Tips for Timing Your Clean Energy and Energy Efficiency Investments

On some level, we all know we should do something to reduce our energy costs, but where to start to achieve that goal is less clear. Should we reduce our consumption by making efficiency improvements (e.g. installing energy efficient lighting, replacing old windows, adding insulation, etc.)? Or, should we focus on reducing the cost of the energy we’re using by installing a clean energy system such as solar, wind or geothermal system? Both approaches make a lot of sense. Here are some points to consider that may help you to decide.

What are your goals for better energy efficiency?

Figuring out what’s important to you can help you to prioritize. Are you mainly concerned with the economic issues or the environmental ones? Energy efficiency reduces your consumption, bills and environmental impact anywhere from 20%-30%. A clean energy system, on the other hand, can save up to 100% of energy costs and, in some cases, entirely offset your environmental impact. The level and timing of your returns on investment will be different in each case. Knowing upfront what you’re trying to accomplish will help you to develop a plan that’s right for you.

What’s your budget? How will you pay for your choices?

While a clean energy system can save you more money, they also tend to cost more. If the expense of a clean energy system doesn’t make sense right now financially, it might make sense to start with less expensive efficiency improvements. Keep in mind, though, that there are many financing options (home improvement loans, etc.) that make it easier to make these larger purchases. Also, some systems, like solar, can be leased so it’s still possible to get the benefits of clean energy without all of the upfront costs.

What’s the cost benefit analysis?

Here’s where the laws of economics can help to light your path. Keep in mind, that when you’re doing the math, you’ll want to factor in all of the variables that will affect your true costs. This means that you’ll need to know what help is available to you in the form of rebates, incentives, federal and / or state tax breaks, or other programs that will offset costs. You’ll also want to know how much you’ll save on your energy bills and how those savings might change over time. For instance, clean energy allows you to lock in your energy cost for the long term. The savings from efficiency improvements, however, may not be sustainable since intervention in the energy markets won’t ensure that prices will go down as demand decreases. Once you have a handle on the financial ins and outs, you’ll need to do a similar analysis of the benefits. Understanding the relationship between both sets of information will help you to determine how to get the biggest bang for your buck.

How will the timing of your choices affect your decisions down the road?

Starting with the projects that save you the most money may help to fund other projects later on. Likewise, the impact of your energy efficiency efforts may allow you to downsize the capacity of the clean energy system you would need to power your home. Knowing how your decisions today will impact your decisions tomorrow and beyond will also help you to come up with the timeline that’s right for you, your goals, and your budget.

Investing in clean energy or investing in energy efficiency isn’t an either / or decision. Ultimately, whatever the mix or timing of your final plan, you will see big reductions in your energy consumption, bills, and your environmental impact. Sooner or later, we’re confident that you’ll invest in both.

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