Category Home Heating Costs

Insulation is one of the most important factors in improving building energy efficiency. Heating, ventilation and cooling (HVAC) often accounts for more than half the energy expense of a building. Insulation helps to improve the energy efficiency of heating and cooling. Depending on the selected insulating material, the economic impact on heating costs can be quite dramatic.

To understand how insulation helps improve building heating and cooling, it’s helpful to review the dynamics of building heat loss as it applies to building materials and outside actual air temperatures.

To calculate the heating requirements for a building, the overall heat loss from a building can be derived as a function of the combined heat loss of transmission through the roof, walls, windows, doors, and floors, as well as heat loss caused by ventilation and air infiltration. In general, without getting too scientific, the heat loss from transmission through roof, walls, doors, and windows represents the largest impact and is primarily a function of the temperature difference between the inside and outside air and thermal conductance of he building material. For a more detailed review of building heat loss see Heat Loss.

The difference between inside and outside temperature plays a critical role in building heat loss. The first step is to understand heating and cooling requirements from weather data. Heating degree day (HDD) are a measure of energy demand required to heat a building. HDD is derived from the difference between the daily outside temperature observations and the ideal indoor air temperature, say 65 degrees Fahrenheit (18.30 Celsius). The heating requirements for a building in a specific location can be derived from the HDD data in conjunction with building factors such as insulation, windows, solar heat gain, and use. Air conditioning also has a similar metric and is defined as cooling degree day (CDD) and measures the amount of energy used to cool a building.

From the historical data on outside air temperature, an average heating and cooling degree day can be assigned to a specific region. To calculate degree days for both heating and cooling Daily Temperatures can be assessed by zip code to capture historical data on specific climate zones.

When it comes to selecting building materials and insulation, material suppliers often supply two measures – the R-value and C-value. A material’s R-value (thermal resistance) is the measure of its resistance to heat flow. The C-value (thermal conductance) is the reciprocal of thermal resistance and measures the ability of a piece of material to transfer heat per unit time or more specifically, specifies the rate of energy loss through a piece of material.

The US Department of Energy (DOE) has provided revised R-value recommendations based on climate zones. To understand the energy impact of selecting the right R-value insulation material for your building, an on-line heating calculator will help illustrate the heating requirements and associated energy costs for different insulating materials. Building heating requirements are often expressed in BTU (British Thermal Units) per cubic foot.

The Heater Shop BTU Calculator Heating Calculator provides some useful insight into managing energy expenses. The calculations were based on an average of 25 HDD for New York City.

Figure 1 illustrates the heating requirements as measured by BTU per square foot of building space for corresponding insulating materials across ceiling heights from 10 to 40 feet to capture cubic feet. As seen from Figure 1, the heating requirements show significant variance depending on insulation assumptions.

Figure 1 BTUs per Square Foot
Source: Heater Shop BTU Calculator

Taking the building heating requirements one-step further, different insulating assumptions (no insulation, average, and good) translate into wide dispersion in operating costs. The on-line heating calculator was used to estimate the building heating requirements based on the following assumptions: 10,000 square foot facility with ceiling height of 10 feet for 25 HDD for no-insulation average insulation, and good insulation. To derive fuel costs, the BTU per square foot for each insulation category was applied to a heating system operating for five heating months with approximately 1,400 hour of operations to coincide with a gas furnace at 90% efficiency and 20-minute on-cycle and 30-minute off-cycle. Gas pricing for heating are based on $17.00 per million BTU.

Figure 2 Heating Energy Cost
Source: Green Econometrics research

Figure 2 demonstrates that heating cost per square foot for good insulation saves approximately $2.90 per square foot in comparison to no-insulation at all. If we compare the heating costs savings to the cost of insulation, the payback period for insulation can be achieved in a year under most circumstances.

Figure 3 Insulation Cost
Source: Green Econometrics research

To assess the C-value and R-Value of various building materials, there are some useful charts available on the web. Insulation and Building Materials R-Values

The bottom line is that insulation is one of the most important building components materials to improve energy efficiency and lower utility costs.

