How to Calculate the Value of Energy Improvements
With so many variables at play, how does one measure energy savings when justifying the cost of retrofit measures?
Adding more insulation, replacing an inefficient furnace, or performing air-sealing measures are oft-recommended strategies for lowering energy consumption and saving money.
Aaron Vander Meulen puts his finger on a key issue, however, when he wonders whether there is a way of determining exactly how much money improvements such as these will save.
"Anecdotally, my parents upgraded to a 95% furnace last year, and are seeing the savings, but it would have to be compared to the [heating degree days] for each year, correct? And even at that it's something of a crap shoot since they have a gas water heater as well? One would need to monitor volume of gas at the furnace, correct? is there any sensor for this?"
His question points to the complexity of this seemingly simple question and is the subject of this week's Q&A Spotlight.
Two points of view
The simple answer to your question, says Michael Blasnik, is no.
"There is no way to figure out the exact savings from a retrofit because we don't have a perfect parallel version of the world handy where everything else was the same except for the retrofit," he writes.
Blasnik suggests Meulen can get a "fairly good idea" of savings by analyzing energy and weather data, but he adds, "You can't control for everything in any given home — differences in occupancy, behavior, non-temperature weather (wind, solar gain), and other changes in the building and equipment can all affect the observed savings... By analyzing the energy use of large groups of homes you can learn a lot more about retrofit impacts, but the findings in any one home will always be suspect."
John Klingel, however, is voting an "emphatic" yes to Meulen's question.
"Not down to the gnat's butt, as you will never get 'exact' for anything, anywhere, anyhow," Klingel says. "But if you can assume that whoever will live there for the next few years will behave like they did in the prior few years, and the weather will generally be what it has been, then all the variables are gone. Is that a fair assumption?
"Well, what other options do you have?" Klingel writes. "Does it matter if you are off 5%? That's your call. Just do a heat analysis with insulation A and insulation B, or whatever A and B you want to compare, and you've got a pretty good handle on it. I don't see any issues with that at all."
A 'self fulfilling prophecy?'
The problem with your approach, Blasnik tells Klingel, is that it becomes a self-fulfilling prophecy. "If energy savings don't meet expectations, you'll be able to come up with a reason that explains it, and if savings do meet your expectations you'll be convinced you had it figured out."
But in general, neither the weather nor the habits of the occupants will be the same from year to year. "The differences won't usually matter that much if you are expecting energy savings of 40% or so, but they will matter quite a bit if you are expecting savings of 20% or less," Blasnik says. "Energy use tends to change from year to year with a standard deviation of perhaps 10%. Since you are only looking at one house, it limits how strong a conclusion you can make regardless of the results."
Klingel sees Blasnik's point: namely, that doubling the amount of insulation in a house doesn't guarantee that next winter's energy bills will be cut in half.
"Certainly, Nature is going to vary and confound/camouflage your results; that's Nature," he writes. "But, all that aside, you've still got your savings tucked into that variability. It's still there, whether it shows its face or not. That was my point: The savings will exist, but not necessarily be recognizable year to year. Heat loss is heat loss. Fuel usage, and subsequent variability, is another issue."
Should renovators promise results?
These variables raise an interesting question, as suggested by David Meiland. "So," he asks, "should someone doing an audit for an individual homeowner make projections regarding energy use before and after improvements? Give them payback periods for improvements?"
"Consulting professionals of many stripes do this all the time, as do contractors and installers wanting to make a sale," says James Morgan. "Whether they SHOULD is more a question of ethics than technology, given that nearly all have motivation to err on the optimistic side, sometimes wildly.
"I have known energy consultants go so far as to guarantee performance," he adds, "but (given the multiple variables Michael mentions) this did not prove a sustainable business model."
Blasnik doesn't see a problem with providing an estimate of energy savings that will result from a retrofit, providing the contractor has a "reasonable method" behind him. "That's not the same thing as telling people what their bills will be next year," he says. "The savings are how much less energy they use compared to what they would have used if they didn't do the retrofit."
"For example, if a household's heating energy use was $1,000 last year and you install retrofits to reduce that by about $200, that doesn't mean their energy use will be $800 next year," Blasnik adds. "It could be that they just had a baby and their heating use would have gone up to $1,100 but instead it's now $900 — they actually saved $200 but their bills only went down by $100.
"In any given home we don't really know how the energy use would have changed without the retrofit, but across large groups of homes we can generally confirm the impacts of retrofits using evaluation methods."
Our expert's opinion
Here's what Peter Yost, GBA's technical director, had to say:
I have yet to meet a high performance residential remodeler who is happy with an energy modeling program for existing homes. Michael Blasnik has done a lot of great work in this area, demonstrating how frustrating it can be to try to predict the impact of various strategies using existing modeling tools.
That said, existing homes give us a starting point lacking in new homes: utility bills. I have used the Lawrence Berkeley National Laboratory Home Energy Saver, , a Web-based tool. The detailed long version requires about 45 minutes to an hour of data entry, and I've come within $100 of my total annual energy bills on our own home — pretty amazing. So, we are making progress in this area.
But to me the most promising work is in the area of energy bill guarantee programs. For the longest time, I have been telling folks that there are no programs that do energy bill guarantees for remodeled homes — just new ones:
- Bigelow Homes (the first in the country; they've been doing it for more than 20 years now)
- Artistic Homes
- Comfort Home
- Tucson Electric Power
But just a year or so ago, one of my online students in a Boston Architectural College course corrected me: there are in fact TWO programs that guarantee energy bills for gut rehabs or substantial energy improvements: Tucson Electric Power and Masco's WellHome.
I don’t know what sort of energy modeling software each program uses, but the basic approach of all of these programs is to guarantee just the space conditioning loads by using the shoulder seasons to average out a base load (the base load being DHW, appliances, lighting, and plug load).
But clearly, taking into account the vagaries of any existing home’s unique energy performance and occupant behaviors can be at least partially deciphered by using the “institutional memory” of the home built in to the utility bill history.
Added Note by Author (4-7-2011):
Can't believe I missed this one, but Mike Rogers of Green Homes America reminded me that they too, do an energy bill guarantee on their retrofits and have for several years.
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