In rough numbers, let's say there are 100 million houses in the U.S. that could benefit from one of these standard greening investments:
  • - Solar panels
  • - Whole house fans
  • - Improved wall insulation
  • - Better windows
  • - Sealing and insulating all ducts
  • - Improved roofing with radiant barriers

Each of those investments would pay for itself if only you could solve the financing problem. No one wants to plunk down a pile of cash today for a house he might sell tomorrow. And if your payback is over ten years, it's no wonder most homeowners are saying no thanks.

The city of Berkeley came up with an interesting financing approach. The city will pay the cost of having solar panels installed on your home and then get the money back over many years through a special property tax on the property. The tax stays with the property even if it is sold. The homeowner gets little or no financial benefit, but it's good for the planet, so a typical Berkeley resident accept the inconvenience of the installation process and paperwork, and the bother of hosing down the panels every week. I like where this plan is heading, but I don't see it working too well outside of unselfish Berkeley.


And so I decided to apply the awesome brainpower of all you Dilbert Blog readers to come up with a better plan for financing the green retrofitting of homes, both for solar panels and for the more mundane improvements, such as whole house fans. If you succeed, you will put millions of people to work, save the environment, and end dependence on foreign oil (as soon as we all have electric cars).

The first part of the puzzle is coming up with a way to calculate savings for these various green investments. I'm in the process of sizing the solar panel installation for my new home construction and I can tell you that it's more guessing than science. Given all the other green engineering in the home, no one knows how much electricity it will really need. So I can only hope that my whole house fan, for example, will pay for itself over time. Every home is different, so calculating returns for green upgrades is dicey.

One solution would be for the government to mandate some sort of average payback for each sort of greening investment. You might have to tweak the number for region, size of home, and a few other simple variables. But that's a start.

This approach works for Energy Star appliances. Each appliance is assigned one number that is the estimated annual energy cost even though everyone knows that the actual cost will vary a great deal based on region and how many times you open the fridge door, for example. So while the numbers are inaccurate for any particular user, they still guide people toward lower energy consumption on average. I could see similarly inaccurate yet helpful average numbers applied to other greening investments.

If I knew that on average a whole house fan pays for itself in ten years, it wouldn't matter too much if the real payback for my particular home was closer to five or fifteen years. It would still be a good investment as long as the investment stayed with the house, as with the Berkeley model, when I sold it.

The problem with the Berkeley model is that the homeowner doesn't get much if any financial benefit from participation. To make this work in other parts of the country you need to appeal to people's more immediate self-interest. They need to see money in their pockets on day one.

One solution would be to mandate that banks wrap any greening investments into existing mortgages, so long as the borrower is current on payments. That should work for banks since the investment would free up cash for the borrower, through lower energy costs, that is more than the cost of the extra loan payments. In theory it would reduce the banks' risks while increasing their profits. And they could use the government's inaccurate generic estimates for green investments when evaluating these mortgage add-ons.

The next problem is that when you sell a home you get little benefit for any of the greening investments. Green home improvements are somewhat invisible to the potential buyer who makes his or her decision on factors such as location and square footage and the loveliness of the kitchen. To fix this situation, imagine the government mandating that all homes have an annual energy rating, similar to the Energy Star program. For existing homes it could be as simple as disclosing the average power bills for the past three years and the average number of occupants. The energy figure should be prominently displayed, by law, on the real estate listing. When buyers can see those costs, the green investments immediately have resale value.

If every home in the U.S. spends $10,000 on solar panels and other green upgrades, that's a trillion dollars in economic stimulus. It would fix the economy, solve global warming, and reduce dependence on foreign oil (assuming electric cars).

This concept needs lots of tweaking to work. Go.

