Payback Period: Key to Eco-Thrifty Renovation
When my wife and I set out to renovate an old villa in November 2010, we made the conscious decisions to focus on energy efficiency and waste reduction above all else. We also chose a structure that many would have written off as beyond redemption due to its poor condition, and we wanted to do our best to demonstrate that a warm, dry, energy-efficient home can be within reach for people of moderate means. I have heard stories of people spending $20,000 on a new bathroom or new kitchen, but still have no insulation! Although we did install a new kitchen and new bathroom (at $2,000 each), the bulk of our budget went to insulation, solar hot water, and north-facing glazing (windows and doors). These are the investments we made that are paying us back with energy savings at a higher rate than the best term deposits of any bank. This is what we call eco-thrifty. It is a philosophy that focuses on low-input / high-performance systems.
Central to this approach is the concept of ‘payback period’: the amount of time it takes to recoup an investment in energy-efficiency with savings on your power bill. For example, a compact fluorescent light bulb costs $5, but will normally save you more than $5 per year (depending on use) in electricity. Therefore, the ‘payback period’ is one year or less. A ‘payback period’ of one year is roughly 100% return on investment. What term deposit offers that?
Another example of ‘payback period’ is solar hot water. Our system cost $4,000, and offers a ‘payback period’ of 7 to 10 years (depending on use). This represents a return on investment of 7% to 10%. What term deposit pays that? Another example would be insulation, but I won’t bore you. The long and short of it is that our money is paying us back more on our roof, in our walls and in our light sockets than in a bank. Add to this the environmental benefits and the hedge against inflation (electricity has been rising at 7% - 8% per year over the last decade, a ‘doubling time’ of 10 years), and eco-thrifty appears to be a conservative, logical approach to building (and…life, I might suggest). But there is a catch.
If you borrow to make home improvements with a ‘payback period’ over a few years, then the bulk of your savings goes to the bank, not to you. Therefore, we recommend a process we call focusing on the ‘low hanging fruit.’ These are the cheap and easy investments that anyone (owner or renter) can make immediately and start reaping savings. Then, with much fiscal discipline and gnashing of teeth, these savings are set aside to invest in ‘medium hanging fruit.’ And then…you get the picture. This new column published on Saturdays will address many of the fruits of eco-thrifty renovation and their benefits. Although this is a unique approach to renovation, many of the oldies reading these words are probably saying to themselves (or out loud), “it’s just common sense.”
On a final note, we have worked closely with Building Control throughout the process and found them very helpful. From my perspective, the New Zealand Building Code concerns itself primarily with ensuring structures: do not fall down in an earthquake or a gale; do not allow moisture to contact untreated or H1 timber; hold heat in (insulation); do not burn down from electrical wiring or internal heat sources. This list is the definition of a sustainable building. Who could argue?