Why you should convert to a wood pellet heating systems BEFORE upgrading insulation

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While tightening homes will lower fuel usage, it will not protect homeowner from the impacts of higher heating fuel costs. If heating fuel costs rise enough all of the savings from upgraded insulation are eliminated.

What happens to the homeowner’s heating bill if they insulate?

They experience a drop in the number of gallons needed and, at current prices for heating fuel, they save money.

For example, if the insulation project results in a 30% drop in heat losses, the home that uses 1000 gallons of heating oil per year will use 700 gallons per year.

 

 

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However, if heating oil prices increase from $2.25/gallon, that $675 per year savings declines.

Household savings chart

As heating oil prices increase, the homeowner’s savings from insulating their home decreases as the total cost to heat the home trends towards the annual cost before upgrading the insulation.

At about $3.20/gallon, the homeowners’s savings go to zero and at above $3.20/gallon the homeowner is worse off than before upgrading insulation in terms of the total cost per year to heat the home. If heating oil reaches the average price seen in 2014, the pellet fueled home without upgraded insulation saves $1,890 more per year than the insulated home that uses heating oil.

The positive economic impacts of an insulation program on a state’s economy only work if heating oil prices remain low.

As soon as heating oil passes about $3.20/gallon, there is no net benefit to the state’s economy or to the home owners.

From those savings, the homeowner can afford to tighten their homes.

Switching from heating oil or propane to regionally made pellets for home heating allows the homeowner to have the benefit of saving on their annual heating bill no matter how high the cost of heating oil goes. 

That strategy assures that the homeowner will not see their annual heating bill increase with heating fuel price increases, and it will provide significant positive economic benefits and job creation for the states that follow this strategy. 

 

 

 

 

William Strauss, PhDFutureMetrics

WilliamStrauss@FutureMetrics.com

www.FutureMetrics.com

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