Should I pay more for an energy efficient home
If you are looking at buying a home right now, you may have asked yourself, “what bills will I be up for if I buy this place?” It’s a good question, electricity and gas bills have been rising. Indeed, your bank may even ask you questions about your future living costs when deciding on how much to lend you.
Here’s the good news. It probably doesn’t matter, because energyFit helps home owners convert all types of homes into a zero energy bill homes.
Our view is you should be able to buy the home of your dreams first, then we can come in and help you make the changes to fixed appliances and add solar to give you zero energy bills. We have converted some really high energy cost homes to zero bill homes with no upfront cost and insuring the energy savings are greater than any loan repayments, so you are better off from day one. It’s really not that hard when you use the energyFit method.
That said, if you want to get a head start when you buy your home, here are some useful tips.
Here are a few quick tips. Firstly, where is your future home? Will it be in a climate that experiences all four seasons, like Melbourne, inland Victoria and inland NSW. Or is it a mild climate like Sydney. Can it get really hot like Perth, Adelaide, Brisbane and Darwin, or are you heating a lot more than you are running air conditioning like Canberra or Hobart. This is the first place to start. For the purpose of this discussion, we will break them up into;
- Cold Winters
- Four Seasons
- Gets hot
You can decide where your future house fits in.
The most obvious thing to check is, does the home have solar PV. If not, why not. If the home doesn’t have solar PV check to see if there are any large trees blocking the northern roof face. If that’s the case your local council may prevent you cutting down that tree so you may never be able to put solar on the roof. That could cost you $50,000 over the life of a home loan (assuming you would use the bill savings from solar PV to help pay off your loan).
If the home has solar PV the question you are probably asking your self is how much is that worth. You can do some research online to get an idea about prices and which technology is worth what amount, but we’ll give you a quick way to get a rough estimate now.
Find out how many kilo Watts (kW) of installed solar is on the home. Then, find out how old the system is (years). You can then use the formula below to get an idea of the value.
Value = -50 x kW x years + 1000 x kW
Let’s look at an example,
Say we have a 4kW system that was installed 6 years ago, the value is;
Value = -50 x 4 x 6 + 1000 x 4
Value = $2,800
This method provides you with an indicative value, you can definitely take your research further. It does however give you a ball park for how much solar is worth which you can take to auction day. For instance, in the example above, you would not want to bid an extra $10,000 just because the home had solar PV.
Passive Design and Home Orientation
You may have read a lot about passive design. If not the idea is you basically design your house so it doesn’t need much heating or cooling.
If the home faces north and you are in the Four Seasons or Cold Winters, this is great. You can maximise the amount of sun that comes in during the day, and if the home is well insulated, it will store that heat for when you get home at night.
In the Gets Hot climates you should be looking for high ceilings, wide verandas and plenty of air flow. If you live in these areas you probably already knew that.
The more interesting question is how do you value this passive design?
One way to look at it is, how much would it cost to heat or cool this home if it were not passively designed. The size of the electricity or gas bills if it was not passively designed is a good proxy for the passive design value.
Let’s look at an example. In Canberra most homes have ducted gas heating. In a home that’s not passively designed, heating bills are typically $1,200 for gas and $200 in electricity (electricity is needed for the fan in the ducted gas heater). So the total cost could be $1,400. A passive design could reduce that to $600, saving you $800 per year. If you used the $800 to help pay off your home loan you would be $60,000 better off at the end of loan.
Passive design has too many variables to provide a simple formula to use. However, if you have lived in the area before you probably have an idea about your heating and air conditioning costs from your summer and winter bills. It could be worth thinking about how much a passively designed house could be worth to you.
If however, your dream home is not passively designed. Maybe it was built in the 70’s or 80’s. Maybe it has a lot of glass on the west because of a beautiful view. Don’t despair, there are technology solutions that can bring your bills down. Choosing the right heater or air conditioner can massively reduce your electricity and gas bills. Take our Canberra example. We have helped people with $1,400 heating bills reduce that to $350 through low cost technology change. These houses were not passively designed, however the efficiency of the new heaters meant it didn’t matter.
Hot water heaters are the largest single user of energy across all states and territories. On average, they make up a quarter of household electricity and gas bills.
So what should you look for? If you are in NSW, SA or QLD, ask the real estate agent if the hot water system is on off peak. The agent probably won’t know off the top of their head but they can find out and the answer makes a big difference. Off peak hot water can halve your hot water bill.
Another factor to consider is, does the home have solar PV. If yes, then is the hot water heater electric. Electric hot water heaters are great at absorbing excess solar electricity in the middle of the day and storing the energy for when you need a piping hot shower.
Energy efficient hot water systems are a bit too complex to cover in detail and not all are equal, however if the home has a solar hot water system or a heat pump hot water heater you will save money. Generally, these technologies will reduce your hot water costs by 60 to 80 per cent.
If you are in Victoria, gas is cheap so an instantaneous gas hot water system will also save you money. Not generally as much as solar hot water or a heat pump but still a saving compared to electric storage or gas storage.
Many homes outside of Victoria have gas just for cooking. Gas is great for temperature control when cooking, however if you have gas just for cooking you are paying to be connected to a large gas network, or you are paying for bottles to be transported to your home. Why pay for two types of energy to be delivered to your home if you can just pay for one, electricity.
The typically annual gas connection fee is over $300 per year. Induction cooking offers similar temperature control to gas (not everyone may agree with us here) and is fully electric. If you are open to induction cooking it might save you $300 per year for the life of the loan. Worth considering.
Overall, there are a few things you can lookout for when buying a home.
- Does it have solar PV
- Is it passively designed
- Does it have options which reduce hot water costs
- Are you paying for two types of energy to be delivered to your home for cooking
If your dream home doesn’t tick all these boxes, don’t worry technology can help you. EnergyFit provides a service where we assess your home for all viable options to reduce your bills. Typically we check over 200 thousand variations to pick the absolute best options for your home. By doing this we make sure the upfront cost is as low as possible and the bill savings are as high as possible. Using this method we have already helped many people who purchased energy hungry homes get their bills to zero. We make sure if you are borrowing the upfront cost, that the energy bill savings are greater than the loan repayments, so you are financially better off from day one.