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+1 Rank Up Rank Down
May 16, 2009
Nice article! Right now, The Story of Stuff is starting to make the rounds on the internet. The Story of Stuff is a documentary short by Annie Leonard, an international trade critic and environmental causes advocate. The video is short – 20 minutes – and it explains the cycle of goods and services, and the staggering amount of waste that's produced in our quest to have stuff. She also points out that our consumer model of society has created many of the problems we face, and some people would give a cash advance to make the film go away. Still, <a href="http://personalmoneystore.com/moneyblog/2009/05/11/the-story-stuff-video-viral/">The Story of Stuff</a> could mean a need for credit repair on the guiding philosophy of life these days.
May 15, 2009
Why not do the same thing, but without the property tax increase? Sure it would be expensive for the government, but probably no more so than what we're already spending on new power plants.
0 Rank Up Rank Down
May 15, 2009
I've just finished reading the best energy book I've yet come across - sustainability without the hot air, available here to read online or download ... http://www.withouthotair.com ... it looks at basic physics to determine how much we can realistically get out of renewables, nuclear, energy efficiency etc. Highly recommended for anyone sick of debates based on emotion rather than facts. Also very amusing.
May 15, 2009
I am so glad I do not have to worry about saving the planet, since it is not in need of saving. I then can concentrate brain power to more important endeavours. Such as working on getting a job.
May 15, 2009
May 15, 2009
I was into this well before eEarth Day. and i was in a group run by well know state engineering school in the 70'
s.. After looking at many homes it was found that Solar panels are a waste. They look and sound good but without lots of insulation they don't do much. After you insulate right you can heat it with a toster or two. If you use a heat exchander to move out the old wet air without letting in the cold. There are many things you can do to make the house work better as it is being made. But adding on solars will not make up the cost. Aengineering school in cal. came up with a building code that worked wonders on new and old buildings. but it will not make anyone money so nobody hears about it. PS. I came up with a Solar panel that had storys written about it. But it still not worth doing
May 14, 2009
"the government mandating" - Liberals love this phrase. Any solution to any problem that begins with "government mandating" gives me the creeps. "free to choose" - Conservatives love this sentence. Any solution to any problem that does not further a citizen's freedom of choice in his/her own self interest goes directly against the organizing principle that has made us far and away the most prosperous nation.
0 Rank Up Rank Down
May 14, 2009
I've given a lot of thought to the payback/ROI question. The problem with conventional calculations is that only today's power bill is considered, and there are so many other reasons that people care about.

Recently a friend and I put together a survey to collect data and attempt to quantify the relative weight of the less tangible reasons, at www.greentelemetry.com. (This is for general interest only, no personal information is collected). Anyone can skip to the results so far if they don't want to vote.

This "revised payback" idea needs more thought, so any comments are welcome.
0 Rank Up Rank Down
May 14, 2009
Scott - to paraphrase your old comic about quantification (the guy whose grocery list of "bananas, eggs, waffles, and milk" were the "pros" that outnumbered the "cons") - your solar proposal is both unaffordable AND inconvenient.

A government solar program would actually be useful... but it would have to be more like an orbiting satellite in space, which leaves 3 problems - transmission, sustainability, and the impact of emissions of launching a space shuttle for repairs. The reason I suggest this as better than panels on every house is that (1) the sun is always on in space, unlike, say, a dark and snowy night in New England when you need power to not freeze to death, and (2) if I'm not mistaken, we lose some large percentage of solar energy, before it ever gets to us.

Of course, once it's a government program, it'll be all about the cronyism (yeah, so is half of captialism, but government cronyism comes with INTENTIONAL inefficiency!)
May 14, 2009
Majority of people are more worried about their finances than saving the planet. As most green energy devices have a pay back of at least ten years people simply don’t have the foresight to see this as an advantage. Add to this that your solar panels / wind turbine might need replaced before the initial payback, it’s easy to see why it’s unappealing.
Governments are meant to take the long term view. Let them invest in green energy for large government institutions (prisons / schools / hospitals / city halls). Once these are all ‘green’ powered then the taxpayer wont have to cover their electricity prices. Turn this saving into a tax allowance towards individual ‘green’ appliances.
Obviously this is just another turd polishing exercise, but it would make the headlines (which is all politicians care about).
IMO nuclear is the long term answer. It works in France. The US is better set up as well (loads of open space for plants).
May 14, 2009
In the UK, we have a compulsory environmental impact and efficiency report for all houses for sale, and is in the process of introducing it for all rental accomodation too. At the moment, though, no-one really cares about these impact figures. They would if there was a very visible cost for inefficiency.
Instead of central (federal) taxes or increasing the marginal cost of energy, I'd suggest putting a large and explicit tax on energy inefficiency, collected by local authorities. They already collect local taxes based on house size, to pay for local services, so the infrastructure is all there.
Impose a tax, but provide a rebate based on the efficiency scores, and then use the money to provide grants to improve these scores, starting with poorer folk. Soon, everyone would be efficienct, so the tax would disappear (more or less). I bet it would happen within a few years, rather than decades, if the level of tax was set correctly.
Say £999 per year tax on a 1% efficient house (and some of these exist - I've seen them for sale!), which drops to £280 a year for a 72% efficiency house. It's visible, painful, universal (everyone with lodgings pays) and encourages the right behaviours - and uses only existing infrastructure - nothing new required!
May 13, 2009
I read somewhere that the new house you are building is approx. 8,000 square feet.
Maybe I misread it, maybe that's the total area of land.
Or maybe the house is just 4,000 square feet.

