Ultra-efficient house that uses a whole house systems approach to energy. Uses no more energy than its renewable energy system can produce. (Photo: Building Science Corporation via energy.gov/energysaver/articles/whole-house-systems-approach)
Conserving energy was second nature to me ever since I grew up in Holland in the 1950s and 1960s. Memories of scarcity in the ‘hunger winter’ of 1944-45 were still all around. In my first apartment in Rotterdam in 1973, I switched out my incandescent ceiling lights with (indirect) fluorescent lighting. Since 1979 until I sold it in 1998, I pursued one energy efficiency upgrade after another in my Norwalk, Connecticut home.
However, it wasn’t until I became involved in the economics of clean energy, which I now do professionally, that I finally figured out how I really fared. The bottom line is that energy efficiency is of secondary importance. It should not be the first order of business because that will merely make a bad system better. My lesson in a nutshell: renewable energy adds more value to a home than energy efficiency ever can. I should have implemented a whole house systems approach to energy.
Only Making Energy Efficiency Upgrades is Like Putting Lipstick on a Pig
I learned the hard way that we are likely to fall into the trap of putting lipstick on a pig if all we do is make our home more energy efficient. Upgrade fever is so incredibly wasteful because junking that old appliance prematurely increases waste, and it’s probably not a sound decision when all is said and done. We justify the purchase of a new appliances by touting its ‘efficiency,’ and then we compound the mistake by buying it on credit. Then it becomes really inefficient! (Link here for an excellent New York Times article by John Tierney on the ‘rebound effect’ and ‘Jevons Paradox’.)
Consider a Whole House Systems Approach to Energy
Before you start making things more efficient, it pays to ask if that’s really your best option. I should have implemented a categorical whole house energy plan first, instead of incrementally spending money on presumed ‘energy efficiency’ upgrades, which included a switch from oil to gas. As noted on the U.S. Department of Energy website: “Using a whole house systems approach – considering the home as an energy system with interdependent parts, each of which affecting the performance of the entire system – it’s possible to design and build or renovate a house that produces as much energy as it uses over the course of a year.”
For those twenty years in my Connecticut home, I spent a fortune on things that sounded good and felt good, but quite possibly did not add up in the end. I began to realize this when I sold the house. Without a plan for a whole house systems approach to energy, I made decisions that later locked me out of other better choices I had not yet thought about. But I kept going on the ‘installment plan’ at the time.
Eliminating 30 Years of Utility Bills for a One-Time Investment
I first replaced my water heater that had been on a coil in the boiler with an ‘efficient’ one, and when gas came to our neighborhood, I then replaced my old oil furnace with a modern gas unit, and the math seemed to work. But in retrospect, I should have done my homework, and bit the bullet for a whole house Geothermal HVAC System much sooner. (Link here for an informative National Geographic article that debunks Ten Myths About Geothermal Heating and Cooling.)
With 400% efficiency (input electricity, output heat/cooling), I would have massively improved the value of my property, because it would have been paid off by the time I sold the house — by then I would have been selling a house with next to no heating bills! In Connecticut no less! (Link here for a simplified breakdown by Esquire on the average cost and savings of a Geothermal HVAC system.)
The investment trap is that saving energy only goes so far – you’ll still have utility bills. But with real renewable solutions, where you are generating energy on premises from clean sources, you are permanently eliminating the next 30 years of a good portion of your utility costs, for a one-time investment – even if you pay for it over 7 or 10 years.
Know What System You Are Making More Efficient — And Why
As a society, we are never going to switch to renewable energy if we keep on investing in making fossil fuels more efficient. Steve Hallett’s book, The Efficiency Trap: Finding a Better Way to Achieve a Sustainable Energy Future [Prometheus Books (April 23, 2013)], should be required reading for the energy efficiency crowd. He goes beyond the Jevons Paradox, showing how continued ‘efficiency’ improvements to the wrong system (fossil fuels), results only in an ever greater dependence, more pollution — not less — and an ever more brittle infrastructure.
