These Projects Will Save Considerable Home-Energy Usage, but Have High Upfront Costs
Last updated December 2020
If you wanna go big, these projects dramatically reduce energy use—some even offer paths to completely eliminate your home's net energy usage. But the high up-front costs or long payback periods make these improvements impractical for many families.
But if more communities implement building codes requiring home builders to minimize energy use via better designs and installing efficient or energy-producing heating and cooling systems, the high costs of these projects would be baked into the sales prices of homes. Buyers would then pay for them via mortgages; by spreading costs across 30 years, the considerable energy-cost savings offered by these systems would generate immediate positive monthly cash flows, vastly improving affordability.
Air-Conditioner or Heat Pump Upgrade
- Cost: SEER 20 central air-conditioning units cost about $3,000 more than SEER 14 ones, although tax credits can lower net prices a bit.
- Energy savings: For most homes, less than $30 per year.
If you want to add or replace a central air conditioner or heat pump unit, in the Bay Area it usually doesn’t make financial sense to pay extra for a highly energy efficient model. For air conditioners, for example, the most efficient options usually cost nearly $3,000 more than minimally efficient ones to attain modest energy-cost savings of less than $30 per year.
- Cost: Standard insulated vinyl models run $500-$600 each.
- Energy savings for a typical home: $44-$73 per year
Even if your old ones are extremely inefficient, you won’t save enough money from lower utility bills to offset the cost of a replacement project.
For example, if you own an average-size home with old, very leaky, single-paned, aluminum-framed windows and upgrade to new, double-glazed ones with wood or vinyl frames, your utility bills might drop by $150-$250 per year, but each window you replace will cost hundreds more than that, and they won’t last long enough for energy savings to cover that outlay.
Cost: $8,000 and up, but the federal tax credit and incentives from utilities and local governments help offset a chunk of that.
Energy savings: Most homeowners scale their projects to offset their entire electricity bills.
Solar-energy technology continues to advance in ways that can greatly benefit homeowners. Panels sold today cost considerably less than those available just five or six years ago, yet produce more electricity. These efficiency gains mean most families can install fairly small projects to cover all their electricity costs.
But there’s growing uncertainty that the cost of panels and other equipment and installation will remain low. Prices are being pushed higher by pandemic supply-chain kinks, rising labor costs, proposed tariffs on panels from market-dominating Asia, and U.S. Customs blocking import shipments of some panels made in China reportedly using forced Uyghur labor. If the U.S. government adds to its already generous tax incentives for residential solar energy projects, rising demand might also propel prices higher.
Even if the cost of equipment and installation remains low, upfront project costs are still a big obstacle for most families: A typical-size system for the Bay Area runs about $11,000. If you stay in your home for six years, a generous federal tax credit and lower electricity bills will eventually add up to recoup those upfront costs. After that, as the system provides free electricity for years, you’ll realize big profits—over 20 years our example homeowners will come out ahead by more than $28,000.
You can finance the high initial cost with a loan from an installer or a home equity line of credit. But that can add thousands of dollars in interest charges to your total cost.
Alternatively, you can sign on with a company that supplies equipment via a lease or similar arrangement in exchange for paying it a flat monthly fee—typically $100 to $120 per month—and letting it collect the tax credit. In general, we don’t think these arrangements represent good deals for most homeowners.
Start by making sure your abode and its roof are good fits for solar. Homes with roofs that have unobstructed southern exposures are the best sites. Also assess the condition of your roof. Because solar panels last for 25 years or more, and because your shingles will need equal longevity, ask a good roofer if you should replace shingles where you plan to install panels.
Thoroughly vet solar contractors you consider. Skeptically review any marketing materials—our undercover shoppers found some companies promise overly optimistic scenarios. Carefully read the contract and ask the company to clarify anything you don’t understand.
Geothermal Heating and Cooling Systems
- Cost: $20,000-$25,000 after factoring in the federal tax credit.
- Energy savings: $300-$425 per year.
Ground-source heat pumps (aka “geothermal”) extract warm air (in heating mode) and cool air (in A/C mode) from stable below-ground temperatures. They are incredibly energy efficient: According to the EPA, geothermal heat pumps can reduce energy consumption up to 40 percent compared to air-source heat pumps, and up to 70 percent compared to electric resistance heating with standard air-conditioning equipment. If you have a gas furnace and central air conditioning, typical savings are 35 to 45 percent.