But that's still a pretty large house. If 100 million people built houses like that (with the same solar panels, energy efficiency, etc) - would that be considered "sustainable" living?
+2 Rank Up Rank Down
May 13, 2009
I just created an account to say this because it's really annoying to hear solar and nuclear power even mentioned in the same sentence.

At the moment, Polycrystalline silicon photovoltaic cells are not a viable source of power generation any more than lead-acid car batteries. The simple fact of the matter is that it takes more energy to make a solar cell than you can ever get out of it in it's lifetime. This is because to actually make a silicon solar cell, you have to bake the entire thing in a super-heated furnace at massive temperatures investing a huge amount of energy into a single cell; a cheque for the future that it will never be able to cash.

Don't believe me? Calculate how long it will it will take for a new solar cell set-up to pay itself off; the ballpark for all these calculations is around 30-40 years depending on the cell; not too bad. Unfortunately, the average life span of a solar cell is only 20 years.

May 13, 2009
As someone above said, first work on energy efficiency. Tons of insulation, super-tight envelope, really good windows, very efficient appliances, CFLs or LED lights, etc. If you get the house efficient enough, you won't need a heater or an A/C (or an attic fan or ground source heat pump) and can do all the space conditioning you need with an energy recovery ventilator. And you will need much smaller PVs, meaning a much smaller cost.

The EU already has an Energy Star-like rating system for houses, which does just as someone else above said - allows the energy use of houses to be compared. There's something similar here, done by the Energy Star people, called HERS, but it's not mandated.
+1 Rank Up Rank Down
May 13, 2009
there's a great program to measure your energy usage called "tweet a watt" that runs through twitter. it is hooked up to the circuits of your house, and sends you twitter posts on your energy usage throughout the day. also check out what a heat exchanger is.
+1 Rank Up Rank Down
May 13, 2009

What about an intermediate plan. Take Home Depot, Lowes, Builders Supply. Contract with them and with chose, specially endorsed installers, so that the city pay 75% of the cost outright at time of purchase, when installed by specified, endorsed installers. Add a moderate sales tax or real estate tax assessment to the community to cover the costs. Manage the purchase agreement with the retailers and with the installers to get fair and moderate prices.

For the other 25%, arrange for city or designated lenders to source 5 year loans for the other 25% of the purchase price.

The city could guarantee the Green loan if not lending the money itself. Place a lien against the property until the loan is repaid, to the benefit of the city.

This approach would contain costs, the loan process should help qualify people - i.e. avoid most scams and deadbeats. The endorsement of the installers should help assure correct and fruitful installation, and also avoid resell-scams, etc.
May 13, 2009
A side issue, but I think your readers will be interested. I have complained at least twice in this blog that none of my bookstores carry Dilbert 2.0. I noticed, almost randomly, that they do. This issue is that the book is very large so it is put into a separate section of over sized books (like with special Calvin and Hobbes collections) and not with the "normal" Dilbert books. In addition, it doesn't have the normal color scheme, it a kinda muted, dictionary tone as opposed to the normal bright colors of your other books. So I think I have just been overlooking it.

Once I saw it, I bought it. You might want to do some sort of public awareness campaign on this.
May 13, 2009
I like the idea of an energy star rating for homes. Seattle now requires restaurants to list calories on their menus and I have to say, it has affected my choices. I already knew certain favorite foods were high calorie, but staring at the number at the point of order does make a difference.

Same thing with hard data on energy costs.

Here is why we just borrowed money on our equity line to upgrade our windows: The old windows were ugly and inefficient, the government is offering a tax credit to upgrade and the window companies are so desperate for work that the price dropped dramatically every time we spoke with them.

There was one final reason that pushed us over the top: We believe that inflation is going to hit the american economy with a vengeance in a year or two. The $9,000 we just shelled out for windows is a much better deal than the $12,000 or $15,000 it will cost in a few years when inflation revs up.

If we just get honest about the long term implications of all this federal spending, we might see more folks making the same calculation.
May 13, 2009
Wouldn't $10K spent on energy savings add at least $10K to the resale value of the house? So who cares whether you sell it in less than the payback time?
+6 Rank Up Rank Down
May 13, 2009
"If every home in the U.S. spends $10,000 on solar panels and other green upgrades, that's a trillion dollars in economic stimulus."

It would only be an economic stimulus if it was 10K NEW dollars being spent. If the homeowner spends $10K on solar panels instead of buying a car, it's just shifting the money from one area to another; stimulating one industry while depriving another.
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