Building Solutions: Opportunities for Coloradans to Save Energy and Money through Efficient Home Heating

2008-09-10

Executive Summary

Coloradans are paying increasingly steep prices to heat their homes each winter. Since 2002, residential electricity prices have climbed 25 percent and natural gas prices have risen by more than 70 percent. As a result, Coloradans spent about $500 million more on home heating this past winter than we spent just five years ago.

To help homeowners with their bills, Colorado should improve home heating energy eficiency. Because heating accounts for more than half of all energy used in a typical Colorado home, heating efficiency improvements can have a big impact.

Efficiency measures from high-performance furnace systems to improved weatherization can directly save families money. Moreover, reduced demand for energy will reduce energy prices, benefiting everyone in the state.

Improving home heating efficiency can reduce energy bills for Colorado families.  
   --Statewide, Colorado families would have saved on the order of $400 million this past winter if they had all retrofitted their homes with effective weatherization and efficient heating equipment.* That equals about one-third of statewide heating energy costs.
   --For example, a family living in a typical Colorado home built in 1980 could save nearly $600 per year by choosing a high-efficiency furnace and high-efficiency windows instead of standard models, by installing a programmable thermostat and improved insulation, and by sealing air leaks in heating ducts and in the outer shell of the home.
   --The upgrades would cost about $3,900 to perform. However, the resulting energy savings would pay off the initial investment in six years, delivering net savings of more than $12,000 over the useful lifetime of the upgrades. That’s an annual return on investment of 15 percent—better than many options in the stock market.

A variety of readily available technologies and practices can dramatically reduce home heating energy use. For example:
   -- High Efficiency furnaces meeting Energy Star combustion standards and incorporating high-efficiency fans, use up to 20 percent less gas and up to 65 percent less electricity than a new minimum-eficiency furnace. If Colorado required all new furnaces to meet this level of performance, the state could save 12 billion cubic feet of natural gas and reduce electricity consumption by 270 million kilowatt-hours (kWh) in the year 2030. That’s enough gas to meet the annual needs of about 150,000 typical Colorado households, and enough electricity to supply more than 33,000 Colorado homes.
   -- Improved insulation, high-efficiency windows and air-sealing can reduce the amount of heat that escapes from a home during cold weather, cutting heating energy consumption by 20 percent in a typical home. Achieving this level of savings statewide would conserve 17 billion cubic feet of natural gas per year, reducing total natural gas consumption in Colorado by 4 percent.
   -- Repairing and sealing ductwork that carries heated air from a furnace throughout the home can reduce heating energy use in a typical home by 15 percent. At this level of savings statewide, Colorado would conserve enough natural gas to meet the heating needs of 100,000 families.
   --Programmable thermostats can help time heating energy use for when it is most needed in the home, reducing heating energy use by another 10 to 15 percent. If every home in the state used a programmable thermostat to reduce heating energy consumption, statewide natural gas consumption would fall about 2 percent.

Improving home energy eficiency will reduce energy prices and stimulate the economy, benefiting everyone.
   -- Every 1 percent reduction in natural gas demand reduces market prices by 0.8 to 2 percent below forecast levels.
   -- Money saved through efficiency programs can then be spent on other goods and services, creating jobs and stimulating the local economy. For example, in 2002 the Southwest Energy Efficiency Project forecast that a comprehensive 18-year efficiency effort could create 12,200 jobs in Colorado.

To improve home heating energy efficiency, Colorado should:  
   -- Apply for a waiver from the federal government to adopt strong minimum efficiency standards for residential furnaces and furnace fans and lobby the federal government to adopt such
standards nationwide;
   -- Expand the scope and funding of weatherization assistance programs, including programs aimed at assisting low-income families;
   -- Require local jurisdictions to strengthen building energy codes, ensuring that all new homes across the state meet or exceed Energy Star performance standards;
   -- Provide financial incentives and technical assistance to encourage high performance new construction and building renovation; and Establish a goal for all new homes to achieve net zero-energy performance by 2030.

*Savings estimates for individual efficiency measures partially overlap and are not 100 percent additive.