Home Energy Efficiency: Costs & Potential Savings
Home Energy Efficiency: Costs & Potential Savings
How to make your home more energy efficient
Improving your home's energy efficiency not only reduces your carbon footprint but has the potential to save you hundreds or more on utility costs each year. Taking advantage of tax credits and other incentives can reduce the out-of-pocket cost to make your home more energy efficient.
| Upgrade type | Potential energy savings* |
|---|---|
| Energy-efficient lighting | 75% – 90% |
| Sealing & insulation | 5% – 40% |
| Smart or programmable thermostat | 10% – 30% |
| Efficient windows | 25% – 50% |
| High-efficiency heating & cooling | 25% – 50% |
| Tankless water heater | 24% – 34% |
| ENERGY STAR certified appliances | 10% – 50% |
*Compared to standard or non-energy-efficient units and systems.
Many home upgrades are eligible for the Energy Efficient Home Improvement Credit and other tax credits and incentives.
Improving your home's energy efficiency may increase your home value, depending on the upgrades. Many states have laws that exempt this increase from property taxes.
What makes a home energy efficient?
"Energy efficient" means using less energy to perform the same function. While design and requirements vary from house to house, common elements of an energy-efficient home include:
A well-constructed and tightly sealed thermal envelope
Energy-efficient doors, windows, and appliances
Controlled ventilation
Correctly sized, high-efficiency heating and cooling systems
Ultra-efficient homes use the latest technology, construction, and renewable energy systems like solar power to reduce a home's energy needs as much as possible.
Energy efficient home improvements
Assessing your home's current energy efficiency is a fantastic place to start. A home energy audit costs $200 to $600 on average and can help determine which home improvements will have the biggest impact on your energy use and your wallet.
An energy auditor reviews your utility bills, inspects your home, and sometimes conducts one or more tests. Then, they recommend updates based on where your home lacks efficiency.
Energy-efficient lighting
Replacing incandescent bulbs with energy-efficient bulbs is one of the quickest, easiest, and cheapest ways to improve home energy efficiency. Compact fluorescent (CFL) bulbs use about 75% less energy and last 10X longer than traditional bulbs. Even better, LEDs use 90% less energy and last up to 25X longer.
Increasing the amount of daylight coming into your home is another way to reduce your dependence on electricity for lighting. Solar tubes and skylights are popular updates. A solar tube costs $600 to $1,100 installed on average, while a skylight costs $1,600 to $4,200 with installation.
Sealing & insulation
Air sealing and improving your home's insulation save 10%+ on your annual energy costs, improve the air quality, and make your home more comfortable. Insulation costs $1 to $4.50 per square foot installed, depending on the type, material, and R-value. Since heat rises, the attic is a great place to start.
Air sealing costs $350 to $3,000 for an attic or about $1,000 to $5,000 for the whole house. Sealing just between the attic and living space can reduce your heating and cooling costs by 15%+ if it's the main cause of your high energy bills.
Professional weatherstripping costs $1 to $5 per linear foot for an average home, or $0.16 to $4 per linear foot if you DIY. Weatherstripping prevents air from getting in and out through gaps around windows and doors.
Better thermostat
Upgrading to a smart or programmable thermostat costs $160 to $450 on average with professional installation or $80 to $250 with DIY installation. Smart thermostats save 10% to 30% through better temperature control that aligns with your schedule and reduces energy waste.
Energy-efficient windows
Replacing old, single-pane windows with energy efficient, insulated windows costs more than the smaller changes we've discussed, but it can save you up to 50% on your energy bills and reduce exterior noise.
Solar screens cost $50 to $150 per window installed and block 65% to 90% of the sun's heat, which can translate to saving 25% to 30%+ on cooling costs during the hotter months.
Window tinting costs $5 to $8 per square foot and can reduce heat by as much as 85%.
Efficient heating & cooling
Heating and cooling account for up to 50% of a home's energy consumption. Replacing your HVAC system with a more energy-efficient system can offer substantial savings. Here are some options to consider:
| Type | Average installed cost | Details |
|---|---|---|
| High efficiency AC unit cost | $3,000 – $11,000 |
|
| HVAC zoning system cost | $1,700 – $4,500 |
|
| Ductless mini-split AC cost | $2,500 – $13,000 |
|
Depending on your home size and the AC type, the cost to run an air conditioner can range from $30 to $270 per month.
Additional improvements:
Other less-costly ways to improve your home's efficiency and lower your heating and cooling costs include:
Ceiling fans: New ceiling fan installation costs $250 to $700 for the fan and wiring labor. Ceiling fans improve energy efficiency by circulating and distributing cool or warm air.
Filters: Replace the filters in your AC unit and heater regularly. A dirty filter makes an appliance work harder and use more energy.
Curtains: Close curtains and draw shades to better insulate the home at night.
Whole-house fan: A whole-house fan costs $600 to $2,300 installed and draws outside air in to cool the entire home.
When improving your home's efficiency, save heating and cooling updates until last. Tackling other improvements first may allow you to update to a smaller system, saving on the new HVAC cost and increasing your long-term savings.
