Why Are Renewable Energy Systems for Homeowners Still So Expensive?

A:

Ian, I am happy to respond to your question since I have spent my own money on both my net-zero-energy home and my zero-energy office building — so I am acutely aware of the costs.

My two-story office building in Arlington, VA was built 11 years ago from the ground-up, and includes R40+ insulation and double pane argon-filled windows with low-e coatings. The building uses CFLs and LEDs only along with a ceiling fan and solar daylight tube. Now these additions added 4% to the building cost and have already been recouped in energy savings after the first 5 years.

I also included a ductless heat pump, which is more efficient than a traditional heat pump and has much better air-quality and less maintenance (no duct cleaning or sealing). So while the unit cost was 20% more than the traditional heat pump, the installation costs and energy costs are lower, and it paid for itself in 4 years. And finally, I have a small wind turbine and photovoltaics roofing shingles tied to a smart web-enabled battery bank that added $15,000 in costs and paid for itself in 8 years. Now and for the last 3 years I have had free electricity. The payback was lessened because I did not need to buy surge protection and long-duration back-up for the computers and web/fax/phone — all critical for business.

Note that businesses usually have higher energy rates expressed in demand charges, peak power and ratchet rates, which accelerate payback. I find in my business where I counsel commercial, industrial and government customers on the blends of clean energy options behind their corporate or facility fence, or on their buildings — I am constantly educating these consumers to actually read and understand the nuances of their energy bills. (My 15-year-old daughter understands her cellular bill better than most facility owners understand their energy bills).

The other challenge is to help customers realize the actual costs associated with traditional energy systems such as duct cleaning, back-up power, power quality and surge protection, noise reduction, indoor air quality including respiratory illnesses and loss of productivity due to unstable indoor temperatures and poorer light quality.

My home systems were tied to renovation and here again, I focused on energy efficiency first with double-paned argon-filled windows with low-e coatings, insulation and thermal barrier paint, CFLs and natural lighting, and Energy Star appliances. This cut the energy costs in my home by 35% and have long since paid for themselves (I began this in 1990). This was also true with my solar water heating system that cost $6,500 installed (in 1984) but was folded into a second mortgage. It added $11 per month to my mortgage and saved me $20 per month and is now paid off giving me totally free hot water. The ground-coupled heat pump I just installed (during the political convention this summer when they chanted "drill baby, drill) cost $10,000 more than installing a traditional heat pump, but should pay for itself in 4.5 years, with much higher quality indoor air quality and much more stable indoor temperatures. Just these renewable energy and energy efficiency applications — which were all absolutely cost effective — reduced my home's energy use by almost two-thirds.

Your question also applied to zero-energy building. For my home I have two kinds of photovoltaics (polycrystalline and 'peal and stick' modules for metal-seamed roofs) tied to a large deep-cycle battery bank (with 10-year warranties). Now the installed cost was $25,000 over time, which I financed at 8% for 15 years, requiring $238.91 per month compared to my levelized energy bill (electricity and natural gas) of $202.50. So I am paying $37 more per month than when I received conventional energy. But I also do not need surge protection or back-up energy for my home (Arlington has more than 4 outages per year over one hour). And by the way, approximately $70 per month is charged to me by both my electric and natural gas utilities as hook-up and transmission fees including tax whether I draw in one electron or therm from the electric grid or natural gas pipeline, or not.

Now I currently have some projects where I have been hired to facilitate the building of zero-energy buildings, and the $80,000 figure for both efficiency (including appliances) and renewable energy systems (including electric and thermal) is a good guide. But at least $60,000 of the improvements when financed in the mortgage are cash-positive the moment they are installed and financed. Obviously, the renewable energy additions for either off-grid buildings or places with time-of-day or true seasonal energy rates, are absolutely comparable and competitive.

For the rest of us residential owners, if installed and financed with thought, clean energy power systems are slightly higher than the traditional energy rates — whose resources are more polluting, less reliable, and offer poor power quality. So for me, the extra $445 per year saves me the costs I would normally pay for computer battery units and diesel-back-up or loss of appliances due to surges or replacing surge protectors (that my neighbors routinely pay for).

I expect it's dead-even economically if I just attribute these actual costs - but absolutely a bargain when I consider human health, global climate, and being a driver of the cleaner technologies for the new green economy. Aside from seeing my neighbors when they converge upon my home during power outages, it has been an honor to tour all the interested groups and individuals at my own buildings and installations to acquaint them with the many great commercial options available to consumers today.