Home Improvements that Pay Off

The typical U.S. home spends 12% of its annual energy bill on lighting, nearly $265. And much of it is wasted. The incandescent bulbs Thomas Edison invented a century ago, that means most of that money was uses 10% of the electricity it draws to produce light and wastes 90% as heat.

More-efficient bulbs, such as those that will be stocked to the exclusion of traditional incandescents starting in 2012, cost more. But as a rule of thumb, every $1 spent on energy efficient lighting pays back $6 over the life of the bulb. By 2020, efficient bulbs will save the average household $85 in electricity annually, according to the Natural Resources Defense Council.

Compact fluorescent light bulbs, or CFLs, are 75% more efficient than incandescent bulbs. Switching all bulbs in the average home, then, could cut its electric bill for lighting from $264 to $66.

A typical incandescent 60-watt bulb costs about 50 cents, plus about $16 per year in energy, assuming average U.S. electricity rates and six hours of daily use. You can now buy a 13-watt CFL for less than $1, or a 5-watt CFL for about $2, plus at most $3.40 for electricity per year.

The savings are compounded by the long life of a CFL, which may last 8-10 times as long as an incandescent bulb.

The Energy Star logo does more than tell consumers that the bulbs meet high efficiency standards. For compact fluorescent light bulbs, it also certifies that the bulb is quiet, quick to light up, low in mercury. Energy Star CFls come with a two-year warranty and should last 6,000 hours.

There are now good CFL options for bathroom vanities, candelabra-syle fixtures, outdoor flood lights, outdoor post lights, and even ceiling fans fixtures.

You'll lose the benefit of a long-lasting CFL if you don't use the right bulb for the right fixture. CFLs aren't a good fit for some lamps. Rapid switching greatly reduces their lifespan, so don't put CFLs in closets or other areas where lights aren't used for 15 minutes or more at a time. CFLs usually don't perform well in low temperatures, so think twice before using them outdoors, in basements or other environments prone to cold. And only specially designed CFLs should be used in dimmers 3-way fixtures and ceiling fans.

If halogens make you think of super-bright floor lamps, and hybrids make you think of tiny Toyotas, think again. Hybrid light bulbs incorporate halogen and incandescent technology so that they screw into standard fixtures but use 10-40% less energy. Try them in fixtures where CFLs don't perform well.

Compared to the 50-cent 60-watt incandescent bulb that uses $16 in electricity per year, a 40-watt Philips Halogena Energy Saver light bulb will cost about $8.50 per bulb, use $10.50 in electricity and last about three times as long. It adds up to about $1.25 in savings over the life of the halogen bulb.

Philips recently won the Department of Energy's L Prize for developing a durable 60-watt replacement LED bulb that uses less than 10 watts. GE will unveil its 60-watt replacement LED this fall. But with the current market price for LEDs at $45 per bulb does it pay to switch?

Compared to the 60-watt incandescent that costs 50 cents per bulb and $16 per year in electricity, the Philips 12-watt LED uses just $3.12 in electricity per year and should last about 25 times as long. You'll pay off the investment before the end of the third year, and if the bulb lasts as long as promised, you'll save about $125 in electricity costs.

Just intalling a modern dimmer can shave as much as 5% off the electricity usage—80 cents a year per incandescent bulb. If you use the dimmer enough to cut energy usage in half, your savings jump above $8 annually. Dimmers can be expensive, but there are a number of options for about $15, like the dimmer switch from Lutron pictured here.

If you're using energy efficient bulbs, it will be a slower return on the investment. The same assumptions for a halogen produce about $5.25 per year in savings; or $1.70 for a CFL or $1.55 for an LED.

Commercial building managers long ago learned the value of motion sensors. That's why so many office spaces and bathrooms seem to light up only when you walk in. The same savings can work for you at home in hallways, on porches and in outdoor spaces. The savings will vary by the amount of time the light is used, but it's reasonable to expect a typical outdoor light might save 90% or more if it only clicks on when passers-by approach, and could easily pay for itself in less than a year.

These tips are based on the work of Brian Clark Howard, co-author of Green Lighting ($15 at amazon.com). PIck up a copy for more tips.

The bigger savings accrue over time, as the hot water portion of your energy bill drops 50-80%. A typical water heater can account for as much as a quarter of a household's energy bill, at a cost of about $475. In other words, you might save roughly $240 to $$380 a year after installing a solar thermal system.

At that rate, after federal tax credits, it could take 10 years or more to recoup the cost of installing a solar thermal system, making low-interest financing a key to making it pay.

One Block Off the Grid is an innovative company that claims to save most consumers about 15% by streamlining the process of going solar (whether by purchasing or leasing solar panels) and organizing groups of buyers for bulk purchases.

This summer, 1BOG, as it calls itself, unveiled a first-of-its-kind solar calculator that lets you estimate your personal payback, based on local utility rates, credits and incentives from all levels of government, and 1BOG's pre-negotiated deals with solar panel distributors.

In their book Geothermal HVAC, Jay Egg and Brian Clark Howard draw on Egg's 20+ years' of experience to estimate the cost of installing earth-coupled, ground-source or ground-loop heating and cooling systems.

Popularly known as geothermal heating and cooling, these systems harness the even temperatures underground and use a heat exchanger—similar to those used in air conditioners—to pump warmer air into the home in the winter, and cooler air in the summer. The following ROI estimates are based on Egg's calculations.

The total cost of an earth-coupled ground-source or ground-loop heating and cooling system is steep, estimated at $42,400, nearly double the cost of a new high-efficiency HVAC system, which Egg estimates at $22,000. But the sticker price is only a small piece of the puzzle. To see how that up-front cost turns into a savings of nearly $40,000, read on.

Through 2016, geothermal systems qualify for 30% income tax credits. That includes 30% off Energy Star-rated equipment, 30% off labor and 30% off installation, which is good, since a big chunk of the cost comes from excavation needed for piping. The credit must be applied to a residence, but it need not be the primary residence. Additional geothermal incentives may be available from state or local governments and utilities.

Savings: $12,720 or more

A ground-loop system with a heat exchanger will provide your home with all the hot water it needs, so you won't have to pay to heat water anymore. The average homeowner spends about $500 on hot water annually, according to the Department of Energy.

Savings: $500 in the first year, and $14,889 over 20 years (assuming a combined 4% annual increase in water-heating prices and inflation).

A ground-source system will nearly zero the cost of running a furnace in the winter and an air conditioner in the summer. There's a small electricity cost to run the pumps, but that's a whole lot cheaper than fuel oil or gas for the furnace, and electricity for a central air conditioner.

Savings: $1,617 in the first year, and $48,151 over 20 years (assuming the same 4% annual cost increase).

Geothermal systems should require little maintenance and repair. Furnaces and air conditioners should get annual maintenance, which Egg estimates at about $500 annually.

Savings: $500 in the first year, and $6,289 over 10 years.

After savings, the cost of the system in the first year amounts to $27,063. (If you're building a new home and consider the geothermal system as an alternative to the high-efficiency HVAC, the difference in cost is about $5,000.)

Adding up all savings gets you about $2,617 annually (plus 4%) for the 20-year life of a geothermal system, and you reach the $5,000 mark in less than three years, after which you'd save $61,000. You reach the $27,000 mark for a retrofit around year nine, after which you'd save nearly $40,000.