Energy-Efficient Buildings: Investing Pros, Cons

Investing News

Homeowners who want to add energy-efficient features to their home can save substantial money in utilities bills, but they have other costs to consider.

Along with the potential for savings on energy costs, energy-efficient features can provide a number of benefits for the environment and for the occupants’ health. However, the technology that helps a building become more energy efficient can also be expensive.

To determine whether investing in energy-efficient buildings would be worth your while, weigh all the pros and cons, including upfront costs, long-term savings, and tax credits.

Key Takeaways

  • Energy-efficient buildings are designed to reduce energy use and cut down on waste and emissions.
  • Installing energy-efficient features in your home can result in utilities bill saving that can add up significantly in the long-term.
  • Energy savings features include rooftop solar panels and energy-efficient appliances.
  • The Inflation Reduction Act of 2022 provides tax credits for certain energy savings features for residences through 2032.

Is It Worthwhile to Invest in Energy-Efficient Buildings?

You may be interested in investing in green features to help the environment or to save money. No matter your reason, understanding how investing in energy-efficient features can potentially affect your finances can help you make the right choices for your situation.

There are several factors to consider with investing in energy-efficient building, including the costs, health benefits, impact on the environment, and potential profits. Tax credits can also play a role in whether these are worthwhile investments.

Under the Inflation Reduction Act of 2022, signed into law Aug. 16, 2022, consumers can get a 30% credit, or up to $2,000 per year, for home efficiency improvement projects like heat pumps, efficient exterior windows and door, or biomass stoves and boilers. They can also receive 30% tax credits through 2032 for rooftop solar panels or other renewable energy projects like wind or geothermal systems, After 2032, the credits phase down.

Costs

Pro: Green buildings in the right locations can realize zero utility bills. As a result of the Inflation Act of 2022, you can receive a tax credit of 30% for solar electric systems, solar water heaters, geothermal heat pumps, and small wind turbines if the costs are incurred from 2022 to 2032. A green building can save on heating and utilities bills and may have a higher appraised value, making resale easier.

Con: Building a green home is usually costlier up front, although some costs can be recovered through tax credits, energy savings, and reduced repair bills. Do the math and see if increased construction costs balance against potential long-term savings.

Living or Working in a Green Building

Pro: Green buildings are healthier because they are built with natural products that have fewer dangerous chemicals. This can decrease allergies, asthma, and other respiratory problems, saving health costs. In addition, the higher-quality building materials are more durable and should require fewer repairs. 

Con: Cooling components use natural resources that don’t give the homeowners full control over temperatures. It is important to position the building for optimum use of these resources, which could mean that shades or blinds would need to be installed. You might have to position the building on the lot in a way you would not prefer. 

Using Natural Resources

Pro: Green buildings depend on the sun, wind, and geothermal energy so there is reduced dependence on conventional sources of energy. This reduces the carbon footprint.

Con: You must build in a location that allows you to take advantage of these natural resources. For example, if you are planning to install solar panels, a lot near trees or buildings may not get enough sun. Also, you need an architectural design conducive to solar panels. Buildings that intend to use wind or geothermal energy sources have other location and positioning limits.

Return on Investment

Pro: Green buildings, because of the materials used, have an increased lifespan, providing a better return on investment. 

Con: The price tag for building can be quite expensive, requiring accurate figures on construction and long-term-usage costs. 

Materials

Pro: Green buildings use more efficient and renewable materials for construction, such as straw, recycled metal, concrete, sheep’s wool, compressed earth blocks, lumber, and bamboo. All these are recyclable, reusable, and nontoxic.

Con: Building materials that are efficient and renewable can be more expensive.

The Bottom Line

If you decide to construct a green building or add green features, you’ll face initial costs, even with tax credits. However, you could benefit from savings on electricity and heating as well as receiving a higher appraisal value for easier resale. Finances aside, an energy-efficient building can help with reducing emissions, and therefore benefit the environment.

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