If the response to the launch of Canada’s Greener Homes Grant is any indication, there are a lot of people interested in a green retrofit. According to David Thurton of the CBC, when the program opened for applications, there were so many that the website crashed.
Getting a greener home isn’t cheap. Hence the extraordinary interest in the grants program in Canada. If you also live in an existing home that you’d like to make greener, you might be wondering whether a green retrofit is practical, financially speaking.
Green retrofits are expensive, but they really are investments, too. For many people it will make financial sense to spend the money upfront or take out a personal loan to complete energy efficiency projects that will save money in the long run.
This post will offer some practical considerations to help you as you try to balance energy savings with upfront costs.
How Much Does a Green Retrofit Cost?
That will depend on how deep your retrofit goes. A light, or shallow, retrofit lowers energy use by 10-20%, but offers a faster payback period because the renovations are less expensive; under $5,000, according to the Pembina Institute.
A shallow retrofit could involve simple, inexpensive tactics like air sealing and switching to LEDs. Amanda Voss of ProRemodeler cites a Florida study that found that a basic lighting retrofit resulted in a simple payback of 1-3 years.
A moderate retrofit could include replacing a furnace, installing a heat pump or adding insulation to attics and walls. Energy savings could range from 30-50%, but because the costs of these upgrades are more substantial (anywhere from $5,000-$50,000), the payback will be longer—3-6 years, says the Pembina Institute.
Deep retrofits go all in. They could entail anything from upgrading the entire HVAC system to replacing windows to replacing siding and adding insulation to the building envelope. The Pembina Institute suggests these could go up to $150,000.
With retrofits this extensive, you could reach energy savings of 50-80%. Voss reports that the Florida study also examined homes that had undergone deep retrofits (i.e., major appliances and HVAC equipment had been replaced). She suggests a payback period of “a little less than 8 years,” which puts those homes in line with the Pembina Institute’s estimate that deep retrofits take upwards of 6 years to pay off.
Installing renewable energy systems falls under this category, too. EnergySage puts the cost of a 10kW solar system in the U.S. at “$17, 612 to $23,236,” after federal solar tax credits. They estimate that homeowners could recoup that cost in 7-8 years.
The payback period for any retrofit ultimately depends on several factors, including the price of energy, the home’s location and the homeowners’ energy use.
How Can I Cut the Cost of a Retrofit?
Know Your Home
Consider an energy audit before you tackle any work. Voss reminds us that “that the worse shape a home is in before energy upgrades are made, the greater the energy savings and shorter the payback period.”
If your home is already in decent shape overall, you’ll be further ahead if you can pinpoint how your home is still wasting energy so you can use your budget to target that issue.
Calculate How Much Energy an Upgrade Actually Saves
Once you know where your home could be made more energy efficient, do some research into the energy savings potential of the renovation projects you’re considering.
Windows, for example, are notoriously expensive. Calculating the energy saved by replacing them vs. the energy saved by improving them (by installing storm windows, for example) could make improving them a savvier move.
DIY What You Can
As with every home renovation, the more you can competently do yourself, the more money you can save. Only you know which jobs you can tackle. Air sealing could be the limit of your powers, which is still great because air sealing is very effective.
Aside from taking on work yourself, grants can make your green renovations much more affordable. It almost doesn’t matter where you are, you can usually find a government grant, rebate, tax break or incentive program to help make your home more energy efficient or to help you install a renewable energy system.
Renovate When Necessary
Think about staggering your renovations such that you turn necessary renovations green, rather than renovating for the sake of making a home greener.
It’s not cost-efficient or environmentally helpful to buy a new freezer every few years simply because appliance efficiency improves. The minor gains in efficiency won’t offset the emissions that went into the manufacture of that new freezer. If a freezer replacement is already in the cards, however, purchasing an Energy Star certified model will provide you with higher long-run energy savings than a non-certified model.
Is it Easier to Just Buy a Green Home?
Not necessarily. For one, the housing market is an absolute nightmare. Recent skyrocketing home prices and low housing supply make it very possible that you’ll be competing for a home that could go tens of thousands of dollars over asking and require you to waive all conditions, even a home inspection.
And even considering that you’ll get more for your home now, too, by the time you factor in commissions, legal expenses, taxes and moving expenses, you might not financially get ahead.
Add to that the premium that green homes are now commanding. According to the Earth Advantage Institute’s data, new green-certified homes can sell for 8-23% more than non-certified homes. Existing green homes averaged 30% higher price tags.
If you want to move from a conventional home to a greener one, you can expect the homes you consider to cost more upfront. That said, you’ll be moving to a home that’s less expensive to operate over the long run. How long you plan on living there will determine the extent to which you recoup that initial expenditure.
The good news is that whether you buy a green home or do a green retrofit of your own home, you can expect to benefit from that premium yourself when it comes time to sell.