Can You Afford to Go Green? The Cost and Savings of Residential Renewable Energy Systems

If your home already has good insulation and efficient windows and doors, alternative energy may be the way to go.

| January/February 2011

  • If your home has consistent wind from 6 to 40 miles per hour, it may be prime for home wind power.
  • If you have an older home, you can save money by increasing insulation. Visit and search "insulation" for information on assessing current and optimal insulation levels.

The economy, rising utility rates and growing concerns about carbon emissions are causing more homeowners to consider alternative energy sources to power their homes. James Quazi, energy efficiency operations director with SolarCity, which rents photovoltaic panels to more than 1,000 communities in California, Arizona, Colorado, Oregon and Texas, says he always advises clients to “start with the easiest things first.” But if your home already has good insulation and efficient windows and doors, alternative energy may be the way to go. Companies are increasingly finding ways to offer lower-cost options such as the photovoltaic leasing option that SolarCity offers.

Alternative Energy Systems: The Big Three 

Geothermal Heat Pump 

Why: Geothermal (also known as ground- source) heat pumps heat and cool homes with no fuel and minimal electricity, using the earth’s constant internal temperature. Geothermal systems save 30 to 70 percent on energy bills.

How It Works: Unlike conventional heat pumps, which draw in outside air, geothermal systems draw heating and cooling from inside the earth via vertical or horizontal pipes that circulate water or environmentally safe antifreeze through loops underground or submerged in a pond. In winter, geothermal heat pumps pull warm air from the earth to heat the home. In summer, the process works in reverse, as the system pulls heat out of the home and pumps it back into the ground.

Cost: $25,000 to $50,000, depending on home size and climate in new construction; less for retrofits. Generally about 30 percent more than installing a conventional HVAC system.

Payback: Break even in as little as five years with tax credits and rebates (if you’ve sealed up leaks and have up-to-code or higher insulation).

Photovoltaic System 

Why: Photovoltaic (PV) systems use the sun’s energy to power your home, decreasing or completely eliminating dependency on the grid and fossil fuels or other nonrenewable resources. The average 3- to 4-kilowatt PV system can provide 30 to 50 percent of a home’s power. PV systems can last 30 to 50 years, although you may have to replace the inverter, and once you have installed a system, the energy you draw is free.

How It Works: PV systems use silicon wafers to convert sunlight into electricity, allowing homeowners to generate their own power and often sell excess power back to their electric company. Today’s solar panels can be installed in unobtrusive ways, including as solar shingles.

Cost: $15,000 to $100,000 installed, depending on system size

Payback:18 years or more, though an area with tax credits and excellent rebates can decrease that number by as much as 10 years. Some companies offer PV systems for lease. Lease a PV system and see payback in as little as five years.

Residential Wind Turbine 

Why: A residential wind turbine provides free electricity (insofar as it can meet your home’s demands) for at least 20 years. A typical residential wind system can offset 1.2 tons of air pollutants and 200 tons of greenhouse gases while producing 10,000 kilowatt-hours of energy per year.

How It Works: Most residential wind turbines are erected on 30- to 100-foot poles with blades up to 25 feet long. To provide power, your home site must have consistent wind from 6 to 40 miles per hour. Your energy output will be dependent on weather conditions, so you can’t rely solely on wind to power your home. Improvements in battery storage capabilities may change this.

Cost: A typical 10-kilowatt residential wind turbine system can cost at least $48,000 installed; a general rule is that small wind systems cost from $3,000 to $6,000 for every kilowatt of generating capacity.

Payback: With federal, state and local tax incentives, as well as credits from your energy supplier for creating excess power, a residential wind system could pay for itself in 10 years.

Not Ready for Renewables? 

Less-expensive efficiency upgrades are great investments.


Why: If your home isn’t well-insulated, you’re wasting your money on high-dollar upgrades. Uninsulated crawlspaces, poorly insulated attics, recessed lights, electric outlets and light switch plates are the biggest culprits. 

How It Works: Find leaks by shutting doors and windows, turning on exhaust fans, and feeling where the air pulls into your home, or hire a professional blower door test.

Cost: Varies depending on space covered and insulation type; roll-out batting costs from 50 cents to $2.25 per square foot, and blown-in insulation is about $2 to $4 per square foot.

Payback: With an immediate effect on your home’s comfort level and HVAC use (and annual energy savings as high as 30 percent), you’ll see a payback in just a few years.

Replacement Windows 

Why: Once you’ve sealed leaks, it’s time to consider replacing old windows.

How It Works: Updated low-E, argon-filled, double- or triple-pane windows protect against heat and cold infiltration.

Cost: $300 to $1,000 per window, depending on type and manufacturer

Payback: With tax credits, payback can occur in as little as three years for an average 2,000-square-foot home with 300 square feet of window area.

Solar Water Heater 

Why: A solar water heater takes advantage of the sun’s free energy to provide all of your hot water needs. Water heaters can account for as much as 25 percent of a home’s utility costs.

How It Works: Active or passive solar collectors on the roof heat water. 

Cost: $1,000 to $10,000 installed, depending on whether the system is passive or active

Payback: Four to eight years, depending on family size, water use, and local tax credits


Geothermal Heat Pumps 

Climate Master 





Bonded Logic 
natural fiber insulation

Cell Pak 
cellulose insulation

spray foam insulation

Johns Manville 
formaldehyde-free fiberglass

Photovoltaic Solar Systems 

Backwoods Solar  

Evergreen Solar 

Phat Energy 

REC Solar 

Ready Solar 

Sierra Solar Systems 

Solar Water Heaters 





Tankless Water Heaters 

American Hometec 


Stiebel Eltron 


Wind Turbines 

Helix Wind 


Southwest Wind Power  

Urban Green Energy 


Andersen Windows 





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