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Energy Efficiency  |  Energy Efficiency 101

Energy efficiency 101: what is energy efficiency?

Last updated 4/3/2023

Energy efficiency refers to any method where less energy is consumed to attain the same amount of useful output. There are opportunities for  energy efficiency measures at all levels of energy use, from household appliances to large scale industrial projects. For example, an energy-efficient 12-watt LED bulb uses 75-80% less energy than a 60-watt traditional bulb but provides the same level of light. Across the board, energy efficient products reduce energy costs and decrease reliance on energy imports. Similar to renewable energy sources, energy efficient products and processes reduce greenhouse gas emissions, but given the price of renewable energy, energy efficiency is sometimes the cheaper green option for reducing greenhouse gas emissions.

Efficient energy use has been a rising trend in the United States due to increasing energy costs and the environmental problems caused by greenhouse gas emissions. This clean energy trend is evident in the products and appliances for sale to consumers, many of which become more energy-efficient from year to year. An excellent example of trending energy efficiency is in community design. “Energy smart” infrastructure and land development tactics to increase public transportation accessibility, for instance, cuts both costs and carbon emissions as these practices spread.  The trend also extends to homes: a growing number of prospective homeowners are starting to request energy ratings before deciding to purchase property. 

“Energy smart” land development refers to the method property developers use to ensure their infrastructure is energy efficient. This concept can take many forms, including compact land development to keep natural disruption to a minimum, and the accessibility and abundance of walking or biking paths.

In 2014, residences were responsible for approximately 21 percent of national energy consumption, contributing an equal amount to national emissions. There is significant opportunity for emissions reductions in the residential sector; in fact, the U.S. Department of Energy estimates that you could reduce your energy use, and by extension your utility bills, by 25-30% by implementing energy efficient appliances and projects in your home. Because households are charged for electricity per kilowatt-hour (kWh), reducing your energy consumption results in proportionate utility savings.

Common misconceptions about energy efficiency

Energy conservation – the concept of reducing energy consumption through the minimization of activities that consume energy – is often confused with energy efficiency. The main difference between the two concepts is how much you have to alter your behavior.

Energy efficiency doesn’t require you to change your habits

Energy conservation calls for a certain degree of sacrifice, such as using the clothes dryer less often or turning down the heat in the winter. Energy efficiency, on the other hand, maintains the same amount or quality of output while using less energy. Instead of turning down the heat, you can install an energy-efficient furnace to keep your house at a certain temperature while consuming less energy than you would with a conventional one. Energy efficiency does not inconvenience you with inhibitive restrictions, and it requires no change in behavior on your part to reduce your utility bills.

Energy efficient options are worth the investment

Another misconception is that energy efficient options are not worth buying because they are more expensive than their conventional alternatives. Indeed, efficient options, whether for appliances or home specifications, often come with a high price tag. However, energy efficiency should be considered an investment that accumulates savings over time, rather than a typical purchase that is evaluated based on up-front costs.

The utility bill savings generated over the lifetime of an energy efficient upgrade have the potential to offset the total purchase price and can even generate a positive return on investment (ROI). In addition, a long-term energy efficient installment can add value to your home upon resale.

According to the 2018 Cost vs. Value Report, an attic insulation renovation earns a 107.7% return on investment on average when you sell your house. In the Pacific region, the same investment earns over a 122.8% return upon resale. In contrast, conventional options offer lower up-front prices but require more frequent replacements and generate higher utility expenses, diminishing the benefits of saving on the sticker price.

Big energy savings require a significant investment

A common misconception about energy efficiency is that replacing a couple appliances will result in significant savings. For substantial utility savings, you should consider a holistic approach that strategically targets the most significant sources of energy waste in your home or business.

For example, electricity consumed by appliances that are turned off or in standby mode, known as the “phantom load”, can add $100-$200 to your annual utility bill. While your first instinct might be to replace appliance with a more energy-efficient version, consider first using a smart power strip. Smart power strips prevents plugged-in appliances from drawing power by turning off when it senses the appliances are not in use, and effectively eliminates their phantom load.

Another example is installing an energy efficient furnace or air conditioner. While installing an energy efficient HVAC system can reduce your energy bills, your savings will be smaller if your home is not sufficiently air sealed or insulated because it will take more energy to maintain the interior temperature at any given level.

The price of a holistic approach to energy efficiency may seem daunting, but keep in mind the potential savings and home value appreciation from such upgrades. The Department of Energy estimates that you can save about 30 percent on your annual utility expenditures through comprehensive home improvements.

Residential vs. commercial energy efficiency: different standards, different costs

In homes and businesses, energy is used for space and water heating, air conditioning, appliances, electronics, and lighting. However, residential and commercial buildings are subject to separate energy efficiency standards and regulations due to their different magnitudes of energy use.

For instance, the commercial HVAC system of an entire office building will consume much more energy than an average home. According to the Department of Energy, a residential building must meet the minimum requirement of having less than three stories above ground level. Any building that is not categorized a residential building is considered as a commercial building, including as an office building or warehouse. Energy efficiency measures will differ in scale and price between residential and commercial buildings, although the intended objectives are the same.

FAQ: Do I need an energy audit for my home?

Most homes can benefit from an energy audit. They help you identify easy ways to reduce your energy consumption, which can cut your utility energy bills by hundreds of dollars a year. As a bonus, in many cases home energy audits are free or subsidized by your utility. 

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