Today, NYC is a case in point. The switch from oil to gas for heating, when often times a direct switch to renewable energy might have been possible, made the city less resilient— not more— and after Hurricane Sandy, it turns out resilience is what we truly need.
Government Needs to Get With the Renewable Energy Picture
Recently, I responded to the New York State 2014 Draft Energy Plan and pointed out the same logic (Link here to see my detailed comments on the plan). Oddly enough, we now have a commitment to 50% Greenhouse Gas (GHG) reductions by 2030, and 80% by 2050, except the details of the draft plan too often are more of the same. They are full of incremental energy efficiency improvements that add up to a whopping 15-25% reduction in GHG, and will never get us where we want to go.
That’s why Steve Hallett points out “the road to hell is paved with efficiency.” We’ll just burn fossil fuels at a slower rate, but we’ll burn them longer, so the uncritical pursuit of energy efficiency is counterproductive. That kind of efficiency achieves the opposite of what we thought we wanted, because we’re making the wrong system more efficient, instead of figuring out how to switch over to a new system — in this case, renewable energy — which is the only thing that can reduce greenhouse gas emissions.
How Valuable Will the Upgrades Be to the Property as a Whole?
Financially, the sellers of all these terrific energy efficiency widgets and appliances talk us into buying them by pointing out the payback from the savings provided by their technology. Sound financial decision-making should evaluate purchases based on what value the upgrade adds to the property as a whole. This means you need to have a long-term plan of where you are going: will you rely on fossil fuels, or renewable energy, or both? Before you’ve decided what the plan is, you won’t know what it is you are actually making more efficient. Maybe I’ll do a better job with the next house… These days, I try to reduce waste, of energy or otherwise, as rationally as possible, and teach others to do the same.
Editors Note:
Readers of this article may be interested in William Maclay’s book, “The New Net Zero: Leading-Edge Design and Construction of Homes and Buidings for a Renewable Energy Future.”
A helpful review of the book is available here.
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Hi Rogier,
I very much enjoyed your article. This is a concept I’ve struggled with working in the environmental field as it makes me question other “efficient” practices as well. For example, automotive companies are now producing electric cars, but there’s little attention paid to the fact that when we plug those cars in we are still charging them via fossil fuels. It’s a better alternative to gas, but it’s not the long-term solution. Furthermore, it leads people to buy a new car instead of used, which strains multiple resources.
I do, however, have to say I disagree with some of the issues you’ve raised with energy efficiency upgrades when talking about the multifamily sector. Many non-profit organizations that work on apartment buildings (in NYC through NYSERDA funding, for example) are utilizing what it available to them to make buildings more efficient, healthier, and cheaper for residents. These organizations and programs only replace big appliances like boilers and refrigerators when they have reached the end of their lifespan and the best option to replace them is with efficient versions. This also makes a energy efficiency accessible to those it had previously not been available to– renters. Many city buildings are not at the end of their lifespan, but cannot be overhaul retrofitted to run completely on renewable energy. So I do say, that if one has control over a single-family home to make choices that have long-lasting impacts on energy source and use, then yes absolutely don’t just jump to efficiency upgrades. In the multifamily world however, upgrades are often the best (and only) option, and I don’t think we should ignore their value!
Thanks again for the post,
Katherine
Hi Katherine.
I beg to differ re multi-family. There is NO excuse for wrong economics, regardless if the building is owned by a not for profit or not. The NYSERDA MPP program provably produces inferior financial and economic decisions, it serves mainly the fossil fuel industry, and neither the environment, not the owners, nor the tenants. I
am on record saying that in any number of venues, including to NYSERDA
itself. We can do, and must do far better.
