The Economics of Energy Efficiency and Renewables

There's understandably a lot of excitement about photovoltaics, solar water heaters, geothermal heat pumps and other sources of renewable energy for the home. We all want to be self-sufficient. It's part of our national psyche. And, particularly for the environmentally motivated among us, the desire to reduce our dependence on traditional energy sources is strong. Our company believes that renewables play an important role in managing the continued growth in energy consumption worldwide.  Our company and our management team have facilitated close to 1,000 installations of solar photovoltaics and geothermal heat pumps on residential and business properties. 

But when looking at adding renewable energy technologies to your home or building, you should keep in mind a few important considerations:

1) Energy Efficiency is about more than electricity. For cold climate North American homes, the biggest source of energy consumption is space heating; space heating, in turn, is largely fueled by oil and natural gas. Barring a conversion to electric heat (which may not be desireable or cost effective), solar photovoltaics will do nothing to reduce the amount of oil and gas that your home consumes.

2) Should you decide to invest in renewables, the scale of your investment will depend on the amount of energy your home consumes. If you can cut your home's energy consumption by a third through simple, low-cost measures, and thus reduce the investment necessary to take your home to net zero by a third (think: 2 solar panel vs. 3), you've made a good investment.  We are strong believers in "Efficiency First" meaning do everything you can to reduce your demand and usage of energy before investing in creating your own energy.

3) Return on investment. Air sealing might be a $2,000 dollar investment upfront, and could save you $1000 or more per year, which would give you a 2-year ROI. A solar system on your roof on the other hand, might cost somewhere in the ballpark of $20,000 to $30,000. Even with all of the incentives available this investment will take many years to achieve a simple payback.  Make the investment that pays you back the fastest first.

4) Energy Efficiency is about more than saving energy. Done right, sealing air leaks and upgrading your insulation are both measures that have a high ROI, will reduce your carbon footprint, and will reduce your energy bills. But they will also reduce drafts, make your home warmer in the winter, cooler in the summer, and potentially increase the health and longevity of your house.  Advanced heating and air conditioning technologies like geothermal perform best in a tight, well insulated home or building.  You will likely be dissatisfied with the comfort afforded by the system if the home or builiding is drafty and not properly insulated.

We can help you choose the right renewable technologies for your home or building by starting along our Roadmap to Energy Efficiency.