What It Costs to "Green" an Existing House

From building an addition with solar paneling to laying new shingles for the roof, Deep Energy Retrofit is not cheap.

Doing a Deep Energy Retrofit (DER) of your home is not cheap. In fact, it can cost thousands of dollars, depending on how energy inefficient your home is.

Think of a DER as energy efficient home improvement on steroids. It's not about changing light bulbs or even just replacing a few windows. It involves evaluating the overall structure of your home and how much energy it "loses" through doors and windows, heating and cooling, water heating, lighting and appliances — and then making improvements to the building to limit this energy loss.

Jeff Wilson is shelling out $50,000 from his own pocket to finance a home addition and DER to his 1,000-square-foot Cape Cod home. After that, Jeff will be tapped out — and this cash limit, he admits, has sparked some creative thinking and research, such as taking advantage of a bevy of government incentives and tax breaks and partnering with suppliers who share his passion for the project.

Jeff emphasizes that for him, dollars and cents are a bonus from the project. His purpose is to show that a retrofit of this scale can be accomplished by homeowners using materials that are readily available. "I wanted to apply the best practices and products in 'off the shelf' energy efficiency technology for the home and see where it led us," he says.

The goal is for the DER to lead them to savings. But exactly how much is difficult to pinpoint.

The Cost Variables

There are several cost variables with Jeff's DER. First, the Wilson home has an energy advantage over the "average" American home, which is 2,500 square feet, according to Jeff. With a home measuring only 1,000 square feet, the Wilsons consume less than half the energy a typical homeowner uses without improvements, explaining why the family prefers smaller homes. Gas and electric bills average $150 per month pre-DER.

Second, Jeff has forged relationships that have resulted in donations of materials. For instance, lumber. Jeff estimates about $50,000 in total donated materials, bringing the total project cost for retrofit plus home addition to $100,000. The home was appraised at $160,000 in summer 2009 when Jeff took out a home equity loan for $50,000 to finance the improvements.

Finally, Jeff's DER project includes two distinct components: an energy efficient home addition of 350 square feet and a retrofit of the existing structure.

The DER Price Tag

The home addition includes solar paneling that will allow the Wilsons to be completely energy independent and pay off the system within 6 or 7 years. As for budgeting, Jeff says that the bulk of his $50,000 was consumed by the solar panel system, which cost $32,000. He was able to bring down that cost to $14,000 through an $11,000 grant from the State of Ohio for their Residential Solar Assistance Program, along with a $7,000 federal tax break.

As for retrofitting the existing structure, the Wilsons started with a Home Energy Rating System (HERS) audit, in which a professional energy auditor comes to the home and conducts diagnostic tests to identify air leaks and gauge the building's energy loss.

Jeff used the audit report as a roadmap for his home improvements. The home received an 87 HERS rating (the HERS baseline score is 100). A score higher than 100 means a home is relatively inefficient; a score of zero means the home uses only the energy it creates, such as through solar or wind power.

Ultimately, Jeff plans to compare energy saved and money earned back through this DER by seeing how close he can bring his 87 HERS rating down to "net zero."

For practical purposes, Jeff outlines some basic costs of energy efficient improvements he initially made to the home.

  • Roof: Replacing the roof involves laying new shingles over the old, which was a $6,000 project for Jeff at $3 per square foot. He added 50 percent more to that ($3,000) by adding Foam It Green spray-foam insulation to more than double the insulation. "But you'll never replace that insulation again and it will give you 100 years of energy savings," Jeff says, easily justifying the expense.

  • Siding: To replace the siding and wrap the home in energy-efficient cellulose insulation (applied by spraying on the material), Jeff figures $5 to $5.50 per square foot. That includes labor, materials, spray foam, house wrap and fasteners — everything required to get the job done.

  • Windows: Jeff replaced the front door and nine windows, opting for triple-paned gas-filled models — the gold standard in green. Cost depends on the manufacturer and whether you install windows yourself or hire a contractor. Four of the windows were specialty, he adds, guessing a total $10,000 to $12,000 value for all donated windows and the door for the retrofit.

Meanwhile, outside of the DER budget, Jeff has made other improvements to the home over the last seven years. Estimated cost for those items are as follows:

  • Tankless hot-water heater: $1,000
  • 97-percent gas efficient furnace/A.C.: $5,800 (entry cost for a unit like this would be $3,800)
  • Front-loading washing machine: $400 (uses one-third of water per load)
  • Refrigerator: $700 (Energy Star)
  • Gas convection range: $800 (Energy Star)

How You Can Cash in on Incentives

The best way to measure how much energy you consume vs. what you could save is to get a HERS test, which will examine every aspect of the home and provide a detailed report and recommendations. With HERS test results in hand, Jeff recommends seeking out funding available for homeowners committed to making energy efficient improvements. "You'd be surprised how much help you'll find," he says.
So far, Jeff has cashed in on these incentives that go way beyond covering the HERS test. All this makes his home-efficiency project more affordable:

  • $11,000 grant from the State of Ohio for solar panels
  • $7,000 federal tax credit
  • $5,000 to $6,000 over a 5-year period for selling Solar Renewable Energy Credits

Additionally, Jeff is only paying 2.75 percent for the home equity loan for his retrofit because of a "prime minus 0.5-percent offer," plus he can take a $1,500 tax credit on efficiency materials purchased for the project. He expects this dollar amount to increase over the next couple of years.

Most gas and electric companies will give you rebates of hundreds of dollars on a new, high-efficiency furnace or geothermal heat pump before you even take the federal tax credit, Jeff adds.

Next Up

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