There are rarely times when prices roll back after they’ve been raised. Consumers see countless examples: toll road charges, the cost of public transportation, the cost to check a bag on an airplane. Recent gas prices notwithstanding, energy costs in the U.S. often trend in similar fashion. What’s interesting on that front, however, is that energy use is actually trending downward. Even though we now live in bigger homes and have many more devices to power, our homes actually use 40% less energy than they did in 1970. Our electricity consumption, however is up, and so are our electric bills, which are much higher than they were just 10 years ago.
Given our connected and modern lifestyles, it’s no surprise that a recent Demand Institute survey found that energy efficiency is still a top concern across America. In fact, 71% say energy efficiency is important, but only 35% consider their homes live up to that standard. That leaves a noteworthy gap of 36% between what people want and what they have today.
While appliances and HVAC systems have become much more energy efficient in the past several decades, we’ve also seen advances in renewable energy sources, like solar power. On-site energy generation like solar energy holds the power to re-shape household energy consumption, but only 2%-3% of U.S. homes have gone solar to date. Interest is rising, and residential solar installations are growing in numbers. In aggregate, however, solar energy accounts for less than 5% of the total residential energy consumption in the U.S.
Cost has always been a factor in any solar energy discussion, but pricing is no longer as prohibitive as it once was. According to the Solar Industries Association, the cost to install solar has fallen by 73% in the last nine years. That said, systems and installation can still run a homeowner $20,000 or more, and they might not reap the full financial benefit for 15-20 years. Despite the reduced cost from a decade ago, consumers are often seeking to spend $5,000 or less and hope to get their money back in just four to six years.
Government incentives play a key role in closing the gap, as 70% of consumers say they would need some form of discount, offsetting credit or special loan in order to consider installing solar technology.
The government will also play a role in how quickly consumers step up to the solar plate. California, for example, has mandated that all new homes be “zero net energy ready” by 2020. That means homebuilders need to think today about building homes that generate as much energy as they consume. Solar panels can play a key role in green home construction, particularly for net zero homes. According to a McGraw Hill survey of homebuilders, green homes represent a growing share of the market, and many builders say consumers are increasingly willing to spend more for green housing, although the average premium they say consumers will spend for a green home is just 3% more than what a comparable non-green home would cost.
Tracking and managing energy usage is also a growing desire among homeowners. Research from The Demand Institute found that four in 10 homes now have smart meters that allow utility companies to offer pricing models to consumers based on consumption habits. Smart home technologies are also promising, as these technologies allow consumers to control their energy usage from any number of connected devices, thus minimizing waste and over use. Smart thermostats and energy use monitors are much more cost efficient than installing solar panels, and almost half of consumers who don’t currently use them say they would consider buying them.
The U.S. Energy Information Administration expects energy usage in America to stay relatively flat for the next 15 years. That said, however, the population will continue to grow, construction will rise to support it and consumers will always seek out ways to stretch their dollars farther. And in today’s digital stew, there’s little doubt that advances in technology and efficiency will have a growing impact on how many of us choose to handle our energy needs.