The Costs and Savings from Energy Efficiency Projects for the Home

Last Monday in the Wall Street Journal was an article “The Economics of Installing Solar Power.” They had a lovely chart with costs and returns that had virtually nothing resembling the actual costs and savings of my solar photovoltaic system. Though the costs of solar panels have gone down considerably since I purchased my system, and I discovered that solar panel installation costs less in San Francisco than Virginia and I assume cost less in urban centers than in rural areas. Nonetheless, the chart in the Wall Street Journal made me feel terrible, the cost of the fictional solar systems in the Wall Street Journal were all $5,500 a Kilowatt (KWh). Nonetheless, payback period is entirely dependent on the cost of electricity, rebates and incentives. Depending on how I continue to play the incentive game, my payback period could potentially fall in line with the fictional systems in the Wall Street Journal.

Right now (and for the past few years) electricity costs me $0.115 a Kilowatt. No matter how you look at it solar power costs more than the eleven and a half cents a kilowatt that NOVEC (Northern Virginia Electric Cooperative) is charging for residential power. The payback without tax credits and rebates would exceed the life of the system regardless of how good or bad a deal I got. In addition, my solar photovoltaic system cost way more on a per Kilowatt basis than the system cost they used. Prices have really come down on solar panels, but I do wonder if their costs include permits, plans and engineering, as well as the costs to change the electric panels and repair and seal the walls. The Wall Street Journal priced solar at $5,500 per KWh. The 5 KWh systems in the Journal have a listed cost of $27,500 while my installed cost was $58,540 for 7.36 KWh DC. Sizing their system up to my system size proportionally would be a cost of $40,480, but my cost included $1,500 for permits, plans and engineering. Nonetheless, you could probably install the same system today (even on the edge of nowhere) for $15,000- $18,000 less so even without the state of Virginia rebate the first year cost would be the less than my cost. 

My lifetime to date energy production

The actual cost of a solar photovoltaic system is really based on rebates, tax incentives and utility subsidies. Virginia no longer has rebates available and does not have any utility subsidies or solar renewable energy requirement, but I managed to snag a rebate when they were available and register my system in Washington DC before their market rules changed. My system was grandfathered when the market was closed. The Solar Renewable Energy Credits or SRECs are worth about $290 each right now (though I have sold them for between $95 and $350). Each SREC is a credit for each megawatt of electricity that is produced and used by me. SRECs have value only because some states have Renewable Portfolio Standards, RPS, which require that a portion of energy produced by a utility be produced by renewable solar power. Utilities in some states can fulfill that requirement by buying SRECs from solar installation owners and utilities in Washington DC are buying mine. As long as the market is not oversupplied (as is Pennsylvania) and there is a financial penalty for not meeting the solar carve out, then I can make more money selling SRECs than I save on the power I produce. With any luck I will be able to sell enough SRECs to get my payback period into the 10-15 year range. Energy savings from solar power are the most expensive no matter how you look at it.

A significantly shorter payback was from upgrading my heat exchanger. This past July I replaced my air heat pump with a new efficient system, replaced the ducting system in my attic and installed an attic fan and gable vent. The result is improved comfort and a $77 a month reduction in my electric bill during the summer cooling season and I assume an equivalent reduction in the winter bill. However, there are generally 3-4 months a year that I do not run the heating or cooling system so my annual savings will be closer to $600-$700 a year. That is about half the savings from my solar panels at fraction of the cost and I get a cooler, more comfortable home.

Though I had always assumed that when the time came I would replace my heat pump with a geothermal heat pump, that’s not what I ended up doing. After considerable research and getting several estimates I replaced my air heat pump with another air heat pump, a more efficient one, and re-ducting the attic to create a more efficient and effective system. The costs of installing a geothermal system in my existing home far exceeded the benefits. Based on the estimates I received the cost to reconfigure my finished basement ($5,000-$10,000) and install either a vertical coil or standing column well ($12,000-$18,000) on top of the cost of the heat pump and upgraded ducting combined with technical difficulties (a daylight basement and fractured rock system with no overburden), and the potential I might impact the drinking water aquifer or damage my garden ended my plans to retrofit a geothermal unit into my existing home. Instead I installed a more efficient and powerful heat pump, redesigned the ducts in my attic, and installed an attic fan. The result was heaven- a master bedroom that could hold 71 degrees at the heat of the day on a 100 degree day and the bedroom over the garage that in the past always was 10 degrees hotter than the master bedroom in summer and 10 degrees colder in winter was within 1 degree of the master bedroom and my electric bill fell by more than $77 for the month of July. (The decrease was about the same year to year or June to July.)