Hi Rogier,
I am an emerging green professional and I have a question. I wanted to get an idea of your thoughts on the SBC (systems benefit charge) that all New Yorkers pay. Regardless of whether you are your electric bill comes directly through ConEdison or an ESCO, you are required to pay this charge. This charge, taken from every bill is directly inserted into the vault of the Public Service Commission and then sprinkled down within the government (Primarily NYSERDA programs). What I am asking is. Does this charge that we are all, for lack of better words, forced to pay, and does it seem like the state is forcing our hand in the direction that they want us to go with energy efficiency.
Through my experience with the U.S. Solar Decathlon (a national collegiate contest that helps showcase net-zero houses), I have seen first hand how good design, pragmatic planning and today’s existing technology can make net-zero houses affordable and practical. Today, net-zero homes are not only pragmatic, but can be ordered online, built in a factory, and trucked to your site…but that is a whole other discussion on the benefits and rationale of pre-fab, good architecture, and ditching our out-dated construction practices.
While I agree with Roger’s comments, I would not wholesale dismiss the need to promote individual, incremental energy efficiency practices, simply for the fact that as a society (in the U.S.) we are increasingly mobile and moving away from long term-home ownership. Making the business case for large EE investments is tough in a short-term investment case.
As an example, in my career as a corporate communications pro in New England, I have moved every 4-6 years. Many of my colleagues move more frequently. Houses today are built to be “flipped” after 7,8,9 years. The cookie cutter approach to ‘McMansions’ and architecture is about economics and market place trends, not necessarily about long term, custom solutions for individual homeowners. I can’t imagine actually living in one spot for 15 -20 years. 🙁
In the meantime, taking simple steps like fully insulating your home and investing in simple home automation products can drive better ‘operations’ and make energy usage more transparent. Sure, these benefits may be small, but it is akin to getting all motorists to ensure their tires are fully inflated. Would I expect to see my milage improve? No. But in aggregate, it does have a positive impact across the system.
Hi Chris:
I disagree. The whole point of RE (Renewable Energy) vs EE (Energy Effiency), is first off that mathematically, EE is a secondary, not a primary objective function. So the real discussion is about RE versus Fossil Fuels, and the point would be that whichever system is better for a given property, you would do so as efficiently as possible. Energy Efficiency is not an objective in itself, and if you start blindly spending money on EE, you end up the (most likely fossil fuel-based) infrastructure in place more efficient, which might not be in your best financial interest. If people do their financial homework, RE will move energy from liabilities to assets, and thus come back in capital appreciation. And as we get more and more disclosure of energy information for homes, this will become stronger and stronger.
A whole home energy approach is fine where it is practical and economical. Like me, 63 million Americans live in homeowner associations with restrictions that often make solar, wind and geothermal less than automatic. What I think most Americans need is a road map of improvements like is easy to understand for water efficiency, where toilets are the biggest offender, using 27% of the average home’s water, then showers at 17% and so on. As energy costs climb, that cost may become more of a factor in selling prices. Once one maps out a path to energy improvement in terms of costs and payback and resale, then compares that to alternative homes, it may just become a game of musical homes and be more effective to move into a really efficient living space.
There’s no questions that such associations, coops and condos have their own set of problems, but eventually it will all revolve around asset value at that level and these bodies will have to deal with it if they restrict the ability of their members to improve the value of their asset. So before all is set and done, I think lawsuits will fly, and the only way out in any forms of collective ownership is a completely rational policy of maximizing long term asset values, if need be with 3rd party verification. And RE will increasingly win out, because it moves energy from liabilities to assets. In fact PACE financing was made to make this possible, and many states have commercial PACE programs even if they do not yet have residential ones.
Rogier,
I also hear what you’re saying- we can’t hide behind small, quick, fixes forever. Renewable Energy, I think, will really only become a standard when the energy systems we have in place are challenged and the market (energy consumers) demands change on a local and national governmental level. However, I don’t think the average joe in the US really grasps what that means or where to begin to do that. Even though RE in the long term will be more sustainable, don’t you think that EE is a gateway for people to enter into the conversation being held? I think EE is a least an introduction into how one can change their lifestyle or spending habits to be a part of a solution. Not everyone can run the marathon without first running a mile.
