Justifying Energy Efficient Upgrades
Energy efficient upgrades or new construction are just like any other business investment and must not only pay for themselves over the useful life of the improvement but also provide a return to the purchaser in order to justify the initial capital outlay. There are many energy saving techniques on the market that will simply never pay for themselves, will pay for themselves if installed efficiently, may be the wrong improvement on a given structure, is overkill for a specified application or is simply not effective for the given purpose. However, the problem is typically that most contractors are determined to sell their most expensive products to anyone regardless of effectiveness. Even proven technology like geo thermal heat pumps, which cost a substantial amount more than standard heat pump applications, will never pay for themselves in certain applications. Thus they can be an inefficient upgrade and an economic waste. This is one example of many that we have learned over the years and can define based on a project by project analysis as well as one that would save the uniformed purchaser tens of thousands of dollars.
All energy efficient upgrades should have a simple payoff for these improvements between 2 to 6 years on most depreciable assets and less than 20 on durable improvements. Simple payoff is used for simplicity and does not take interest expense into consideration so the actual payoff can be greater.
Costs can increase substantially with the greater the desired energy savings, but a 50% reduction in energy consumption can be achieved for a small increase above standard construction costs. However, the greater the energy savings after this point escalates costs to the point of diminishing returns and thus a loss on the initial investment, but there are many improvements that more than offset the increased mortgage payments and thus actually provide a cash flow back in long term savings.
Let us put our experience to work for you to create the ultimate living environment.
All energy efficient upgrades should have a simple payoff for these improvements between 2 to 6 years on most depreciable assets and less than 20 on durable improvements. Simple payoff is used for simplicity and does not take interest expense into consideration so the actual payoff can be greater.
Costs can increase substantially with the greater the desired energy savings, but a 50% reduction in energy consumption can be achieved for a small increase above standard construction costs. However, the greater the energy savings after this point escalates costs to the point of diminishing returns and thus a loss on the initial investment, but there are many improvements that more than offset the increased mortgage payments and thus actually provide a cash flow back in long term savings.
Let us put our experience to work for you to create the ultimate living environment.
New Homes and Remodeling
Energy Efficient Construction
Green Building and Development Techniques
Energy Efficient Construction
Green Building and Development Techniques
New Homes and Remodeling
Energy Efficient Construction
Green Building and Development Techniques
Energy Efficient Construction
Green Building and Development Techniques