Planning an Eco-Friendly home renovation

Plenty of people are now putting the sun, wind and water to work to cut their energy bill. Should you join them?

Before any shift to renewable energy technology, you’ve got to do some very individualized research and above all, work the numbers.

Solar energy seems to be getting the most attention. You might have heard recent news reports about solar energy’s sliding costs and rising support in Washington. A recent White House report (https://www.whitehouse.gov) noted that the average cost of a solar electric system has dropped by 50 percent since 2010 and that federal agencies are working to make it easier for lower-income taxpayers to borrow up to $25,000 for solar and energy efficient home improvements.

And many are rushing to do installations by the current year-end 2016 expiration date for the 30 percent federal consumer energy efficiency tax credits (http://www.energystar.gov/about/federal_tax_credits) covering solar energy systems, small wind turbines and geothermal heat pumps.

How should you evaluate the cost of a renewable energy project? Consider these questions first:

Could incremental energy-saving projects be more practical? Start with baby steps. Before you decide on an expensive solar or other renewables project, see if smaller changes around the home could save money. You can improve the performance of heating and air conditioning systems and seal air leaks from windows, doors and other areas of the home. A do-it-yourself or professional energy audit (http://energy.gov/energysaver/articles/energy-audits) might be a good first step in detecting energy waste.

What’s going on locally? When it comes to renewable energy, geography matters, and not just for tax breaks and credits for systems. Generally, weather, temperature, wind and sun exposure measurements matter when you’re choosing a particular project. For example, the Solar Energy Industries Association reports that solar installations are more common on the East and West Coasts, mainly because – that’s because sun exposure is greater on the coasts than in the center of the country. State and local organizations dealing with renewables can offer guidance to cost, effectiveness, installation and many other issues you’ll need to evaluate. A local evaluation of options is essential.

Do you really understand the technology? There is no doubt that technology is always evolving, and this is one of the reasons why solar and other renewable energy options are becoming cheaper. However, falling costs are one thing, but you need to fully understand what you’re buying so you can hire the best people to install it and service the system over time. For the basics, a good place to start is the U.S. Department of Energy’s Energy.gov site’s renewable energy section.

Should you buy, lease or borrow? One of the drivers behind the recent growth in solar is a new generation of vendors who provide one-stop shopping, installation and billing for systems at little or no initial cost. These vendors facilitate both purchase by loan and lease options. As convenient as this option might be, watch for inflation clauses, fees and penalties that could drive you above what you’re paying for conventional, utility-produced electricity.

How will it affect resale? There’s a fair amount of debate as to whether green home improvements actually boost home prices. Also, many real estate experts have mixed opinions about how prospective buyers feel about purchasing a home with existing renewable energy equipment that’s either been bought or leased.

Should I involve my financial and tax advisors? Whether you plan to buy, borrow or lease a system or do intermediary energy improvements around the home, talking to a qualified financial or tax advisor isn’t just worthwhile, it’s essential. It is also a good idea to speak with your homeowners insurance agent to see if your project will affect your coverage.

Bottom line: Want to save money while saving the planet? Do your homework and make sure an investment in renewable energy works for you.

Nathaniel Sillin directs Visa’s financial education programs. To follow Practical Money Skills on Twitter: www.twitter.com/PracticalMoney.