Efficient water heaters
Water heaters use almost 20% of a home's total energy. Updating to a more efficient model can yield significant long-term savings. The best type for your home depends on your home size and budget.
A tankless water heater costs $1,400 to $5,600 installed and uses 24% to 34% less energy on average than standard tank water heaters.
A hybrid heat pump water heater costs $2,000 to $4,600 installed and is up to 4 times more efficient than a standard electric water heater.
Solar water heaters cost $3,000 to $9,000 installed and can save 50% to 80% on energy costs. The price looks steep compared to other options, but available tax credits and rebates often reduce the cost to about $1,500 to $6,600.
ENERGY STAR appliances
Appliances account for up to 20% of a typical home's energy bills, so choosing ENERGY STAR-rated models can have a significant impact on your overall home energy efficiency. New appliances cost $400 to $3,000+ each, depending on the type and features.
Bathroom efficiency
Conserving water is another important part of making an energy-efficient home. Installing low-flow shower heads and toilets can result in a 20% to 60%+ reduction in your home's water usage.
Installing a low-flow toilet costs $250 to $950, including the unit and labor. Dual-flush options cost $250 to $1,500 installed.
The average cost to replace a shower head and faucet is $250 to $800.
According to the EPA, using a low-flow shower head can save a typical family 2,700 gallons per year. The reduced water use also saves enough electricity to power a home for 11 days due to the lower demand on your water heater.
Efficient roofing
When it's time to replace your roof, consider a metal one. A metal roof costs $7,500 to $40,000 installed and lasts 2 to 3 times longer than traditional asphalt shingles. Additionally, metal roofs reflect the sun's UV rays away from your home, reducing your cooling costs by 10% to 25%+.
Electrical wiring
Older homes with outdated wiring may struggle to handle today's electrical demands safely and efficiently. The average cost to rewire a house is $10,000 to $30,000 for the materials and labor. An electrical inspection costs $100 to $200 and can determine if you should add this project to your task list.
Renewable energy systems
Depending on your home's location and sun exposure, renewable energy has the potential to significantly reduce or eliminate your reliance on public electricity. While the upfront costs are high, tax credits and incentives, the long-term savings, and reduced carbon footprint make it worth considering.
The table below details several home improvement updates that involve renewable energy:
| Type | Average installed cost* |
|---|---|
| Solar panel cost | $12,600 – $31,500 (6- to 10-kW) |
| Solar roof cost | $29,400 – $56,000 (2,000 square feet) |
| Solar battery storage system cost | $5,600 – $11,200 |
| Solar pool heater cost | $2,500 – $6,500 |
| Solar water heater cost | $1,500 – $6,600 |
| Portable solar generator cost | $500 – $3,300 (unit only) |
| Wind turbine cost | $14,000 – $56,000 (complete wind power system) $350 – $2,800 (micro/roof-mounted) |
*After 30% federal tax credit on qualified items. Total costs may be lower with additional state and local incentives.
Check out our detailed guide about the benefits and costs of installing a solar energy system: Do solar panels increase home value?
Home energy efficiency FAQs
What is ENERGY STAR?
ENERGY STAR is a U.S. Environmental Protection Agency (EPA) program that helps businesses and individuals save money and protect the climate. ENERGY STAR-rated appliances and electronics meet specific energy efficiency requirements set forth by the EPA.
What appliances or systems waste the most electricity?
An HVAC system is typically uses the most electricity—accounting for about 50% of a home's energy use. Other electricity guzzlers include water heaters, washers and dryers, and lighting. Improving efficiency in these areas provides the best opportunities to save electricity and money.
Does unplugging devices and appliances save money?
Unplugging appliances and electronics when not in use eliminates phantom load, the electricity consumed when powered on but not actively operating. This one action can save 5% to 10% on electricity bills.
Getting estimates for energy-saving home improvements
Follow these guidelines when searching for a home energy auditor or home improvement contractors near you:
Search for a home energy auditor certified by one of these DOE-accepted programs:
For renewable energy systems, look for contractors accredited by the North American Board of Certified Energy Practitioners (NABCEP) and members of these organizations:
Ask for references and confirm their credentials.
Compare detailed quotes from at least 3 reputable companies before making any energy-efficient home improvement.
Check out their reviews on HomeGuide and Google.
Avoid extremely low bids as this often indicates low-quality work or lack of experience.
Always get a written contract and warranty in hand before the work begins.
Questions to ask an energy-efficient home improvement contractor
Ask the following questions to ensure you choose a qualified and experienced auditor and contractor to help make your home more efficient:
How long have you been in business?
What licenses and certifications do you have, and which professional organizations do you belong to?
Which tests does the home energy audit include?
What other tests do you offer, and how much do they cost?
Does the audit include a follow-up visit to confirm the recommended improvements are successful?
How long will the energy audit or project take?
Does this audit qualify for the federal tax credit?
How do you determine which home improvements I should make first?
Does this home improvement project qualify for any federal tax credits?
Are there any other incentives or rebates available for this project? Can you help me obtain them?
Using our proprietary cost database, in-depth research, and collaboration with industry experts, we deliver accurate, up-to-date pricing and insights you can trust, every time.