For our country to achieve the carbon emission reductions necessary to avoid a planetary catastrophe, many experts contend that almost every house in the country will need to have retrofit work that achieves deep cuts in energy use.
There’s a major stumbling block, however: deep energy retrofits are frighteningly expensive —in the range of $80,000 to $250,000 per house. With costs so high, many homeowners are asking: how long is the payback period for a deep-energy retrofit?
A new high-R skin
A deep-energy retrofit is a remodeling project that aims to reduce a home’s energy use by 50% to 75%. In cold climates, these retrofits specify R-40 walls, R-60 roofs, and triple-glazed windows. This usually requires the removal and demolition of the home’s existing siding and roofing.
Once the walls and roof have been covered with a thick layer of rigid foam, new siding and roofing are installed, along with new triple-glazed windows.
Only the wealthiest Americans — or those with easy access to credit — can afford a deep-energy retrofit:
- A deep-energy retrofit in Marlboro, Vermont cost $107,000.
- Alex Cheimets estimates that the cost to complete a deep-energy retrofit of his duplex in Arlington, Mass. — including the value of donated materials — was about $140,000.
- The deep-energy retrofit of Peter Yost’s single-family home in Brattleboro, Vermont cost $85,000 — not including labor.
- The cost of a partial deep-energy retrofit (not including the basement or attic) at the 3,000-square-foot Somerville, Mass. duplex owned by Cador Price Jones was $117,000.
- The cost of the deep-energy retrofit of a single-family home in Boulder, Colo. was $675,000. (This amount included a 6-kW PV system and extensive remodeling work that was not directly related to energy efficiency.)
Is that much insulation cost effective?
When skeptics question the cost-effectiveness of these expensive retrofits, superinsulation advocates point to the flawed logic behind cost-effectiveness calculations based on current energy prices.
As building scientist John Straube often explains, “The rate of inflation for energy, depending on whether you’re talking electric, natural gas, or oil, is on the order of 8% per year.” In the future, energy prices may escalate even more rapidly, so these retrofit jobs will eventually pay for themselves. Yet even Straube admits that “deep energy retrofits do not pencil out (from a strict cost-accounting perspective) on energy savings alone.”
An upper limit to energy prices
While it’s true that energy prices are likely to rise in the future, there is an upper limit to future energy prices: namely, the current price of electricity generated by photovoltaic (PV) modules.
A 1-kW PV array now costs about $7,000, and the price for the hardware is dropping. Such a PV system will generate 1,123 kWh per year in Syracuse, New York — a location that is not particularly sunny.
According to Paul Eldrenkamp, a Massachusetts remodeler, the average single-family home in the Boston area measures 2,400 square feet and uses 70,000 BTU per square foot per year; multiply the numbers, and you discover that such a house uses 168,000,000 BTU/year.
Does it make sense to invest in a deep-energy retrofit designed to save 50% of your home’s energy use?
Let’s do the math
The deep-energy retrofit would save 84,000,000 BTUs per year, which equals 24,612 kWh. If you want to provide space heat for the home using air-source heat pumps with a COP of 2 — that’s not particularly efficient, so the calculation is conservative — you’ll need to generate 12,306 kWh per year to achieve a 50% savings in purchased energy. You can do that with an 11-kW PV system that costs $77,000. If you throw in $15,000 for two or three ductless minisplit heaters, your costs are up to $92,000.
In this example, it’s cheaper to buy a massive PV system than to perform a hypothetical $100,000 deep-energy retrofit. To be fair, however, it’s important to note:
- If you choose the deep-energy retrofit, you get a much more comfortable house, with a lower rate of air leakage and (at least in some cases) better windows.
- If you choose the deep-energy retrofit, you get new siding and roofing.
- The materials installed as part of the deep energy retrofit will probably last longer than the PV system and the ductless minisplit units.
- The roofs and yards of many homes are too small to accommodate an 11-kW PV system — an array that takes up 1,000 square feet.
Energy consultant Michael Blasnik notes, “In a retrofit situation it can cost a lot of money to save a small amount of energy. Going from R-19 to R-40 walls or R-30 to R-60 ceilings doesn’t save a whole lot of BTUs — and the cost of that work is potentially tremendous. The way I see it, if we don’t have somewhere in the neighborhood of a 50-year payback at current energy prices, the work is probably not worth doing.”
The bottom line
The current price of PV-generated power is a useful guide for determining whether a suggested retrofit measure makes sense. We all know that $7,000 worth of PV will generate between 1,000 kWh to 1,600 kWh per year, depending on location. So it doesn’t make sense to install $7,000 worth of additional insulation unless it saves more energy per year than is produced by a 1-kW PV array in your location.
The most logical way to plan a $100,000 deep-energy retrofit is to calculate the energy saved by each incremental step, stopping when the retrofit measures become more expensive than PV. The rest of the $100,000 budget can then be spent on PV modules. A similar analysis is routinely used by designers of net-zero-energy homes.
Last week’s blog: A ‘Magic Box’ For Your Passivhaus