ENERGY PAYBACK

Koala Insulation provides the full range of services to improve energy efficiency and comfort.

Evaluating the payback period of a given energy efficiency upgrade involves several variables. We can recommend a few energy upgrade payback calculators, but some factors are more nuanced and don’t fit into a simple calculation.

To help you look beyond a website calculator, we’ve laid out how to take a closer look at the benefits of an efficiency upgrade like insulation. It’s much more complex than plugging in numbers for a certain type of insulation material. A good decision-making process involves more than a calculator can account for.

When considering an energy efficiency upgrade, there are dozens of factors that a homeowner or other building owner must consider. Sorting it out can be complicated.

Some types of renovation projects are driven by emotion and desires. If you’re a homeowner, you know this well. You have a vision for your ideal kitchen and ideal bathroom: once you know what you want, you figure how to make it happen, get the work done, then sit back, relax, and enjoy it.

But you’re unlikely to have an emotional attachment to air sealing or insulation. There’s a list of gut-level positives attached to remodel projects like kitchens (great for entertaining!) and bathrooms (so relaxing!) that’s lacking in “out of sight, out of mind” needs.

When the upgrade is unseen and you’re only trying to avoid losing money, being uncomfortable, or preventing damage in the long run, the more analytical side of your brain kicks in—this can be a good thing if you know what to analyze and how to do it.

Check out the chart below for a look at what we mean by that. It’s about determining your priorities. Consider what you’re willing to invest upfront for later energy savings along with each method and material’s pros and cons. If you have any questions about an option, your needs, and what option best fits your needs, we’re here to help!

When the upgrade is unseen and you’re only trying to avoid losing money, being uncomfortable, or preventing damage in the long run, the more analytical side of your brain kicks in—this can be a good thing if you know what to analyze and how to do it. 

Property value

  • How long will you be at the property? Will the improvement increase its value?
  • When you sell, what is a buyer most likely to notice and pay more for?

Energy costs

  • Are there tax credits available?
  • Are there utility incentives available?

Improvement costs

  • Which efficiency improvement gives the biggest return on investment?
  • Can you finance the work with a low-interest loan? The lower your borrowing costs, the better the investment.
  • Will there be any maintenance costs associated with the energy improvement?

Timing

  • What’s the best time to make improvements?
  • How will energy costs change in the future? Next year? Five years? Ten years?
  • What is the expected lifetime of the measure you are contemplating? A long-lived measure like attic insulation is likely to be a better investment than the purchase of short-lived equipment like a new water heater.

Environment

  • How much do you value the environmental benefits associated with reduced energy use? What is your responsibility to limit the impact of global warming?

Health and comfort

  • How much more comfortable will occupants be after an upgrade?
  • How will that comfort feel?
  • How much better will the air be inside the building? 
  • What effect will that have on the people in it?
For Homeowners

Mike Guertin of Fine Homebuilding recommends using the Energy Star Home Energy Yardstick to learn how your energy use at home compares to your neighbors’. If you don’t score an 8 or higher, Guertin recommends taking a serious look at what steps would improve your energy efficiency and cost.

Take the time to determine what you can expect from an energy efficiency upgrade after it’s done—how much money will you save, how long will it take to earn back in savings what the improvement cost, and how will you feel in your home or other building after the airflow and temperature is stabilized?

Energy payback calculators:

  1. Fine Homebuilding - Insulation Upgrade Payback Estimator
  2. Energy.gov - Cost Savings Calculators for Energy Efficient Products
  3. Energy Star - Calculating Returns on Energy Efficiency for Facility Owners and Managers