TITLE:
A Homeowner-Based Methodology for Economic Analysis of Energy-Efficiency Measures in Residences
AUTHORS:
Nelson Fumo, Roy Crawford
KEYWORDS:
Methodology for Economic Analysis; Energy-Efficiency Measures for Residences; Energy Savings in Residences
JOURNAL NAME:
Open Journal of Energy Efficiency,
Vol.2 No.2,
June
14,
2013
ABSTRACT: Residential energy-efficiency measures, besides energy savings, provide opportunities for improvement of thermal comfort, air quality, lighting quality, and operation. However, all these benefits sometimes are not enough to convince a homeowner to pay the incremental cost associated with the energy-efficiency measure. The objective of this work is to develop a methodology for the economic evaluation of residential energy-efficiency measures that can simplify the economic analysis for the homeowner while taking into consideration all factors associated with the purchase, ownership, and selling of the house with the energy-efficiency measure. The methodology accounts for direct and indirect economic parameters associated to an energy-efficiency measure; direct parameters such as the mortgage interest and fuel price escalation rate, and indirect parameters such as savings account interest and marginal income tax rate. The methodology also considers different cases based on the service life of the energy-efficiency measure and loss of efficiency through a derating factor. To estimate the market value, the methodology uses the future energy cost savings instead of the cost of the EEM. Results from the methodology offer to homeowner annual net savings and net assets. The annual net savings gives the homeowner a measure of the annual positive cash flow that can be obtained from an energy-efficiency project; but more important, the net assets offer a measure of the added net wealth. To simplify and increase the use of the methodology by homeowners, the methodology has been implemented in an Excel tool that can be downloaded from the TxAIRE’s website.