Are Energy Retrofits Really Cost Effective?

A new study of energy-efficiency upgrades for existing homes provides some much needed guidance.

Remodelers and home-performance contractors run into this quandary every day: How do you accurately explain to a homeowner that most energy retrofits—especially in older homes—really do save energy, will cost less over time, and will benefit the environment?

According to "Whole-House Analysis of Energy Efficiency Upgrades for Existing Homes," a new study by Newport Partners, a market research and analysis firm in Davidsonville, Md., the key to the success of energy retrofit programs and incentives is homeowner involvement.

"Decisions on where and when to invest in residential efficiency upgrades can be very difficult for a homeowner, especially when it comes to paying a premium for higher efficiency equipment," states the report. "Questions like, 'How much energy is this supposed to save?' and 'How long will it take me to recoup my investment?' are valid, but credible answers are not often available."

The 36-page report, prepared for the Propane Education & Research Council (PERC), takes a stab at providing answers to these questions. Using a homeowner's perspective, it evaluated dozens of energy-efficiency upgrades (referred to as "energy efficiency measures" or EEMs). Through the application of building energy simulation tools and additional analysis, a full range of EEMs were evaluated for their energy, economic, and environmental performance at 10 locations across the United States covering different climates.

Because the study was done from a homeowner's perspective, energy savings of various EEMs were considered relevant in so far as they were found to be cost effective. The metric for this was simple payback—the time required to recoup a first investment (labor and materials) on an expected annual energy cost savings. If an EEM was found to have a payback of 10 years or fewer, the emissions savings associated with the payback were also reported. In this way, CO2 emissions data could serve as a second evaluation point to assist homeowners in choosing between EEMs with comparable paybacks.

Both "elective" EEMs and "non-elective" EEMs were evaluated. Elective EEMs are those measures—done at the discretion of the homeowner—that do not require immediate action or replacement (e.g. adding attic insulation). Non-elective EEMs are those that are prone to failure and are generally replaced with haste due to a loss of some critical function in the home's operation (e.g. a new refrigerator).

Here are some of the more pertinent findings from the more than 30 non-elective EEMs that were evaluated:

Space Cooling and Heating

  1. Where cooling was provided by a central AC unit, a high-efficiency AC unit (instead of a standard efficiency model) provided a payback of six to eight years in hot climates. In other regions, this EEM was unattractive due to low cooling loads.
  2. The economic and emissions performance of heating EEMS were also highly dependent on climate. A consistent performer across most climate zones was a high-efficiency propane furnace in lieu of a standard efficiency propane furnace. A dual system (high-efficiency air source heat pump and high-efficiency propane furnace) also performed well.
  3. In the Northeast, replacing an exiting oil furnace with a high-efficiency propane furnace resulted in a payback of one year, and provided three times the annual emissions savings over a high-efficiency oil furnace.

Water Heating

  1. Here, geography matters. Retrofitting a water heater in the Northeast offered strong paybacks and emissions savings. Five EEMs had paybacks of fewer than five years, with the propane condensing tankless unit offering the highest annual emissions savings.

For a full discussion of the findings of this study, stay tuned for our CEU course, Residential Energy Performance Upgrades: An Energy, Economic, and Environmental Analysis, due out in December. At that time, you will also be able to download the full study from Newport.

Subscribers to the Propane Energy Update newsletter will be sent an e-mail notification when the course and study become available. If you're not yet a subscriber, sign up now!

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Are Energy Retrofits Really Cost Effective?
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