First of all my air heat pump like most is a split heat-pump systems consisting of two parts: an indoor (blower) unit and an outdoor (condensing) unit. Both units are designed to work together. Air Heat-pump systems manufactured today, by law, must have a seasonal energy efficiency ratio (SEER) of 13 or higher. Seasonal Energy Efficiency Rating (SEER) or Heating Seasonal Performance Factor (HSPF) for heat pump systems are the efficiency ratings on heat pumps, the higher the SEER/HSPF, the more efficient the equipment. The SEER is measured in average Btu output over the season divided by the watt hours and is the standard measure of energy use efficiency. Generally, the higher the SEER/HSPF of a unit, the higher the initial cost and lower the operating cost.

My old heat pump was a 3.5 ton with a SEER of 12 and a HSPF less than 8. Once the temperature reached 90 degrees in Virginia the heat pump ran continuously and could not keep the master bedroom or the bedroom over the garage cool. The master bedroom struggled to stay below 78 degrees and the bedroom over the garage was always 10 degrees warmer despite additional insulation. The old system was only 8 years old when the coil failed, but replacing the coil ($2,500) seemed like throwing good money after bad. We decided to do it right. After getting several bids and weighing my options, I had Randy Hayes and his boys (Hayes Heating and Air Conditioning) install a 4 ton Carrier Infinity 19 seer heat pump model #25HNB948, its matched multiple speed air handler and a programmable thermostat. The high efficiency two-stage heat pump allows me to oversize the unit slightly so that it can handle the hottest days without sacrificing optimal performance on more temperate days so the old rule that if a system is oversized, the system will cycle on and off too frequently, greatly reducing its ability to control humidity and its efficiency is no longer strictly true. I rounded up from base line Manual J to get the 4 ton.

In addition we (Randy and his boys) removed the old sagging flexible ducts and installed two new galvanized steel trunk lines (one to each side of the house) with 3 inch reflective duct wrap and tied the new flex lines into the existing vent boots with as little sag as possible (thanks to Randy’s middle son) using silver flexible ducts insulated with R-8. We minimized the amount of flexible ducting in the attic using as much galvanized ducting as was feasible (at an additional cost of $3,000, but the galvanized portion of the ducting will last longer and in all real world tests gives better air flow). Flexible ducts consist of three layers an inner core of a metal helix encased in a foil film, an insulation layer and the outer vapor barrier jacket. While fully extended properly installed flexible duct can be as good at maintaining air pressure as a galvanized steel duct, performance deteriorates as the ducts sag.

In the real world there is some degree of sag even in good installations and it tends to increase over time. In poor installations (like mine was) there were sharp bends and excess lengths snaked all over the attic in a daisy chain of connection using fiberglass plenums. This caused the inner layer of the flexible duct to crumple (it is a soft spring) and the helix pop out. Instead of smooth circular tube the flexible duct turned into a bumpy pathway for the air that caused turbulent flow and very significant pressure drop from the beginning to the end of the duct. In my case, there was almost no air flow in the bedroom over the garage (the room furthest from the air blower). The reason the drop was so great is that the ducts operate at very low pressure and small resistance due to friction can have a very big impact on flow. The old ducts were also R-6 insulation and black collecting more heat. Now I have conditioned air flowing into the bedroom over the garage and you can feel the cool air come out of the duct.

Finally to help the whole system work well, we added another gable vent (on the south facing gable) and a temperature controlled attic fan in the east gable. The result was that fabulous feeling of luxury (during the test period) of lying in bed in the middle of the day on a 100 degree Sunday and pulling the covers up because it’s cold. After a week of freezing out the bedroom at all times of the day and night, we settled back at a more reasonable temperature, but still reduced our energy use by about 670 KWh for the month. Total cost $16,300 for everything-heat pump, ducting, attic fan, installation, removal of the old equipment and cleanup. Part of the cost was simply to have heating and air conditioning, part for improved comfort and the rest for energy savings.

So, I did not get a geothermal heat pump, but I am more than satisfied with the cost savings and comfort improvement of my new air heat pump over the old one. The geology of my property was not ideally suited for a horizontal coil, too many rocks. The water table is shallow (under a hundred feet). My septic field and 56 new trees were in the way of the drill rig needed for a vertical loop or standing column well, and the location of my ducting and blower were not easily accessible to a new well without digging up the driveway, patios and/or garage or moving all the utilities in the house. For another house geothermal could be an easier or better solution. I had not thought through the requirements of geothermal when I purchased the house and finished the entire basement.

Finally, the first energy project I did and you should too, was to seal and insulate the house. Heating and cooling account for 50% to 70% of the energy used in the average American home. Inadequate insulation and air leakage through ducts, walls and roofs are the major sources of wasted energy in most homes (see upgrading my ducting above). Though, my house was built in 2004 the insulation and thermal properties were not optimal. I turned to the Building Envelop Research of the Oak Ridge National Laboratory for guidance. The Oak Ridge National Laboratory performs their Building Envelop Research for the US Department of Energy, DOE, and publishes their guidance in their “Insulation Fact Sheet,” which is available on the blog home page and through this link. Insulation and sealing was the most cost effective project I had done. Despite having it professionally done the payback was under 4 years in straight energy savings.