As energy and food prices set new world records, what can we do at home to avert the crisis? Food prices are rising because corn is diverted from food production to producing ethanol for use as fuel in motor vehicles and is exacerbated by the recent flooding in the Mid West. Oil prices continue to escalate as demand for oil in developing countries increases and supply constraints, rising production costs, and limited refining capacity constrain the supply of oil. These factors continue to weigh against homeowners that will face escalating fuel bills to heat or cool their homes. There are some viable alternative energy solutions including wind and solar as well as home insulation that should offset the rising cost of energy. As far as food for fuel, we need to break our dependence on hydrocarbons which continues to impact our climate and weather and transfer our wealth to oil producing nations

Corn Prices have increased 264% since 2005. The rising price of corn used for ethanol is causing farmers to plant more corn and less production of other grains such as wheat or soy. Lower supply of grains is driving up food prices. Rising food prices is most debilitating to the poor, especially those in developing countries.

Figure 1 Corn Prices

Growing demand for oil and questions over Peak Oil suggesting even with oil prices rising to such an elevated level, production is rather anemic. According to the Energy Information Administration (EIA) , while oil prices increased 344% since 2001, oil production from OPEC is up only 1.2% over this same period.

Figure 2 Oil Prices

According to the EIA The demand for oil in China is growing at an 8.1% CAGR over the last five years. With demand for oil growing significantly in developing countries and despite production developments in Saudi Arabia and the 5-to-8 billion deepwater Tupi oil discovery in over Brazil The Tupi announcement in January 2008 is the world’s biggest oil find since a 12-billion-barrel field discovered in 2000 in Kazakhstan according the International Herald Tribune. These new oil discoveries are often in inhospitable areas or deep ocean environments, which makes extraction costly and difficult.

Figure 3 Rig Count and OPEC Oil Production

What can we do? . Forget drilling for more oil, electric vehicles and investment into alternative energy is the only way to avert this crisis. OPEC area drilling activity is up 48% since 1998 and yet, despite dramatically higher oil prices, up 5 fold since 1998, OPEC oil production increased only 11% over 1998.

Homeowners could begin to deploy energy saving and alternative energy systems. Wind and solar energy could help reduce some of the pain. As consumer embrace hybrids, electric, and fuel cell vehicles, wind and solar should begin to offer a stronger value proposition. Energy saving tips such as compact fluorescent bulbs, on-demand hot water heaters, and thicker home insulation products should help reduce heating and cooling costs.

According to the American Wind Energy Association AWEA a turbine owner should have at least a 10 mph average wind speed and be paying at least 10 cents per Kilowatt-hour (KWH) for electricity. There are electric utility and tax credits available in some areas. There are also questions regarding zoning restrictions, and whether to connect to batteries for energy storage, or directly to your electric utility. Consult the Wind Energy Resource Atlas of the United States Wind Resource Maps to get a better understanding of wind speeds in your area.

Cost wind systems will vary depending on model and installation costs will vary by your location. The Whisper 500 from Southwest Windpower offers electric production of 538 KWK/month at 12 mph (5.4 m/s). The system weighs 155 lb (70 kg) and has blade span of 15 feet (4.5 m) and must be mounted on a tower in cement. At 538 KWH per month, that is enough energy to cover the needs a modest house with conservative electric usage. Small wind systems can range from under $1,000 to over $20,000 with a payback period of approximately five years depending on wind resources and utility rates.

Solar photovoltaic (PV) panels cost an average of $4.80 per watt according to Solarbuzz which is about $0.24 per KWH over a 20 year life of the PV system. With an average output of approximately 10.6-watts/square foot (114 w/m^2), a five KW PV systems would cover 515 square feet (47.8 sq. meters) costing approximately $36,000 before credits and tax benefits and produce about 490 KWH per month. Of course installations costs are extra, but with PV production ramping and new PV suppliers entering the market we can expect costs to decline. Federal and local tax credits as well as selling unused electric to your local utility offers economic value on the margin.

The economic value is expected to increase as costs decline and electric rates increase and we can expect significantly higher utility rates in the near future. The economics of zero carbon emissions is not even measured as a benefit to the consumer. We are just beginning to see the cost impact of extreme weather and climate change.

Consumers should try to ameliorate the rising cost of energy by investing into solar and wind. There are several companies offering complete installation services. Among these include: Akeena Solar (AKNS) in California and The Solar Center in New Jersey.

The bottom line: energy and food prices are creating a crisis for consumers globally and there are several initiatives that could help minimize the pain. In addition, the erratic weather patterns around the world may be just a prelude to climate changes due to the impact of carbon dioxide on climate, which may cost us much more in the long run. Let’s stop the drain of wealth cause by oil and invest into clean and renewable energy solutions.

