Payback time for going all green unclear

GLENCOE, ILLINOIS - The July electric bill for Wilmette architect Scott Krone's brand new 4,000-square-foot "green home" was $180.

Compare that to the $400 to $600 a month his family paid for electricity during July 2007, when they lived in a home without solar panels, geothermal heating and cooling, thick insulation, reflective roof and energy efficient windows.

The geothermal system takes advantage of the constant 55 degrees of the earth with 18 wells in the back yard that pump that air deep within the earth for cooling in the summer and warming in the winter.

And the solar panels convert sun rays to electricity, offsetting the cost of energy on their ComEd bill.

The Krone family's Nicor gas bill also has dropped, even with therms going up. Krone estimates his 2008 average monthly bill to Nicor will be $100, versus $150 a month last year at his old house. The old house relied totally on natural gas for heat.

Krone spent an extra $53,000 on all these features when you count up everything - $20,000 for the solar panels, $20,000 more for the geothermal system than he would have paid for a traditional furnace, $10,000 more for the reflective roof and $3,000 for improved insulation.

And while the payback period is just too early to tell, Krone's family is seeing dramatic savings on their monthly energy bills.

Krone, an architect and builder and principal of development with the Glenview-based architecture and construction company, CODA LLC, teaches at the Illinois Institute of Technology. He offers his home as a case study in cost savings because he does not want prospective buyers of "green homes" or those who are thinking of retrofitting existing homes to be misled about how much money they will actually save.

For those who want to install renewable energy features such as geothermal systems or solar panels for environmental reasons, concerns about costs may not matter.

But doing so to save money is another matter. Still, with natural gas and electric rates expected to keep going up, the economic incentives may come sooner rather than later.

For example, Krone wants prospective buyers to know that putting up enough solar panels to completely wipe out a monthly electric bill is difficult to determine.

His 12 solar panels, which went on line in early March, have supplied the energy for only 15 percent of the home's total electricity, Krone said.

But he said the house is quite comfortable thanks to the geothermal system and their keeping the thermostat at a guilt-free 75 degrees year-round.

"In the old house, we would only turn on the air conditioner if the temperature went up to 85 or 90 degrees," he said.

Krone points out that the cost of natural gas was 76 cents a therm in 2004, doubling to $1.25 a therm in 2007. ComEd rates were 8.15 cents a kilowatt-hour in 2006 and are nearing 11 cents a kilowatt-hour in 2008.

On top of reduced utility bills, the state and federal government offer tax incentives and rebate programs (see sidebar) that could also tip the scale in favor of adding green features to a home. Krone enjoyed a $7,000 rebate from the state to help offset the $20,000 cost of the solar panels.

Come tax time, his accountant also will be looking into what Krone believes will be "substantial" deductions and credits he can take for the improved energy efficiency features of the home.

Greg Weismann, a Northbrook-based builder who has two homes on the market in Highland Park, said he will not be able to quantify the energy savings from the geothermal systems until the families move in.

"I don't have a good feel yet for what the actual savings will be," he said. "The theory is they would save a couple of thousand dollars a year (in energy bills), with a payback of 10 to 12 years," he said.

Locally, companies such as Pure Energy Alternatives of Northbrook, Canada & Klein of Winnetka, and Indie Energy of Evanston, have all been in the forefront of building north suburban homes with green features such as solar panels or geothermal systems.

Jeff Cohen of Canada & Klein said he estimated the 6,000-square-foot home he built in Glencoe will pay back its $80,000 geothermal system in four to five years.

"It could be three years if the prices keep going up," Cohen said.

The reason for the fast payback is because he was comparing its cost with a high quality $53,000 furnace he would have installed instead. The July electric bill for the home was $250, with air conditioning running constantly, he said.

Cohen also paid more for closed foam insulation for the home, but estimates its payback will be three years.

But Cohen says homeowners who don't have tens of thousands to plunk down on geothermal or solar panels can find even cheaper ways to cut their utility bills. Better insulation or compact fluorescent bulbs are other ways. Eliminating energy-hogging appliances is another.

"Those with 20-year-old refrigerators could spend $800 on a new refrigerator and save (substantially) in electricity," he said.