Energy efficiency: Everything you need to know

Energy-efficient measures achieve the same amount of useful output as their traditional alternatives while consuming less energy. With energy costs and environmental concerns on the rise, energy-efficient products and practices enable utility customers across the country to reduce their energy bills and greenhouse gas emissions. This article breaks down the economic and environmental benefits of energy efficiency and outlines various financing opportunities for those looking to invest in energy efficiency.

Energy efficiency can benefit everyone whether your motivation is economic, environmental, or personal. 

Energy efficiency protects the environment

Burning fossil fuels for electricity, heat, and transportation is the country's biggest contributor to greenhouse gas emissions. Still, about 60% of U.S. electricity generation in 2022 came from fossil fuels. As you improve your home's energy efficiency, you need less electricity and rely less on carbon-intensive power plants. This reduces your home’s demand from the plant, which benefits the environment by reducing carbon dioxide emissions.

Energy efficiency can significantly reduce your utility bills

The U.S. Department of Energy (DOE) estimates that you can save anywhere from 5-30% on your utility bills by switching to energy-efficient appliances and home upgrades. Energy-efficient appliances consume less energy without sacrificing quality and are an excellent way to save on your energy expenditures.

You can earn a return on your energy efficiency investment

Energy-efficient products and services can cost more than conventional ones, but the electricity savings from energy-efficient measures should eventually offset their extra cost. Energy efficient upgrades generate an “implicit return” that increases over time due to rising energy costs.

Energy efficiency can increase your property value

In the real estate market, energy-efficient homes frequently sell for a higher price than standard homes with comparable features. Every project that increases your home’s energy efficiency adds a fraction of its cost to the final selling price.

Energy efficiency can enhance your quality of life

Energy-efficient measures contribute to a warmer, drier, and properly ventilated home, effectively lowering the risk of illnesses and mold growth. Energy efficiency also prevents the buildup of indoor pollutants, a major concern in areas with high radon emissions. 

Energy efficiency can be simple and still cut costs

Energy expenses are often considered a fixed cost of owning a home or business, with reductions only possible through pricey renovations. You can easily reduce utility bills through simple energy conservation behaviors or small energy-efficient purchases. Smart thermostats, advanced power strips, and energy-efficient lighting can decrease your energy expenses with almost no effort on your part.

You can avoid rising electricity prices with energy efficiency 

Utility residential electricity rates fluctuate seasonally and annually but have risen steadily in the last decade. U.S. retail residential electricity rates rose about 27% between 2012 and 2022, a trend that is likely to continue. In addition to cutting your monthly electricity bills now, conducting energy efficiency improvements on your home helps to insulate you from the financial impact of energy price increases that could happen in the years to come.

Efficient options often come with a higher price tag than conventional alternatives. It’s essential to use more than just upfront costs to evaluate your options. Energy efficiency accumulates savings over time that can offset the total purchase price and generate a return on investment (ROI). Long-term energy-efficient installments can even add value to your home upon resale. 

Depending on where you live, you may also be able to access state, local, or utility rebates that will decrease your out-of-pocket costs for energy efficiency projects. Common rebate programs include: 

• ENERGY STAR rebates

• Rebates for purchasing new energy-efficient appliances, air conditioning systems, or furnaces

• Rebates for recycling old appliances

• Rebates for upgrading leaky windows or insulation

Energy efficiency measures can increase your property values, reduce your electric bills, and create a more comfortable living environment in your home. Various financing options are available to make it easier for homeowners and businesses to invest in energy efficiency.

Energy-efficient mortgages

Energy efficient mortgages (EEMs) are similar to a standard home mortgage in that they use your property as collateral for a loan. With an EEM, you can purchase or refinance a home that is already energy-efficient, or you can purchase or refinance a home that will become energy efficient after energy-saving improvements.

Energy-efficient loans

Energy efficient loans are unsecured loans, meaning they don’t require your property as collateral. In practice, they are similar to personal loans or lines of credit that you can take out from a creditor.

PACE for energy efficiency

Unlike energy efficiency loans and EEMs, Property-Assessed Clean Energy (PACE) financing doesn’t require a monthly loan payment to a creditor. If you take out a PACE loan to fund your home energy efficiency improvements, you repay the amount owed on an annual basis as an assessment of your property taxes.

On-bill financing

Funding your energy efficiency projects doesn’t always require taking out a separate loan or refinancing your mortgage. Many utilities offer on-bill financing programs that pair loan repayment with monthly energy bills to make it easier for homeowners and businesses to invest in energy efficiency improvements for their properties.

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