Hi Rachel, unfortunately, the opposite is the case. Pursuing a path of “energy efficiency” first is the best prophylactic against EVER adopting renewable energy. The first thing to do is to ask yourself “energy efficiency of what?” Well of your fossil fuel system of course! So you’re going to start out throwing good money after bad, with the thought that eventually when there’s nothing left to do, we will become desperate enough to switch to renewables. The reality is that if people do their financial homework, and evaluate energy investments over the life of the building, many a time you can devise a strategy to cut a property over to a significant renewable energy infrastructure. It is economical far more than people think, because they start frittering away their money, sometimes for decades (I did!) before they notice that they are not getting the return they thought. The mathematical reason is that energy efficiency has diminishing returns (it is a limit function), so you get to a point where never mind what you spend, you will make no progress. Only politicians would love a proposition where you can forever claim you’re making progress, while in actual fact you’re making sure that you’ll never get there. So first you choose your source(s) of energy, and on a long term basis, and then you plan your “efficiency” strategy around those infrastructure choices. And depending on which path you follow, the choices will be very different, to the point that if you don’t plan, you may inadvertently lock yourself out of economically worthwhile choices.
An energy audit is a great first step for a healthy and more energy-efficient home. An auditor can identify opportunities to air seal and insulate – cost effective measures that reduce the amount of oil, gas or electricity we actually use- whatever the source. I am a certified home energy auditor and have evaluated hundreds of homes throughout Westchester, NY. There isn’t a home (except a new, high-performing home) that wouldn’t benefit from measures to tighten up (without becoming too tight). In terms of adding value to your home, insulation is the best investment, with the shortest pay backs and the biggest win for the environment.
Hi Jean: I generally would agree with the practical value of the energy audit, who would not? However, more important than the audit, which is a fact finding mission, is the plan, the conceptual framework. For most folks, their home is their major asset, and they should be treating it like a serious investment. So BEFORE the energy audit, comes the financial plan, and that must take a life-cycle approach to the property and its major energy systems, so you can start to pre-plan, and make your energy efficiency choices in the context of the long term plan for your energy choices. Unfortunately, most folks start like chickens with their head cut off once they see an audit, and prioritize based on the highest payback of individual expenditures, but this is a financial death trap because of the simple mathematical fact of diminishing returns. People need to prioritize based on the highest investment return, not based on the shortest payback from marginal energy savings. So, the energy audit is valuable information, but it can’t be used for guidance, unless it is framed in a proper financial plan for the property.
Hi Rogier,
I too have learned that it is best to tackle energy savings from a holistic approach. There are two schools of thought: first is invest all you can into a thermal envelope of the house, this way who cares about renewable energy when you can heat the house with a hair blower. Second is go full out with renewables like geothermal and solar. When we needed to update our house we had a choice – geothermal, air to air heat pump or gas. After all sorts of calculations I decided to go with a rather new tech gas condensing boiler (we have radiators). I have to respectfully disagree with you that with geothermal your energy bills would be close to zero because Geothermal is still a heat pump that runs on electricity. Even in Europe, where gas price is high, geothermal does not provide a huge advantage over modern gas burning appliances. Its definitely not as straight as the makers of heat pumps make it look especially when you factor in rising electricity prices. Now if you also have solar to power up that heat pump, then its another story. 🙂
Hi Tad from San Jose:
Generally I don’t much disagree with you, but the devil is in the details, and one example I run into is that there are interdependencies, and you CANNOT finalize your planning for making the envelope tighter until you finish up your planning for the sources of energy. One of the big ones is, are you going to be able to switch from gas to electric for cooking. If you can, you’re eliminating a lot of indoor air pollution, and you and generally pursue tighter windows etc, and probably go with heat-recovery ventilation.
