I’ve been thinking a lot about the economics of insulating my foundation exterior, see the post before last for a discussion of what I’m doing, the costs involved and the economics of it. I should update that my energy audit report claims that if I do it their way I will save $383, since I’m doing more I have calculated that my savings roughly scale up to about $500/yr. We’ll see if that is true. That would give me a bit over a 7% return on my investment, which is above my minimum attractive rate of return of 7%, set by the interest on my land payment (I am a conservative investor, and no other way I invest my money does better than this). This does not include the state’s rebate, which should bring me to 16%. So the economics are looking better than at first blush.
But what could a person do to make it better – say, without the state rebate or with a higher minimum rate of return to beat? Well, you could dig it all by hand yourself, which could save almost a couple of thousand dollars on excavator and friendly labor – which is a big percentage of the total costs. I would do this if I didn’t have a kid to play with and a full time job that pays me well, etc. If you are in the lower 48, you could get reclaimed foam board, which would likely be cheaper than new if you need enough of it and the shipping isn’t insane. I might be able to do this too, and it does seem like a much greener option, but I fear the cost of trucking it up here, or the logistics of getting it barged. Lowe’s takes care of that for me with the new stuff, and I am ashamed to say I take advantage of that ease. We also have locally made foam board, but it is not blue board, so has, if I have my facts straight, a smaller R-value per inch, greater permeability to water, and doesn’t seem to be a huge price break.
OK, what about the costs and benefits that are uncertain? Exterior insulation may prevent further water pipe breakage. This hadn’t happened, to my knowledge, in the place before, but last winter was harsh and pipes broke all over town, including in my basement. The clean up/etc cost over $2000. It could have been worse if no-one was home and the basement had flooded. It could have been better if I had rented my own fans and dried it out myself instead of naively calling in the carpet restorers. So lets say I prevent one pipe breakage of that magnitude every 20 years? So another $100 a year saved? (Yes, real economists, look the other way as I ignore the time value of money and other important things for my rough analysis). Then there is the certain increase in the price of gas, which could be extreme in my area, which currently has about the lowest gas prices in the US, but is losing that advantage. Exterior insulation could also prevent seepage of extreme amounts of melt water or rain water into the basement from the foundation walls. It could allow me to install a much smaller boiler when mine eventually goes. It might mean that the tenants use much less electricity for supplemental space heating in the nooks and crannies not well served by the baseboards. It could mean that the boiler isn’t on as much, heating the upstairs efficiencies which are right next to the hot exhaust chimney, causing those tenants to open windows and waste heat in the winter. Finally, I can attract tenants and perhaps nudge rent up a bit because my building is green – the greener the better. And insulating the foundation gives me more ‘green’ points than paying off my mortgage sooner (is this image building actually ‘green washing’? I don’t want to do it just to make more money, I really do want to promote and attract others to live more sustainably and to learn from my experiments, and insulating the foundation is a real thing I am doing to reduce carbon emmisions)
And then there are other reasons for me to insulate the foundation first. I have been holding off planting tender perennial trees against the foundation because I know it is all going to be dug up someday. If I get it done, I can plant my sweet cherry, grapes, and warmth loving kitchen gardens against the south side of the house and reap benefits in food cost saving and good nutrition sooner.
One thing I have found, though, is that calculations of the economic benefits of an efficiency measure are highly variable and individual, depending a whole lot on incentives, local prices, what you can and are willing to do yourself, individual house conditions, location, size, etc.
I think, given that I’ve done most of the easier, higher return things (CFLs, behavior, low flows, etc, etc), that insulating the basement is the next best thing I can do economically, and my new analysis indicates that it is a good deal. Next summer my dad and I will do the same treatment to the above grade walls, and the economics are probably only a little worse for that. Still good because of the rebate program. After this, I’m guessing (educatedly) that my next move should be to pay off my land, with its 7% interest. Paying off my mortgage faster, with 6% interest, is probably a close follow up, but there is a big emotional pull to put solar hot water on my roof first, instead of waiting until my mortgage is paid off: even if I put the $17,000 toward the mortgage instead of toward the solar hot water that only pays me off about 4 years faster. Oh yah, and that brings up federal tax incentives for all of these things, which I have ignored to this point!!
For any one who has managed to make it to this point awake, I welcome refinements to my thoughts and ideas of other, more economic, energy saving improvements!