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Home energy retrofits: Part two

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This summer I put our household through an energy efficiency retrofit. I was working on a research paper on energy efficiency, and then both the B.C. and federal governments announced new funding for their retrofit programs, so I engaged in some direct action research, staring with an energy audit of our home (more in part one). Over the summer I completed some projects around the house, then recently had the second closing audit done.

I basically aimed to harvest all of the low-hanging fruit, the actions that will be most cost-effective in cutting down on our heating bill. Most of this was less-than-sexy caulking around windows and on the stairs, tightening up the doors, and putting in foam gaskets in the electrical plugs on exterior walls. I installed programmable thermostats, which should better control for leaving the heat on all night downstairs by mistake. I spent an afternoon in our confined attic space, dodging nails sticking through from the roofing tiles, crawling around the joists holding the ceiling up, being sure to step only on beams so as not to crash through the attic floor, and packing insulation into place with an extendable ski pole -- it was a mix of rock climbing and caving, a physical feat of which I am proud but never want to do again.

One of the things I was excited about at the outset was the possibility of getting a heat pump installed. Because we have electric baseboard heaters, a heat pump is about three times more efficient at space heating because it sucks the warmth from the outside air (even when it is cold) and puts it into the house (similar to a fridge in reverse). Alas, after getting support for the idea from the audit, I contacted some contractors (approx $4-5,000 installed), did the math and found that a heat pump is just not cost effective. At best it had a payback period of about 12 years, and a useful lifespan of about 15. Even with electricity prices set to go up, and a combined federal and provincial incentive of $1,500, all it would take was one maintenance or service call and we'd be in the red. Plus, to install it, we would have to have units placed inside and out, and electrical connections made, meaning holes and drywall repair and ... at best we might save a couple hundred bucks over a 15-year period. So we bailed on the heat pump.

Some of the suggestions from the energy adviser seemed excessive, like changing our bathroom fan; others seemed dumb, like spraying expansion foam to prevent even more marginal air leaks (so that toxic fumes can off-gas in our more tightly sealed home?), and replacing toilets (what does this have to do with energy?). Overall, I think I did well on tightening up the air leakage, though when the overnight temperature dropped last week I noticed an alarming amount of condensation on the window frames that dripped into a pool by our window ledge. File that under unintended consequences.

Costs and benefits:

I have not got the final, final reports yet, and I'm told it could take eight months to get cheques from each of the feds and province, but here is how it looks. Total outlay on my part: $960 including $336 for both audits (the B.C. government also pays the auditing organization another $168 to subsidize the cost of the first, longer audit). I will get back $650 from the federal and B.C. governments for meeting certain targets. So, a total net expenditure of $310, which is basically the cost of the audits. And over the long-term, this investment will manifest itself in lower winter electricity bills, but it will take a few years to assess how much.

For attic insulation, I get back $250 from the feds, and spent $330, so a net cost of $80. I did mess up on this, however, misreading the report and putting only an extra R-20 instead of R-30, which would have qualified me for an extra $125 from the feds and $300 from the province. On the other hand, you cannot buy R-30 batch insulation easily and I would have had to pay for double the insulation. Still, attic insulation is basically fully subsidized by the combined federal and provincial programs (apart from the labour if you were to hire someone to do it, and given my experience up there, I can say that it is not for everyone).

The best incentives would appear to be for air sealing. I spent maybe $70 on caulking, new door sweeps and seals, and gaskets for electricity plugs and switches. I had to meet a federal target of 14 per cent reduction in air leakage to get $190 in incentive money. But I achieved more than a 26 per cent reduction, which qualifies me for an extra $120 from the feds and $100 from B.C. That's $410 in incentives, for a net gain to me of $340, for something that I should have done anyway because it saves money on heating bills. Some of the proceeds went into buying programmable thermostats, but overall the improvements paid for themselves (no charge for my labour) due to the combination of all the incentives.

Final thoughts

Every home is different in terms of starting point and size and climate, so there will be a range of outcomes. I'm the marginal consumer, the person the program is really meant to target, as I would not have made those changes in the absence of the program. Estimates from Natural Resources Canada point to about one-quarter of funds going to free riders, those who would have made upgrades in the absence of a program.

There is a basic market failure in all of this in the form of imperfect information. Like most people, we just paid our bills and really had no idea how a house operated as a system, what the big draws for energy were (heating and hot water are the top two for us and most homes) and what a more efficient home would look like (caulking, not new windows). Just getting the information about how our home rated and what to think about for improvement was liberating.

This stuff is pretty complex, including the patchwork of programs themselves. It can be a lot to wade through, and having a graduate degree in economics was an asset. Having a decent non-profit energy auditor was particularly informative (though I'm geeky like that), but you only really know the final tally after the fact (several years after the fact when you factor in reduced heating costs). So you do the improvements with a large dose of faith, and in the case of the heat pump I still see a fundamental uncertainty about upfront costs versus long-term savings for which my faith was insufficient to move ahead. The reports you get from the energy auditors speak only of energy efficiency and do not make any estimates around costs and benefits.

Also, this just happens to be a rare window when both federal and provincial programs are funded, and when they do come on-line they tend to get depleted quickly. Those programs are only accessible to homeowners who can put some cash upfront, and then only to single-family homes. So they essentially subsidize the households that do not really need it, which echoes comments I've made about various tax cuts I keep getting but did not really ask for.

That said, there is a public good aspect associated with gains in system-wide efficiency (less need for new generation capacity) and reductions in greenhouse gases. In that context we need more of these programs, not less, but perhaps aimed at older, draftier housing stock to get the maximum benefit of public funds. Unfortunately, retrofit programs for rental housing stock and multi-unit buildings have not really progressed beyond a few pilot programs. This is where the real benefits could be had for public dollars in terms of getting the low-hanging fruit, improving comfort and lowering bills for low-income households, and cutting down on the free-rider and rebound effects common to traditional retrofit programs.

This article was first posted on The Progressive Economics Forum.

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