More Musings of an Energy Nerd
Back in 2010, Fine Homebuilding magazine published a short article called “Ten Ways to Lower Your Energy Bills,” which contained a modified version of information I first shared on GBA. When reader Jonathan Beers, an energy expert who used to work for Madison Gas and Electric in Wisconsin, noticed the information was dated, he brought it to my attention. Here, I’ll amend the recommendations to reflect today’s circumstances.
What Americans now spend
A personal finance company named WalletHub recently calculated how average energy bills vary from state to state. The company’s analysis included considered the costs of electricity, natural gas, heating oil, and vehicle fuel in all 50 states and Washington, DC. (Curiously, the analysis didn’t consider propane costs or firewood costs). Here’s how the New York Times summarized the WalletHub analysis: “To find the total costs in each location, researchers multiplied the average monthly consumption of each form of energy by its average price, and all costs were added together.”
According to this analysis, the lowest average monthly energy cost ($274) occurs in Washington, DC, while the highest average monthly energy cost ($845) is in Wyoming. Why is it that residents of Washington, DC are so lucky? According to the New York Times, “Washington DC, neither very hot nor very cold, had the lowest energy costs, helped not just by its milder climate and moderate costs across all forms of energy, but by lower gasoline consumption.”
To reiterate: this analysis includes vehicle fuel costs and some of its assumptions are questionable. But it gives readers an idea of the range of energy costs faced by American consumers.
No one enjoys expensive energy
Almost everybody would prefer to spend less on energy, of course, which is probably why my article ended up with the title “Ten Ways to Lower…
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19 Comments
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Office of Energy Efficiency and Renewable Energy
BUILDING TECHNOLOGIES OFFICE
August 4, 2023
IRS Releases Section 25C Tax Credit Qualification Requirements for Home Energy Audits
On August 4, 2023, the U.S. Internal Review Service (IRS) released IRS Notice 2023-59, which specifies requirements for U.S. taxpayers to claim the “Energy Efficient Home Improvement Credit” under section 25C of the U.S. tax code for home energy audits.
The Notice, Guidance on Requirements for Home Energy Audits for Purposes of the Energy Efficient Home Improvement Credit under Section 25C, builds upon guidance issued in December 2022 by the IRS and Treasury Department in a Fact Sheet (FS-2022-40), which addresses “frequently asked questions about energy efficient home improvements and residential clean energy property credits.”
See: https://www.irs.gov/pub/irs-drop/n-23-59.pdf,
https://www.irs.gov/credits-deductions/energy-efficient-home-improvement-credit and
https://www.irs.gov/pub/taxpros/fs-2022-40.pdf
Do carbon emissions equate with $ payback costs?
Most of the article is written about monetary payback, even though it is suggested at times that we are talking about carbon. There is no denying a (sometimes strong) correlation between cost and carbon, but it is not always a perfect match.
For example, does the fact that a professional home energy audit cost a lot of money mean it has a lot of upfront carbon compared to some cheap company or a diy effort? Does the fact that solar $ payback is good when there is net-metering mean the carbon payback is also better than without net metering? Is the fact that wood fiber turned out to be more expensive than foam mean it is worse on the embodied carbon front? This one is a 'maybe' I would say, depending on sourcing and such. For those in New England (probably beyond), I suspect wood fiber will look very good embodied carbon wise once TimberHP is in full production.
No monetary payback analysis, whether talking about light bulb replacement, heating system replacement, rooftop solar, or air-sealing and insulation, will be accurate to the discussion of carbon unless we use a 'carbon dollar' rather than the market dollar ($). There is also the very hard to answer question about whether just adding rooftop solar and mini-splits to existing housing stock is setting us up for success in the future. But that's admittedly a bit down the rabbit hole and hard to factor into these types of decisions.
None of this is to refute the general sentiment of the piece that going too far (and yes paying too much) for energy improvements may be misguided and counterproductive, but the equation may shift for some items depending on if the analysis is performed using carbon accounting vs dollar accounting. I'm not suggesting there is any reliable or easy way to do that, but basing the purchase of solar on whether there is net metering or not doesn't seem to help answer the question of carbon savings even though it affects the personal financial equation.
