Does energy efficiency pay off?

[Katy Walker]

The simple answer is yes!

But like CD’s, bonds and stocks, energy efficiency has different rates of return.

Current retrofit strategies can deliver considerable savings while improving the environment and your quality of life.

Replacing conventional lights with CFL’s may cost $100 and may save you $150/year.  Now that’s an investment!  A programmable thermostat costing $125 may save $200 in heating and cooling bills. Updating your pool pump may cost $1,000, but save you $350 annually.  These are investments that deliver sure savings and performance – more like bonds yielding 30% to 150%.

A middle range on efficiency investment return comes from heating and cooling upgrades, sealing your attic with spray foam insulation and solar water heating. These improvements deliver a return of 10% to 30% depending on the specific conditions of your home, lifestyle and available credits and incentives.

After you have really tuned up your home, there is the renewable energy option of a solar electric system.  A system rated at 5 kW might produce electricity worth $1,000 year at a cost after government rebates and credits of $35,000.  The corresponding rate of return is just a modest 3% but still much better than a $35,000 CD!

How you use your home and your long-term plan are key indicators of how to make efficiency pay off.  If you are a year-round resident, AC upgrades can pay a greater return than they would for homes vacant for the summer. If you live in a multi-generational household, you consume more water than a two person household so water upgrades can pay a quicker return for you. A new revolutionary device called an eMonitor™ measures your electric consumption at the device level delivering real-time feedback about your home through a dashboard on the Internet. This device alone can save 10%-15% of your electric bill and can let you keep an eye on your home while away from home from any Web-enabled computer or even from your iPhone.

In some cases energy savings are multiplied because of corresponding savings in water (e.g., low flow shower heads save energy by using less hot water).  For another example, energy saving Low E windows, which are also hurricane impact resistant, can save $1,000 or more annually on insurance.  Similarly, many insurance agents like to hear that you sealed and insulated your attic with closed cell foam, which adds structural and waterproofing value again reducing insurance overhead while saving energy and improving quality of life.

An important aspect of making efficiency pay is having improvements work well together and getting them in the right order. If you are building a new home you wouldn’t begin without a plan, but many homeowners just fix things as needed with little understanding of how the systems of their home are actually working now or what their options are for improvement. Our customers find that by evaluating their homes performance now and creating a sequenced plan for improvements, they can achieve even more savings than those outlined above. For instance, insulated windows and spray foam insulation often reduce HVAC requirements by more than a third allowing you to replace the old unit with a much smaller high efficiency one at significant additional savings.

If you are worried about resale value, today’s savvy buyers are much more aware of energy costs and performance features and rated homes command a real market premium. So the payoff of energy efficiency is your choice. Do you want to spend hundreds to get returns of 150%?  Or $10,000 to get 20% returns?  Or spend $50,000 to get 4%?  Whatever you decide, you will get favorable returns compared with today’s financial markets. The real bottom line is comfort and peace of mind.