I recently performed an FHA final inspection for Jim Harris of IKON Homes in Rankin County, Mississippi. Jim mentioned that one of his home owner clients was bragging on how much cheaper his energy costs were on his new home vs the older home he’d moved from.
Jim says he feels that the radiant barrier decking he installed on his client’s home was key to the lower utility costs. Let’s see what Allison Bailes III, PhD, says about the product. If you want to convert Allison’s example for power usage, use $.11 per kilowatt-hour for homes in central MS or check with your local power provider for the monthly usage rate.
Radiant barriers are cool! Well, actually they get quite warm, but they help the space below them stay cooler when used on a roof assembly above an unconditioned attic. They can drop the temperature of an attic about 20° F.
But are they cost effective? How much in actual savings on your energy bills can you expect if you pay to get a radiant barrier installed during construction of your new home?
A while back I wrote about theHouston Home Energy Efficiency Study (pdf) and Michael Blasnik’s findings on the accuracy of the energy modeling tool REM/Rate. That study is bursting with data about energy use in new homes, and they also looked at the effect of radiant barrier sheathing on cooling loads and energy bills. Here’s what they found:
Radiant Barrier roof sheathing appears to reduce summer/cooling loads by about 0.09 kWh/ft² of sheathing, which equals about 180 kWh/yr per home or 3 percent of summer/cooling loads.
Remember, this study looked at homes in Houston, Texas, no stranger to heat. The total number of homes in the study was nearly a quarter million, though the report doesn’t give the number of those homes that had radiant barrier roof sheathing. [From Blasnik’s comment below, the total for this part was 16,408 homes, 2010 with radiant barriers.]
So, let’s look a little deeper at this matter of cost effectiveness. If you’re saving 180 kilowatt-hours per year, you have to multiply that by your electricity rate to find out how much you’re saving. Here in Georgia, I pay about $0.14 per kilowatt-hour to Georgia Power. If the same savings they found in Houston applied to Atlanta as well, I’d be saving about $25 per year. (That’s based on the 180 kWh/yr, which corresponds to a 2000 square foot roof based on their 0.09 kWh/ft².)
The extra cost to put the radiant barrier roof sheathing on a 2000 square foot new home is probably around $200. There’s no extra labor because they have to put the roof deck on anyway, and the decking with radiant barrier adhered to it (as shown in the photo above) runs about $2 per sheet more than regular OSB (that flaky plywood called oriented-strand board).
OK, $200 extra and $25 per year savings means a simple payback of 8 years.
But wait, you say, didn’t you tell us in another article that payback is irrelevant?
Why yes, I certainly did. I’m glad you brought that up. If you’re financing the cost of the improvement, then payback is indeed irrelevant. Other measures like cash flow or net present value (discussed in our Energy Efficient Mortgage webinar) would be a better measure of cost effectiveness.
Cash flow just means looking at how much you save compared to how much it’s costing you, on a monthly or annual basis. If you’re saving $25 per year, your radiant barrier would be cost effective as long as your cost to finance it is less than $25 per year. Do you think you could add $200 to your mortgage and have your monthly payments go up less than $2.08?
I played around with this using an online mortgage calculator and came in $0.50 ahead per month, so, yes, I think this would be cost effective on the cash flow basis. What that means is that every month, the radiant barrier costs me $1.58 (on average) and it saves me $2.08. I can take that extra $0.50, save it up for 3 or 4 months, and go get myself a cup of coffee!
I don’t mean to minimize the conclusion here. The point is that as long as the payments you make come in less than the amount you save, it’s worth doing. By that measure, radiant barriers would be a cost effective measure for this example (in Houston with electricity that costs $0.14/kWh and a 15 year mortgage at 5% interest).
The other important point here is that you have to do the calculations. If your cooling load is not as high as Houston’s, your savings will be less. If your electricity rates are higher, your savings will be greater. And then you have to factor in the costs of the radiant barrier, the amount financed, and the terms of your mortgage.
Remember also that electricity rates are probably going to continue going up. If you have a fixed rate mortgage, that makes your cost effectiveness improve over time.
Want to know more about how you can save energy and build smarter? Contact us at 601 691 1496 or follow my blog. We’re also teaching home owners about the FHA 203K Loan program over in out forum: www.203kforum.com.