Solar heating installation (C) Daniel Friedman Balance Energy Expenditures for Maximum Return on Investment

  • ENERGY SAVINGS MAXIMIZE RETURNS ON - CONTENTS: How low should the BTU/hour loss be on an old, leaky wood frame house before adding solarizing with solar heat?
    • How should the basement be insulated - around the perimeter or under the first floor?
  • POST a QUESTION or READ FAQs about how to prioritize spending on saving energy in buildings: priorities in reducing electricity bills, heating bills, cooling bills
  • Solar Age Magazine Articles on Renewable Energy, Energy Savings, Construction Practices
  • POST a QUESTION or READ FAQs about calculating the return on energy savings investments

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This article explains the basic priorities of steps to take in reducing building heating or cooling costs to obtain the maximum economic return when installing solar heating systems.

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How to Maximize the Return on Energy Savings Retrofits & Solar Energy Systems

Balancing Act - how to get the most return on energy efficiency investments

Brick lined wall retrofit (C) Daniel FriedmanQuestion:

I understand the importance of insulating a house before installing any solar space heating system. (See INSULATION LOCATION - WHERE TO PUT IT).

How low a Btu/hour value should I attain in a 60-year old, leaky, wood frame house before solarizing? The house is 1900 square feet, has oil / hot water heat, and is located in Maryland (4000 heating degree days).

Also, how should the basement be insulated - around its perimeter or under the first floor?

Our photo (above left) shows a building insulation retrofit project in process where the owner was removing the original brick wall lining to install building insulation. Details of that project are at BRICK LINED WALLS.


If you want to get the largest return on your investment in building energy efficiency, you should balance your expenditures on

  • energy conservation
  • solar energy
  • auxiliary equipment

so that your economic return is equal for each.

Whatever analysis you use to make economic decisions

  • Simple payback calculation on energy savings projects - how many years until the energy savings pays back the cost of the energy improvement
  • Life-cycle costing calculation on energy savings projects - adds consideration of the costs of maintenance, repair, replacement of the energy improvement
  • Return on investment calculation on energy savings projects - adds consideration of the alternative rate of return if the money spent on energy improvement were invested elsewhere

you should apply the method fairly to each part of the house. How much you want to spend in total will depend on what return on your money you find acceptable.

Law of Diminishing Returns on Energy Savings Investments

In general, the first dollars invested in energy savings will bring larger returns than later dollars due to the law of diminishing returns.See ENERGY SAVINGS PRIORITIES for details.

To be fair, you should apply your cost accounting only to the energy cost of a building part, if it serves another function (for example a window decoration, structure, or added living space).

In the case of an upgraded heating system, you should consider the added cost over the conventional equipment that you would otherwise install. There is a good deal of fudging and judgment in all this and plenty of room for common sense.

Placement of Basement Insulation

As for basement insulation, either approach will work. Of course, if you want a heated basement you should insulate the perimeter. Also, if you insulate the floor above the basement, you increase the risk of freezing pipes in the basement.

If the basement is mostly below grade and has no leaky doors and windows, this shouldn't be a problem in your climate.

See INSULATION LOCATION for BASEMENT for detailed suggestions about basement insulation. Also see INSULATION LOCATION - WHERE TO PUT IT.

The question-and-answer article about energy savings investment strategy when adding solar heat, quotes-from, updates, and comments an original article from Solar Age Magazine and written by Steven Bliss.

Original article

The link to the original Q&A article in PDF form immediately below is preceded above by an expanded/updated online version of this article.

  • Q&A on Balancing Act - how to get the largest return on investment in energy efficiency - PDF version, Use your browser's back button to return to this page

The question-and-answer article below paraphrases, quotes-from, updates, and comments an original article from Solar Age Magazine and written by Steven Bliss.

Readers should also see ENERGY SAVINGS PRIORITIES and see the collection of energy saving articles at ENERGY SAVINGS in buildings. Our page top photograph shows solar panels, both photovoltaic and domestic hot water heating systems, on a rooftop in Surprise, Arizona. The accompanying text is reprinted/adapted/excerpted with permission from Solar Age Magazine - editor Steven Bliss.

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