The Energy Tax Credit: Is it Worth it? Part 2

How it Works: Windows & Water

To see how the credit works, let's look at an example of a modest starter home: a single-story 3-bedroom 1750 sq. foot home built in 2008 on the Gulf Coast.

Replacing old-style single-pane aluminum framed windows with energy efficient windows with good air seals can save money.  Upgrading windows on our little starter home to triple-pane insulating low-E, argon gas wood-framed windows can save $69 per year (note: windows and skylights installed after June 1 require a U-factor and SHH Coefficient of .30 or less). Factor in the tax credit for $1600 and you can deduct $480 from your 2009 taxes.  Your total cash layout for the windows comes to $1120 (excluding installation labor).  Even though adding in the energy savings brings the return to $549, that might not seem a big return on the first year.  But the energy cost savings are immediate.  Over the windows' 30 year lifetime, this becomes an energy savings of $2070.

Heating water in your home accounts for 17% of annual energy costs.  That's $221 of Energy Star's annual cost of $1,300. Most of the water heater's time will be spent keeping the water heated for when it is eventually used.  Putting a water heater blanket around it will help some, but you are still paying for this "stand-by heat" whether you use the water or not.

In our example home, the 40 gallon electric water heater's tank is warranted for 6 years.  The average lifespan of any electric or gas home water heater tank averages about 8 to 12 years depending on local water quality.  The water heater tank will eventually degrade from deposits of calcite and corrosion and then leak; forcing us to purchase and install a new one.  So we have several options: install a comparable electric model, install an equal capacity high efficiency Energy Star heater, or install a tank-less water heating system.

Read the rest of this entry at the Bounce Energy Blog.