The caveat to all this is that one could argue that any monetary savings (regardless of a direct link with carbon reductions) can then be channeled into other (possibly more effective) carbon reducing avenues. A fair argument, but it of course depends on that money actually being channeled there, and on the availability of these effective avenues. There's certainly ways, but making them tenable may be difficult. Dollars at the top being spent on passivhaus (or better yet on crappily insulated mansions) could perhaps instead be channeled to the low-fruit houses that need basic air sealing.
Maine Tyler,
Q. "Do carbon emissions equate with $ payback costs? Most of the article is written about monetary payback, even though it is suggested at times that we are talking about carbon."
A. No, carbon emissions don't equate with $ payback costs -- which is why I wrote, "Of course, it’s possible to lower your energy bills in a way that increases your carbon emissions—and that’s undesirable." I gave two examples -- an example of a measure that lowers your energy bills while creating more carbon emissions, and an example of a higher energy bill that might help the planet by lowering carbon emissions.
Q. "The equation may shift for some items depending on if the analysis is performed using carbon accounting vs dollar accounting."
A. Yes. That's what my two examples were intended to show.
Martin, this is the first article of yours that I've been disappointed in. Let me explain why.
We have got to stop talking about saving money. This singular obsession may be why the home performance (energy efficiency) industry has basically failed to become mainstream. There are not any blower door directed air sealing contractors throughout most of the country because it's not cost effective if people's only motivation is saving money. The time has passed and any focus on savings is really just serving to devalue the work at this point. Having a comfortable, healthy, durable, efficient home is worth spending money on. That's the conversation we need to be having here.
Where I live in Michigan it costs more to install a good central heat pump and more to operate it than a nature gas furnace. Zero savings motivation. The cost of air sealing and insulation to close that gap would create a project cost that's infeasible for most homeowners and payback is basically a joke at that point. I don't see this cost structure changing any time soon either. I realize my area is a worse case but the math is actually not great in quite a few places.
This may be the biggest problem with the IRA tax credits and rebates, the entire conversation is being pushed as saving money. I don't know how to put this anymore plainly, we're not going to cut carbon emissions fast by saving money, we're to cut carbon emissions by spending it. We've got to start building value around comfortable, healthy, durable homes. Homes that insulate us from erratic fossil fuel prices and from the cold during power outages. It's far more important in this climate moment to spend peoples limited funds electrifying homes than on insulation and air sealing to save only some money. This is going to require an entirely different perspective and conversation around home energy than we've had until now.
People spend money on things they value and the good news is that a lot people are actually willing to spend money to have a comfortable, healthy home but not enough contractors are offering that in a meaningful, comprehensive way. Changing the conversation needs to begin on sites like this.
I say this with love and respect, I hope this is the last article published here about saving money.
I happen to see things differently. IMO, tax credits and rebates are incentives to help homeowners lessen the impact of energy efficient remodels or new construction. Most homeowners understand mortgage payments, utility and maintenance bills, and it is up to the “Professionals” in our industry to educate them about “having a comfortable, healthy, durable, efficient home (that) is worth spending money on.”
The problem is that we work in an industry that few members know about such issues, and less have a clue how to explain them. We work in an industry that has neither value for education nor minimum education requirements to work in it. We work in an industry that has no certification or licensing in most of the country. We work in an industry that their leaders and large players work tirelessly in lowering higher and better minimum standards of construction, like code development and adoption.
It is up to the “professional” to explain and sale its product. Remember Steve Jobs? He told us we didn’t need inexpensive, unpractical and bulky brick phones, but we need it to buy HIS sleek iPhone that cost $600, had an 3.5-inch screen with a 2-megapixel camera, a 4 GB storage option and a host of apps that will make our lives easier. We bought it because HE explained the benefits.
Why can the professionals be the ones to learn how to explain all prospective clients the values of a comfortable, healthy, durable and efficient home. Lets be honest with ourselves and our industry, recognize our shortcomings, and maybe then we can fix the problem.
The IRA tax credits and rebates are here to help us and our industry and we need to learn more about them so we can explain the advantages and values to our clients. I for one, I'm succesful at expalining those benefits, and I'm grateful.
