Superinsulation – Questions of Cost Effectiveness

The energy use and economics of a group of superinsulated and conventional houses were studied. Conventional construction was found to use considerably less energy than is generally assumed. The economic advantage of superinsulation is therefore less. An analysis was conducted of the conditions under which superinsulation is cost effective. Cost effectiveness depends on six important variables: 1) incremental cost to superinsulate, 2) loan interest rates, 3) gas prices, 4) fuel use of superinsulated homes, 5) fuel use of conventional homes, and 6) resale value of the house.

The study was conducted on a group of twenty-three superinsulated and twenty-three conventional homes built under the 1981 McKnight Minneapolis/St. Paul Housing Program. Normalized annual gas consumption (NAC) was determined using the Scorekeeping model, a state-of-the-art weather normalization program developed by Princeton University. The conventional homes, built to pre-1984 Minnesota State energy standards (ASHRAE 90-75), were found to use significantly less energy than expected. They had a mean NAC of 940 CCF/year, of which 68% or $370 was estimated to be for space heating. The superinsulated group had a mean NAC of 769 CCF/year, of which 57% or $250 was estimated to be for space heating. The $5,500 extra cost at 11.38% interest increased annual mortgage payments by $648. This exceeds the $120 annual fuel savings and $210 annual tax advantage (35% savings on annual interest paid).

Depending on the rate of fuel price escalation and the effect of superinsulation on the resale value of the home, superinsulation may or may not be the least-cost option for the new home buyer who will own the house for a five to eight year average ownership period. If the added energy savings are deemed valuable to society as a whole, changes in public policy may be needed to make superinsulation a more viable option. 

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Superinsulation – Questions of Cost Effectiveness