But you’ll have to pay a lot up front to attain these savings: Most systems cost $35,000 or more, mostly due to the need to bury coils or pipes in a way that requires a lot of expensive digging or drilling. Even if you could buy and install a ground-source system for a bargain rate of, say, $20,000 it would still take a long time to recoup the upfront costs through resulting energy savings. But there are other factors to consider.
First, Energy Star-certified ground-source systems qualify for a generous federal tax credit for the entire cost of the project, including installation (for 2020 and 2021, the credit is 26 percent). But, for most families, the remaining upfront costs of geothermal systems still make them unaffordable.
Second, ground-source systems usually come with desuperheaters, which create virtually free hot water during the summer and relatively inexpensive hot water during the winter, saving another $100-$150 per year in energy costs.
Third, ground-source heat pumps require much less maintenance than conventional equipment and don’t need to be replaced nearly as often.
Combined, these benefits still won’t add up to making geothermal a practical purchase for many families, but if you’re seeking to minimize your energy usage without regard to expense these units, combined with solar panels, will cut electricity consumption from the grid to zero or nearly so.
- Cost: $150-$400 for a small model similar to those used on sailboats to $60,000 for a large-scale tower and turbine.
- Energy savings: Highly variable; most area homes aren’t situated to benefit enough from reliable wind speeds.
Wind energy is playing an increasingly vital role in reducing use of fossil fuels—its capacity tripled in the last 10 years and it now accounts for seven percent of U.S. electricity production. But almost all that power was generated via large projects located in rural locales or offshore. Although wind turbines can produce enough free power to quickly pay off their upfront costs, unfortunately, few densely populated areas are good prospects for wind energy production.
Most turbines won’t turn unless they’re exposed to wind speeds that stay at or above 10 miles per hour. Unless your house is situated on top of a ridge or by the sea, surrounding trees, buildings, and hills will block much of your area’s wind energy, even on a good gusty day, unless you build a 60-plus-foot tower to access winds less disturbed by surrounding “surface roughness.”
Which leads to another constraint for most of us: space. Most of us don’t live on one-acre-plus lots, and therefore don’t have enough space to house the tall towers. Building codes and homeowner association rules in many metro areas prohibit construction of large windmill towers. Even if you live in an ideally situated spot and can host a large turbine, it will cost $30,000-$60,000; while you’ll eventually recoup that, solar power is likely a more feasible investment.
Smaller scale wind turbines are available if your energy-producing expectations are low. Typical models cost $800-$3,000 (professional installation usually costs an extra $500-$2,000). In ideal conditions, these turbines can produce 500-2,000 watts of electricity, storing excess power in batteries (1,500 watts is enough to power a small, off-the-grid-type home). But producing 1,500 watts is unrealistic for most homes in this area; 300-600 watts is more likely.
Still considering wind power? The nonprofit Renewable Resources Coalition offers thoughtful recommendations of six models, including a budget pick. The website of the DOE’s Office of Energy Efficiency & Renewable Energy also offers good practical guidance.
Build a Zero-energy Home
- Cost: Net-zero builds can cost only five to 10 percent more than conventional new homes. Comprehensive retrofits typically cost hundreds of thousands of dollars.
- Energy savings: Likely 100% or better.
Some architects and contractors specialize in building or retrofitting ultra-efficient, solar-panel-equipped homes that produce all the energy they use—maximizing warmth from sunlight during heating season; minimizing solar gain during cooling season; incorporating super-high-performance insulation, windows, and doors; eliminating wasteful leaks; minimizing loads on HVAC equipment; and using high-efficiency appliances and lighting.
If you’re building a new home, PHIUS (Passive House Institute U.S.) says one that meets its performance standards typically costs five to 10 percent more than conventional construction, once tax credits and other incentives are factored in. Some architects and builders have gained enough experience that they finish many zero-energy projects with no cost premium.
Retrofitting an existing structure to achieve net-zero energy use is a far more expensive approach.
If you’re interested in starting over from scratch, PHIUS has developed standards for all U.S. climate zones and offers lists of builders and designers it has trained and certified. The Zero Energy Project offers similar resources.