I think we actually agree quite a bit. The IRA is an epic piece of legislation and will do much good. I agree that it is up to the "professional" to move needle here, but I also think that there are significant barriers more complicated than selling a sleek new iphone. At least that's how it looks in my neck of the woods, but that's all the more reason to keep at it.
Andy,
I value your comments. Thanks for posting.
First, we agree on most points. You're absolutely right that most energy retrofits won't save the homeowner any money.
Second, you should know that the topic of this article was chosen by Taunton. They asked me to write it -- "Update your article on 'Ten Ways to Lower Your Energy Bills' " -- and I agreed. I started out writing a self-deprecating article ("I was wrong"). Only halfway into the project did I realize that I never wrote the article I was updating. In fact, the article "Ten Ways to Lower Your Energy Bills" was created by Taunton -- it was a modified version of an article I wrote on a different topic ("The Energy-Efficiency Pyramid"), with much of the contextual explanation stripped away, and with a title invented by a Taunton employee. So that muddied the waters. In any case, I was commissioned to write an article on the topic of lowering energy bills, and I agreed to do so.
There are many Americans and Canadians who would like to lower their energy bills. For those who do, the topic is relevant -- and the advice I give in this recent article is probably useful.
You're not concerned about lowering your energy bills. You're concerned about lowering your carbon footprint, and so am I. We can do it -- and many GBA readers are joining you and me in the quest for a lower carbon future -- but it's fairly expensive.
I just came back from a conference where Betsy Pettit shared her success story -- a deep-energy retrofit of a single-family house in Massachusetts that reduced energy use (and carbon emissions) by 73%. Hats off to Betsy. But the work cost $360,000 in 2006. This isn't a solution that will work for working-class Americans. I'm not sure how we're going to get where we need to go, but it won't be easy.
Martin,
We do agree on many points and I appreciate the disclosure here. It's the framing around lowering bills that set me off. Efficiency and savings are certainly part of the picture and a concern of many homeowners, but can be a distraction from getting houses working properly. Addressing climate is part of that, but it's often the lack of dehumidification and ventilation that keep me up at night. Those both cost money.
Your right though, we can do this. Let's get out there and help people value good quality housing.
I'm sorry to bring it up again, but I'm still stuck on one point. If we are going to introduce carbon reduction as a goal or part of the analysis in these types of discussions, then surely if they is going to have some weight, the reductions have to be meaningful, not just a balancing of whether one option is slightly better than another.
Unlike almost every other environmental problem, climate change is an entirely global phenomenon. Local sources of carbon emissions affect everyone, and similarly local efforts to mitigate them can only be viewed against total global emissions.
I haven't seen anything that suggests that even widespread changes to the way we build or renovate houses in North America will make an appreciable difference to how things are going to pan out over the next crucial few decades. Maybe that ship has sailed, and at this point building resilience into houses is the more sensible path?
Malcolm,
There are those who have, indeed, concluded that "the ship has sailed" -- that the amount of carbon already released into the atmosphere, and the reluctance of political leaders to address carbon emissions over the last 30 years, are evidence that unavoidable climate change is imminent. I would have to agree that that's what the data show.
I'm still in favor of both individual efforts and policy efforts (on a national scale) to lower our carbon emissions. My rational side says "it's too late," but we choose to hope, and we choose our moral paths, for reasons other than data.
The challenge is holding and living within this central tension between the rational and the moral: the best data indicate that we are running out of time (if not have run out of time) AND we must act as if we — both individually and collectively — can still make a difference. Hope may seem foolish from a rational and scientific perspective, but I personally couldn't live without hope.
As I slowly work through the updating of my 80-year-old house I’ve decided to put myself in a “win/win” mindset. If the ship has not yet sailed, I’m doing my part* to reduce my carbon emissions. If the ship has indeed sailed, I’m making my house more resilient to the challenges to come. And if the ship has indeed sailed so badly that we’re facing total societal collapse… well I can’t do much about that either way.
*there is of course the carbon impact of the renovations themselves and perhaps the true best approach would be to do nothing at all and live in my house as-is. But at this point many of the core building systems are aging and this just doesn’t seem feasible in the medium- to long-term.
I’m very skeptical about carbon counting in new home construction. We tried it in two projects and two different approaches.
