What is The Average Insulation Payback on Existing Homes?

February 27, 2015

That obnoxious kid sitting next to you in your high school freshman pre-Algebra class probably convinced you and many other students that you wouldn’t need this stuff when you grew up.

After all, how do fancy, confusing formulas with letters and numbers help anyone?

Capitol Machine certainly understands your thinking. We may not have been sitting not too far from you and were just as convinced that Algebra was a useless exercise of gray matter.

Ah, but alas. Life has a way of showing up later on to overturn your earlier preconceived notions. Here you are: Making a very wise investment in insulating your home. You’ve heard the rhetoric (you learned that word in English class). Insulating your house is beneficial in so many ways, especially if you’re looking to increase your home’s resale value or hoping to save money in the long run.

How to Calculate An Insulation Payback

Calculating The Average Insulation Payback

You know in your heart you’re going to save money. But it’s figuring it out in your head that’s the tough part – and it all has to do with that Algebra stuff. So, the question is: How long will it take for you to recoup your investment? Well, pull out your pencil and paper, your slide rule, your pocket calculator or your ancient computer because we at Capitol Machine have the simple formulas for you – information we have gleaned from the U.S. Department of Energy, which you may have learned about in civics class. And if you’re an insulation contractor, it’s time to take notes, too. This information is an insulation selling point to share with potential customers.

According to the DOE, you simply plug in the numbers to the following equations, and you can estimate when in years you reach the payback point. Payback in years calculates the time you reach when energy savings in dollars equals – and then surpasses – the initial insulation investment cost.

The equation only works for uniform sections of your house, which means you can make estimates for payback on certain walls or rooms. Put simply, the formula is the initial investment divided by the annual savings after taxes.

Are you ready? Here is the formula, straight from the federal government: Years to Payback  =  (C(i) × R(1) × R(2) × E)   ÷  (C(e) × [R(2) - R(1)] × HDD × 24).

C(i)  =  Cost of insulation in $/square feet. Collect insulation cost information; include labor, equipment and vapor barrier if needed.

C(e)  =  Cost of energy, expressed in $/Btu.

To determine the energy cost, divide the actual price per gallon of oil, kilowatt-hour (kWh) of electricity, gallon of propane, or therm (or per 100 cubic feet [ccf]) of natural gas by the Btu content per unit of fuel.

To calculate the per unit price, add the total amount of bills (oil, electricity, propane or natural gas), and divide that number by the total number of gallons used during the month.

Use the following values for fuel Btu content:
#2 Fuel Oil = 140,000 Btu/gallon
Electricity = 3,413 Btu/kWh
Propane = 91,600 Btu/gallon
Natural Gas = 103,000 Btu/ccf or
100,000 Btu/therm

The Average Insulation Payback on Existing Homes

E equals the efficiency of the heating system. For gas, propane and fuel oil systems this is the Annual Fuel Utilization Efficiency or AFUE. Typical AFUE values are 0.6 to 0.88 for oil or propane furnaces, and 0.7 to 0.95 for natural gas furnaces.

Use E = 1.00 for baseboard electric systems. For heat pumps, use the Coefficient of Performance or COP for E; where E = 2.1 to 2.5 for conventional heat pumps, and E = 3.2 to 3.5 for geothermal heat pumps.

R(1)  =  Initial R-value of section

R(2)  =  Final R-value of section

R(2) - R(1) =  R-value of additional insulation being considered

HDD  =  Heating degree days/year. (You can get this from the weather station, utility company or oil provider.)

The U.S. DOE offers other equations to the mathematically inclined. And we’d urge our not-so-algebraically challenged readers and customers to fiddle with some of the other, more involved equations the government offers.

And if you’re that dedicated, we at Capitol Machine suggest that you can also calculate the time you spent calculating the time you’d save by investing in insulation. However, we assume no responsibility for the memories this may conjure up from your freshman year.

Did you find this information helpful? Do you have equations of your own you’d like to share? We at Capitol Machine offer a wide variety of insulation machines, insulation blowers and insulation removal vacuums. Contact us with questions or for more information.