THE mystification is that people speak of “energy efficiency” without realizing that they are perpetuating the current system, without first wondering if it’s the best possible system. Therefore, I simply say the mathematically correct thing, that “efficiency” is a secondary feature, an attribute, which is equally relevant either in the FF (Fossil Fuel) or the RE (Renewable Energy) case.
Tad: As to your geothermal comment – here like in any other technology choice it is all dependent on circumstances. There are many for whom geothermal is the best choice, and they end up supplying the electricity largely from solar and/or wind, or chp. My focus tends to be on getting the correct analytical framework first.
Rogier, could you outline a cost comparison of a furnace upgrade versus a geothermal HVAC system over the course of say, 10 years? Your analysis is valid, but I have to clarify that it may not be attainable for all socioeconomic groups. For these groups, I would argue that increasing awareness of these issues with smaller initiatives is still a step in the right direction. I also would like to know if you have ever participated in rebate programs for your projects, and what your opinion on these various incentives is?
Hi: Comparing a furnace upgrade to a geothermal HVAC system over 10 years?
That is hardly a valid way to analyze the problem. The only valid approach is to start out with a 30 year cash flow for the energy costs of your property, because major equipment has that sort of lifespan.
And then you compare that scenario to the alternatives. Take replacements into account. On that geothermal system you’ll replace the compressor at least once in that 30 years, maybe twice, but not much else. The geothermal well usually comes with a 20 year warranty, but many last 30 or 40 years, and you could allow a small amount probabilistically in the out years. What matters is is the consistency of your assumptions. You are never going to be right anyway, but reasonable approximations matter.
In principle it should be income independent, for if you can afford the energy bills, and you can get financing so that its self-liquidating from savings, even if that were 15 or 20 year financing, but the equipment lasts 30 years, you’re ahead, for you’d have 15-20 years of payments and at least 30 years of energy. You oil company can’t match that…
There is something hellaciously wrong to stick poor people with substandard solutions that will cause them to sink faster? Interestingly there was a net zero low income housing project in Philadelphia which recently won an award: http://www.generocity.org/raise-of-hope/ in other words if your money is tight it is very important to make the right decision, instead of squandering the little that you do have on temporary fixes that will never get you out of trouble. The message also is that netzero or near zero is becoming the benchmark, and buildings who can’t come close will rapidly lose value in years to come.
Rogier,
Some great dialogue going on here. In concept I agree with your approach. The meaningful changes have to start at the top of the supply chain and our sources of power should certainly be greener. That being said, I’m sure we could agree that if there are things that homeowners need anyway as a part of modern life (appliances, lights, electronics) that they should be the most efficient likeness possible.
As an architect, I think some of the biggest opportunities for positive impact are still one step above supplying green power. As is with the case with efficiency, there is a difference between using stuff that is better and simply using less. Ultimately our homes are filled with spatial inefficiencies, especially in the U.S., that are reflective of antiquated modes of living. Things like formal living rooms and dining rooms are a great example–spaces that most people feel like they should have, but rarely use. Making homes smaller and more spatially efficient saves more than even a switch to greener power.
Not only do smaller homes use less energy to run, they use less resources to build and maintain. Most often, some of the ways to trim excess square footage are in spaces that we wouldn’t miss it anyway. To become a more sustainable society, we need to do more than making our wasteful lifestyle more efficient. We need to simply use less.
I agree, it will take all of that. In general your case is of somewhat less interest to me in the sense that it is easier to “get it right” if you’re designing from scratch, but on a societal level there are more old buildings than new, and retrofits will be the real challenge for the next 20-40 years. Not enough is being done as of yet to address that market, and what we do do tends to be counter productive, such as the unthinkingly throwing good money after bad, when all you’re doing is making fossil fuels more efficient, and maintaining your addiction to oil, gas, etc. when a renewable alternative might have been economical, only we never looked in the first place.