With oil prices over $80 per barrel, the National Energy Assistance Directors’ Association in its press release today Record Home Heating Prices for Heating is expecting the average home heating cost for the ’08-’08 season to rise 9.9%. For homeowners using oil heat, heating costs are expected to increase 28% and for homes using propane, a 30% increase is expected.

With rising energy costs driven by costly oil extraction, the potential impact from carbon emissions with our continuing use of oil on climate change and rising sea levels, as well as the potential for fuel supply disruptions, could exacerbate our tenuous relationship with energy.

Eventually, as price rise dramatically, alternative energy becomes more compelling. The problem is our economy is so inextricably link to oil, that our energy security is based on securing foreign oil.

Figure 1 Oil Prices and Home Heating Costs

Without support and research on alternative energies such as solar and fuel cell technologies, we are hostage to oil. The U.S. economy is facing one of the most crises since the Oil Embargo of the 1973. Inflation driven by escalating oil prices is impacting the cost of home heating, transportation, production, materials, and food, particularly as corn is diverted to ethanol production. The housing market is in turmoil with falling home values, rising foreclosures, and a credit crisis that is making it more difficult to secure a mortgage may lead to slower consumer spending. With rising inflation and slower growth we may find ourselves in an economic world described as stagflation that was coined in the ’70’s to describe the bleak environment when gas stations rationed fuel, unemployment grew and the Federal Reserve raised rates dramatically to quell inflation.If we could limit our dependence on foreign oil through investment into solar energy and fuel cell technologies, we would not be impacted by the exogenous events in oil producing nations.

We believe there are a number of catalyst that could serve to dramatically lower the cost of alternative energies. It takes initiatives from all of us to change the balance. After all, oil is becoming more costly to extract, new oil discoveries are in difficult and challenging environments, and oil will eventually run out – it is finite. If we wait to long, our ability to make a difference may not be available.

To measure the efficiency of conventional hydrocarbon fuels, we need a common measure of energy. The Kilowatt-Hours (KWH), the billing quantity of electric usage, serves as a useful measure of energy because we can equate KWH to engine horsepower performance, heat energy of a fuel, and compare energy costs on a common level. KWH can be used to determine which fuel is most efficient by measuring the heat output of each fuel.

A BTU is the amount of heat necessary to raise one pound of water by one degree Fahrenheit and each fuel has its own BTU measure. For example, one ton of coal produces about 21.1 million BTUs, which would equate to 6,182 KWH. One KWH equals 3,413 BTUs.

A framework to measure energy costs is to convert each fuel type into KWH of energy. Some helpful links to common fuel conversions Energy Units and Conversions KEEP, BTU by Tree, and Fuel BTUs

We want to establish common energy measure to evaluate home heating fuel efficiency for each fuel type. Our first step is to measure the BTU value for each fuel type. The next step is to divide the BTU value for each fuel by 3,413 to arrive at its corresponding KWH energy value.

Kilowatt-Hour per Unit of Fuel
The energy value of a unit of fuel depends on its mass, carbon and hydrogen content, and the ratio of carbon to hydrogen. In general, hydrogen generates approximately 62,000 BTU per pound and carbon generates around 14,500 BTUs per pound. The combustion process is complex and while higher hydrogen content improves energy BTU levels, not all hydrogen goes to heat. Some hydrogen combines with oxygen to form water. Coal Combustion and Carbon Dioxide Emissions

Energy Comparison
1 pound of wood = 6,401 BTUs = 1.9 KWH
1 pound of coal = 13,000 BTUs = 3.8 KWH
1,000 cubic foot of natural gas = 1,000,021 BTUs = 299 KWH
1 gallon of oil = 138,095 BTUs = 40.5 KWH
1 gallon of propane = 91,500 BTUs 26.8 KWH

Figure 1a Kilowatt-Hours per Pound

As seen from figure 1, natural gas provides the highest efficiency level followed by oil. Wood offers the lowest efficiency per pound at 1.9 KWH/lb and is followed by coal with twice the efficiency at 3.8 KWH/lb. Oil offers almost a 70% efficiency improvement over coal and propane is just slightly more efficient than coal.

