Energy efficiency costs & benefits explained

The U.S. Department of Energy (DOE) estimates that the average American wastes $400 worth of energy on air leaks, drafts, and outdated heating and cooling systems. While energy-efficient appliances and products are usually more expensive than conventional alternatives, the electric bill savings generated over the life of these products can offset the initial cost and provide a return on investment.

Boosting your home's energy efficiency is likely to pay even higher returns as energy and fuel prices continue to rise, but the actual amount of savings differs based on the type of upgrade. You can make various energy-efficient upgrades in your home, from simply replacing your light bulbs to more intensive projects like sealing air leaks and replacing windows. A combination of compatible upgrades in a "whole-house" approach will typically earn more significant savings over time.

Household appliances have two prices: the purchase price and the operating cost. To find the actual cost of an appliance over its lifetime, multiply the monthly operational cost by the product's lifespan, and add that amount to the purchase price. Given this, energy-efficient appliances are often the cheaper option in the long run.

Energy Star-certified appliances consume less energy during active use and on standby than comparable conventional products. Refrigerators, clothes washers, dryers, and dishwashers are common household appliances with Energy Star labels.

An Energy Star-certified water heater can save you $3,500 over its lifetime. Here are four ways to decrease your water heating expenses:

1. Use less hot water throughout the day.

2. Turn down the thermostat on your water heater.

3. Insulate your water heater and the first 6 feet of hot and cold water pipes connected to your heater to minimize unnecessary heat loss.

4. Replace your water heater with a more efficient model.

Water heaters last 10 to 15 years on average, giving energy-efficient water heaters ample time to generate savings relative to cheaper, conventional models. When replacing your water heater, choose the model that best fits your needs.

For example, tankless water heaters cannot handle simultaneous multiple uses of hot water, making them a poor choice for large families. Tankless coil and indirect water heaters are often an inefficient option for homes, but especially for those located in warmer climates. The U.S. Department of Energy offers a comprehensive overview of all the factors you should consider when purchasing a new water heater.

Replacing old bulbs with energy-efficient alternatives is one of the easiest methods to reduce your utility bills. Still, the savings are less significant than some other energy-efficiency measures, like replacing an old refrigerator or water heater. Still, light-emitting diodes (LEDs) use at least 75 percent less energy and last 25 times longer than traditional incandescent bulbs. Energy-efficient bulbs are better for the environment and your finances, given their annual savings and long life.

Windows are among the most attractive features of any home but are responsible for a significant amount of energy waste. Replacing single-pane windows with double-pane windows can reduce unnecessary heating costs. Gas-filled windows with low emissivity (low-E) coatings can significantly reduce heat loss for homes in colder climates. On the other hand, households in hotter climates should purchase windows with spectrally selective coatings to reduce heat gain. Low-E coatings may also reduce heat gain due to their reflective nature, making them viable options for keeping heat in during the winter and out during the summer.

Window curtains can also play a significant role in reducing unwanted heat loss or gain by providing an extra layer of insulation between your home interior and the conditions outside. Additionally, storm windows can minimize heating or cooling expenses and protect your home during extreme weather events.

According to the DOE, you can save about 30 percent on your utility bills by upgrading your HVAC system, properly air-sealing and insulating your home, and controlling interior temperatures with a programmable thermostat.

Heating and cooling expenses comprise about 53 percent of residential energy use and thus have the most potential for utility bill savings. Programmable thermostats optimize temperature use within your home and can reduce your overall energy use. You can set your programmable thermostat to heat and cool your home at certain times and turn off heating and cooling systems when you're away.

A programmable thermostat does not address the root cause of your high utility bills. Heating and cooling expenses are heavily dependent on average regional temperatures. Significant energy expenditure differences exist between the West Coast and Northeast regions. As a result, households in regions with extreme temperatures can receive more significant benefits from heating, ventilation, and air conditioning (HVAC) related upgrades.

In addition, it will take more energy to maintain interior temperatures at any given level if your home is not adequately air-sealed or insulated. Because your home interior is more exposed to external temperatures, it will take more energy to heat your home in the winter and cool it in the summer.

To further insulate your home against rising electricity prices, consider installing solar panels on your property to generate your own clean electricity. Interested in learning more about going solar? Sign up for a free EnergySage account to connect with our Energy Advisors, compare quotes from vetted installers in our network, and go solar with confidence.