The Economics of Energy Efficiency and Renewables

Human beings have a strong desire to reduce our dependence on traditional energy sources. While many people are excited about photovoltaics, solar water heaters, geothermal heat pumps and other sources of renewable energy for our homes, we need to keep in mind a few important considerations when seeking potential energy upgrades for our homes.

1.) Energy Efficiency is about more than electricity. For cold climate North American homes, the biggest source of energy consumption is space heating, which in turn, is largely fueled by oil and natural gas. Barring a wholesale conversion to an electric heat can be expensive. 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 in half through simple, low-cost measures, and thus reduce the investment necessary to take your home to net zero in half, you’ve made a good investment.

3.) Return on investment. Air sealing might be a $1,000 dollar investment upfront, and could save you $500 or more per year, which would give you a 2-year ROI. A wind turbine in your back yard, on the other hand, might cost somewhere in the ballpark of $15,000-$20,000. That would take a while to pay itself off.

4.) Energy Efficiency is about more than energy efficiency. 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 and cooler in the summer, and potentially increase the health and longevity of your house.