Fuel Energy Efficiency
Wood = 1.9 KWH per pound
Coal = 3.8 KWH per pound
Natural Gas = 6.9 KWH per pound (liquid and gas measures are calculated at 6.3 pounds per gallon)
Oil = 6.4 KWH per pound
Propane = 4.3 KWH per pound

This is not the full story. While the energy efficiency of the fuel is important, a lot depends on the fuel efficiency of the stove or furnace that is used to heat your home. The heating efficiency of your stove or furnace has a substantial impact on the overall efficiency of the fuel’s heat value. The adjusted KWH in figure 1 indicates the fuel efficiency adjusted for the efficiency of the heating system. There is also some variance in the fuel efficiency given impurities, temperature, and water presence.

Adjusted Fuel Energy Efficiency
Wood @ 1.9 KWH per pound and stove efficiency of 70% equals 1.3 KWH/lb
Coal @ 3.8 KWH /lb and stove efficiency of 70% = 2.7 KWH/lb
Natural Gas @ 6.9 KWH /lb and furnace efficiency of 95% = 6.5 KWH/lb
Oil @ 6.4 KWH /lb and furnace efficiency of 85% = 5.5 KWH/lb
Propane @ 4.3 KWH /lb and furnace efficiency of 95% = 4.0 KWH/lb

Figure 1b Kilowatt-Hours per Kilogram

Figure 1b proves the same fuel types measured by liters and kilograms. While the absolute numbers are different, the relative fuel efficiency among the fuels is the same.

Energy Economics

The final phase of our fuel efficiency exercise is to compare an economic measure of fuel cost. The market price of fuel will vary by location, usage amount, and market conditions. Our prices were quarterly average U.S. energy prices by fuel type:
Natural Gas Prices, , Oil Prices, and Propane Prices
Coal and wood prices were based on local residential delivery.

Figure 2 Cost per Kilowatt-Hours

Coal and wood are among the lowest priced fuels. However, coal and wood require extensive hands-on control and cleaning which are not factored into costs. Natural gas is offered in many urban areas and is currently priced below oil or propane. Natural gas offers higher energy efficiency and is priced lower than oil or propane, but is not available in all urban markets and very limited rural availability.

The trade off between oil and propane, which can be found in most markets, is operating efficiency and maintenance. Modern oil furnaces are demonstrating higher operating efficiencies, but cost significantly more than propane. Oil does offer higher efficiency than propane, but maintenance costs are higher for oil furnaces and that cost is not reflected in these fuel costs measures.

Electric heat in some markets where utility rates are below oil or gas may offer favorable economics, but electric rates might be going higher as utilities switch to lower carbon emission fuels. The challenge is to migrate electric utilities from lower-priced coal with high CO2 emissions to natural gas with lower carbon emissions. The cost to lower CO2 emissions from coal burning utilities could force natural gas prices to rise. The bottom line is that energy prices will continue to rise with natural gas tide to oil production. Even with higher fuel prices, there is still a tremendous disparity between conventional and alternative energies with the cost of solar near $0.38 per KWH and residential electric rates of $0.11 per KWH.

Carbon Economics

Emission of CO2 from hydrocarbon fuels depends on the carbon content and hydrogen-carbon ratio. When a hydrocarbon fuel burns, the carbon and hydrogen atoms separate. Hydrogen (H) combines with oxygen (O) to form water (H2O), and carbon (C) combines with oxygen to form carbon dioxide (CO2).
How can a gallon of gas produce 20 pounds of CO2

From this example, a carbon atom has an atomic weight of 12, combines with two oxygen atoms each with a weight of 16, to produce a single molecule of CO2 an atomic weight of 44. To measure the amount of CO2 produced from a hydrocarbon fuel, the weight of the carbon in the fuel is multiplied by (44 divided 12) or 3.67.

Wood has half the carbon content than coal, but coal is twice as efficient as wood and therefore both have nearly the same high level carbon footprint. Oil benefits from having higher energy efficiency than propane giving oil 30% lower CO2 emissions pound for pound.

Figure 3 Pounds of CO2 by Fuel Type

Natural gas, because of its low carbon content and high fuel efficiency, achieves lower CO2 emissions than oil, propane, or coal. Natural gas produces 46% less CO2 than coal and 10% less than oil. With coal relatively abundant and cheap in comparison to oil or natural gas, energy prices may increase as electric utilities switch to lower CO2 emission natural gas or invest into emission reduction processes that add to capital costs and operating expense.