The Key Principle of Energy Efficiency

I have talked to many people about energy efficiency. Almost invariably the discussion turns towards residential solar panels and high performance windows. Now, while these things are important, solar panels are _not_ an efficiency measure but instead an electrical generation system. High performance windows, while they are an efficiency measure, are probably the least cost-effective efficiency measure that one can undertake according to the vast majority of research I've read along with my own personal experience.
To folks at this level of knowledge, I would point out one major tenet of energy efficiency as I see it:

For a grid-connected house, saving energy is the same thing as generating it.

From the point of view of the electrical grid, a house that uses 1 kWh less per day looks exactly the same as a house with a solar panel system that generated 1 kWh that day. Both houses take 1 kWh less from the grid than their unimproved counterparts on any given day, and therefore both houses are reducing their energy bill by the same cost per day, and reducing the environmental impact of generating their required energy by the same amount.
In short, and it is worth repeating, those solar panels or wind turbines on the house are performing the exact same function as any energy efficiency improvements. Because of that fact, if you want to determine whether to improve efficiency or add generation to your home, it is logical to compare:

1. The up-front cost and effective interest rate of the improvement
2. The environmental impact of the improvement
3. The impact on the home's value of the improvement

These should be the major factors to consider when deciding whether to go with a generation option (typically solar these days) or efficiency. Bottom line: don't just assume you have to go with electrical generation to reduce your home's ecological footprint. The same amount of money will likely offset more energy usage if spent on efficiency than if spent on generation, depending on the starting efficiency of your home. If your house is anything like mine was when I started this whole adventure, you have a lot of low-hanging fruit to gather, for surprisingly little money and high rate of return, before it makes sense to consider generation.
That being said, the prices of solar panels have been dramatically reduced and ongoing efforts are being made to reduce installation costs. With appropriate subsidies a solar generation system may make good sense, at least for the homeowner. Whether it is worthwhile in the larger community, when considering the other things that the subsidy money might have been spent on in our current era of budget shortfalls, is perhaps a tougher question to answer.

So is Energy Efficiency Man bashing solar panels? Not in the least. The more the better, particularly in the Texas summer. Here in Austin, we had an all-time record electrical usage number a couple days ago. Solar panels will and do undoubtedly help reduce our peak summertime loads. However, EEMan would like to see every one of those solar panel-covered houses looked at for low-hanging efficiency fruit, so that we can get the maximum reduction in load on the grid. A net-zero (or energy positive) house is a great thing to aim for.

Until next time, be safe and be cool!

How much energy is that, in solar terms?

Having determined that I cannot afford to hire 20 or 30 people to spend most of their waking lives pedaling bikes to power my house (20 people for 12 hours at $8.00/hr = almost $2000 per day!!!) , I wondered if there might not be other, non-power-grid ways of getting my home powered. After all, Texas is blessed with pretty good sunshine; not as good as the desert Southwest of this country, but well above average. Perhaps I can power my home with solar panels, using some of that energy to my advantage, rather than just fighting it, to reduce its effect of heating my house up through the summer months.

I've got roughly 500 square feet of roof space that might be exposed to enough sunlight for panels to make sense. (This is my estimate; I'd have to get a real professional to look at it for a final number). According to a nice solar system calculator at findSolar, which takes into account the measured sunlight in my area, I might be able to just fit a system into my roof space.
So my electricity needs are solvable with solar, since I seem to have about the required roof space. (I realize that the sun doesn't shine at night; but my house is grid-tied, so I can pull from the grid at night or on cloudy days. I would effectively put energy back into the grid on sunny days where I didn't need all of it; the proposed system is sized to cover my needs as averaged throughout the year, so my net draw from the grid over a year would be 0.)

The solar calculator estimates that the system would cost me around $20,000 (including various rebates and credits). While that's a chunk of change, once I spend it, it covers my energy costs for quite some time. Compared to paying people $2000/day to pedal bikes, this justifies itself after just 10 days. And since panels last for decades (although some of the ancillary equipment won't), this is looking like not too bad a bargain.
So the solar option is clearly better than paying people to pedal. But a more subtle question then arises: is it better for me to spend money buying solar panels, or is it better for me to continue to reduce my energy usage with efficiency measures?
And so we start down the road that most people considering these sorts of things travel: how much do I spend up front vs. how much do I save over time? If I consider $20,000 an investment, what effective interest rate does it pay me? In fact, to know this, I need to know what is the future cost of the electricity it is offsetting, which is, of course, a guess. Like any investment, this "calculation" involves guesswork about the future of the investment, the future of the market, etc.
Looking at what I spent on electricity in 2007, roughly $700.00, the panels might take $20,000 / $700 = about 28 years to pay off in electricity savings, at current electricity prices. That's a return of roughly 3.5%, which is far lower than my efficiency investments have returned. That rate of return for solar will go up as electricity prices go up; however, so will the rate of return on my efficiency investments. So at this point, it's still looking to me like efficiency is the way to go, until I've gotten to the point that the estimated rate of return on those drops to below 5%, or until solar panels undergo another dramatic price drop.