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Saving Energy is Good

November 13, 2012

Like any other economic activity, the efficient use of energy is good for the economy.

This is especially true when there is little cost associated with making the savings.

If, however, it costs more to achieve the savings than the savings are worth, then, the effort is inappropriate.

Any major project involving the expenditure of large sums of money should be carefully evaluated to determine the return on investment.

For a homeowner, spending $15,000 to re-window the house is a large investment. Even replacing the central heating unit for around $1,500 is a large investment.

Most companies require a 20%, or better, return on investment. This is probably a good yardstick for most homeowners, cities and towns. The cost of the investment will be returned within five years.

There probably is a lot of low-hanging fruit that could result in savings with little investment.

There is also a great deal of hype about how much energy can be saved. Some say, for example, that we can easily save, as a nation, 40% of the electricity we use. Smart meters are, some say, the device that can result in large savings of electricity in the home.

Of course, you can save electricity by drying the clothes outdoors, and using an old fashion “push mower” to cut the grass, but should Americans be forced to revert to how their great-grandparents lived?

Why not see for yourself how much electricity can be saved without spending much money. It’s also a simple matter to determine the watt-hours saved and calculate the annual savings when a large investment is being considered.

Portland Gas and Electric (PGE) has been running short video clips on how to save on electricity1. For example, they demonstrate that using cold water generally gets the clothes clean, which saves on the cost of heating the water.

They also suggest determining how much “vampire” electricity is used when leaving appliances on when not in use. Anyone can easily do the same by getting a kilowatt meter and measuring the watts being used when appliances are not in use. For example, the phone charger that’s plugged in when not charging a phone.

One caveat: The PGE video equates 1 watt saved as equaling savings of $1 per year. This assumes the “vampire” watt is consumed 24/7 for a full year.

Going through this exercise will allow each person to determine how much they can save by turning off equipment when not in use, or unplugging such items as phone chargers.

This is the low-hanging fruit. Does it amount to very much?

If not, it raises the question of whether claims by extremists of huge, readily available, savings in electricity usage are valid.

Add the savings in “vampire” usage to the savings from switching to compact fluorescent lamps2 to arrive at the total readily available savings.

The probability is that the savings from switching to CFLs is greater than all the savings from eliminating “vampire” usage.

Extremists, such as the Aspen Institute, claim that huge savings can be achieved by replacing old windows or by re-insulating homes or by replacing furnaces with new energy star units. But these require large investments with very long pay-back periods.

Here is an example that doesn’t take into account the energy used to make the replacement windows.

Replacing windows in a home with 15 windows, not unusual for a two story home, could cost $15,000. Assuming this investment saves 15% on heating and cooling costs, a generous assumption, annual savings could be around $300.

Under these assumptions, it would require 50 years to pay for replacing the windows.

Some have estimated much higher annual savings of around $1,200.

With savings of $1,200 per year, it would still require 12.5 years to recover the investment.

Investing in replacement windows to merely obtain energy savings doesn’t make economic sense.

Claims that there are huge potential energy savings, if only we would look, are bogus.

It’s easy enough for people to check on the claims by merely looking at their homes and their energy bills. Obviously, if there is low-hanging fruit the savings should be grabbed.

But, for the most part, these savings have already been made. Not many people are blithely throwing their money away by ignoring easy to make energy savings.

It’s highly unlikely that the nation can make huge energy savings of approximating 40%, while maintaining the standard of living Americans have earned.

  1. For PGE web site go to
  2. For a 100 watt equivalent CFL, multiply 75 watts saved, times the number of lamps changed, by the hours of usage each day, by 365, by the cost of electricity. For example, when the number of lamps equals 5 and usage per day equals four hours: Multiply 5 *75*4*365 and divide the total by 1,000 to determine kilowatt hours saved. Then multiply this by the cost of electricity of, for example, $0.11 /kWh. Answer: $60 per year savings from replacing five incandescent bulbs used four hours per day, with CFLs.

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4 Comments leave one →
  1. November 16, 2012 10:41 am


    I just got a letter from a local HVAC firm stating: “This past year we have observed a disturbing pattern of heat exchanger failures on high efficiency (95%) furnaces of that age (8 to 12 years).” Unfortunately, when the heat exchanger fails it also takes out “inducer motor assembly.” To replace these two components of a furnace with a new heat exchanger, under warranty, will cost between $1235 to $2837 depending on who you have perform the R&R. Given an 80% efficient furnace has a MTBF of 20 years I wonder how a high efficiency furnace really stacks up when it comes down to the costs to operate the unit for the life of the system. And how the shorter time between MTBF effects the lifecycle energy efficiency calculations………….

  2. November 16, 2012 3:16 pm

    Thanks. Interesting.

  3. Chris permalink
    June 28, 2013 7:57 pm

    I think there is definitely opportunity for huge energy savings, but obviously the return on investment needs to be considered. I replaced my windows with energy efficient dual panes several years ago. However, I had just bought the home and it had the original aluminum windows when it was built (in 1969) and some of the single panes were even falling out. I had to replace the windows anyway, so the actual ROI was based on the upgrade from normal windows to the EE ones. That made it much more attractive.

    Last year I also decided to make the house more efficient by increasing the insulation and sealing the air ducts as part of the local power companies home energy audit promotion. The pool filter was also getting old, so I added a new efficient filter. As a result, I am seeing around a 25% to 33% reduction in energy with savings that will be paid back around 6-8 years. Not quite as good as a 5 year return, but if energy rates go up I could even get there.

    My Amana frigde is probably over 30 years old and still works fine. No reason to replace it even though newer models are much more energy efficient. At some point, it’ll break though, and I’ll be willing then to get one of the higher efficient models because the marginal cost will be worth it.

    So I think in many of these home analysis, the question isn’t really “should you ever replace it”, but “when will you replace it?” People remodel or buy new appliances all the time without concern of ROI simply because they want the new look or need a new appliance. If that is the case, the ROI is simply on the upgrade to a more efficient version, and not the entire cost as it’ll be paid anyway. If so, perhaps that mythical 40% savings can be reached even with high cost upgrades.


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