On the first try, the Builder’s wife started the process using two of the most well-know calculators. She quit after two months of finding out that more than half of the products used in our project, none of the manufacturers or retailers have any data on carbon counting.
On the second try, my clients hired a company to do the carbon counting for them. After some time, they found that many of the “counting” were assumptions or estimates. This was an expensive lesson.
Many of the processes and materials we use are heavy on the carbon count upfront, but over the life-cycle are better than other options. So, which material is one's choice?
Are the rules for carbon counting for new construction as soon as the owners move in? How about 10-30 or 50 years life-cycle? How about counting the homeowner’s lifestyle? Do we count customary expected and know repairs and/or maintenance?
So, until there is a reliable, accurate and proven system to do carbon counting, I’ll pass on it. I know I design ZER/ZE homes with processes and materials that we are told reduces carbon footprint, and are more energy efficient in the long run. In addition, most of the homes that install PV systems reduce their carbon emissions by large percentages. The amount depends who you listen to, that's not an exact science either.
We recommend clients to build all electric homes, but on the high end of the spectrum, is harder to do. I do claim as win when a client installs an induction cooktop + a 2-gas burner, with good exhaust system and MAU vs. an 8-gas burner stove with inefficient exhaust system and no MAU, or DV fireplaces vs. open flame in their existing house... and with all this being said, I sleep very comfortable at night.
Armando, it's disappointing to hear that due to a lack of precision in the currently available carbon accounting tools, you are abandoning any attempts at reducing your carbon impact. I'm sure that's a common viewpoint and approach but you're missing the forest for the trees. We know that our window for reducing the impacts of now-inevitable climate change is closing quickly; we have about ten years, give or take, to drastically reduce our emissions. Just because we can't measure embodied carbon with precision doesn't mean that we can't make some broad strokes. We know that foam of all types, and mineral wool, come with higher levels of embodied carbon than equivalent insulation options. We know that concrete and steel have much higher levels of embodied carbon than other common building materials. We also need to be thinking about long-term resilience but that doesn't preclude incorporating low-carbon approaches now.
Michael, you make a fair point, and I won't stop a client that wants to pay for a carbon count, however, if they ask about my opinion or experiences, I'll tell them. I don't want to see another client's disappointment and frustration (to be polite) when they pay thousands of dollars for a carbon count full of assumptions or estimates. That is not fair to them either.
BTW, I'm not abandoning any attempts to count carbon, as I said, come up with a reliable system and I'm all in. My clients and I know we're doing better than most.
Yeah I'm not sure high resolution, project by project analysis is where we need to be with carbon accounting right now, but as Michael says, having a general sense of materials and methods that are lower carbon is possible and easy enough to act on.
And then acknowledging that smaller projects (per capita) will win against larger ones every time is an easy way to reduce costs and carbon.
I'm curious why heat pump hot water heaters aren't on this list. Based on this page from the EPA, it looks like it pays for itself quickly even without a tax credit (at least for those who currently have an electric resistance hot water heater). https://www.energystar.gov/products/ask-the-experts/is-a-heat-pump-water-heater-right-for-your-home
Nick,
That's a fair question. In many cases -- especially when a HPWH can be purchased and installed for a low price, when electricity costs are high, and when installed in a house with a large family -- a HPWH can have a fast rate of return.
I just ran into Michael Blasnik, a Massachusetts weatherization guru, who wants to install a HPWH in his Massachusetts house. A local contractor quoted him a price for a heat pump water heater (parts and installation labor) that was over $6,000 -- so Michael decided to wait. That's a lot of money.
If you're replacing an existing gas water heater, you'll probably need an electrician as well as a plumber -- so installation costs can quickly add up.
Heat pump water heaters are eligible for a 30% tax credit and state energy offices are putting together the rebate programs that are set to roll out next year. The tax credit and rebate includes installation costs. Some plumbers are charging those high prices because they are not familiar with the process or they are gouging their customers. Furthermore, suppliers are getting $500 rebates (to presumably pass some of the savings on to their customers). A colleague installed his in less than an hour using pex piping and a pex tool. Turns out, not that hard to do. I installed mine with trickier copper piping in about 4 hours. Just popped the 220 wires from the old tank onto the new tank. Also, there are now 120v options available. No wiring required, just plug into a standard outlet.
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