Personal finance website WalletHub just published a new report ranking the 48 contiguous states on home energy efficiency. This report comes during a year when American households have seen energy use soar during the pandemic, with many individuals staying home to avoid infection. WalletHub found that on average, U.S households historically spent at least $2,000 per year on utilities, costs that will likely increase for 2020. Some states fare better in terms of energy efficiency than others. Among the top five states in home energy efficiency: Utah, Minnesota, New York, Colorado, and Wisconsin. The five states at the bottom of the list in terms of energy efficiency are Alabama (44), Georgia (45), Tennessee (46), Louisiana (47), and South Carolina (48).

Rising Temps Mean Rising Costs

WalletHub’s report cites U.S. Department of Energy findings that adopting energy-efficient measures in homes could reduce utility costs as much as 25 percent, especially during a time of increasingly warmer temperatures. According to the National Oceanic and Atmospheric Administration, September 2020 was the hottest September on record since global recordkeeping began in 1880.[1]

Increasing temperatures have a direct impact on energy use and, therefore, cost.

WalletHub asked a panel of economic experts about steps consumers can take to reduce their energy use and costs. While their answers varied and included measures like adding heat pumps and solar panels, one expert pointed out the most effective way to reduce overall energy use was to plan and then execute energy efficiency strategies for new and existing homes.

University of New Mexico economics professor Janie Chermak cited air sealing leaks and adding insulation in existing homes as a particularly effective method to lower overall home energy costs. She also said that homeowners sometimes miss the small investments (like insulating and air sealing) that contribute to energy savings.

Chermak said these consumer tips should be considered when planning a more energy-efficient home overall, including:

• Energy efficiency measures can differ significantly depending on the style of the home
• Insulation, windows, and doors (leaks) are especially important to address
• Efficient cooling and heating systems should be appropriate for your climate zone; and
• Many areas offer rebates and incentives to spur consumer action on energy-efficient upgrades

WalletHub notes that since the pandemic started, the economic costs of energy efficiency has shifted to individuals, with people spending more time at home.

Conclusion

WalletHub’s report further highlights that home energy efficiency and costs are linked for all Americans, but the burden of those costs isn’t equal across income sectors. The economic costs of home energy take a particularly high toll on low-income homes. Those households can spend an average of 6 percent of their income on home energy while the nation’s highest income earners will spend just 3 percent of their income on energy bills, according to the DOE’s Energy Information Administration.  

According to the U.S. Department of Energy, low-income households can benefit tremendously through weatherization and modernizing activities, reducing electricity consumption by 13 to 31 percent. Those activities include improvements such as adding insulation, more efficient lighting, and appliances. DOE’s analysis of the five states with the highest low-income energy burden includes Mississippi, South Carolina, Alabama, Georgia, and Arkansas.[2]

DOE’s Weatherization Assistance Program has partnered with states and community agencies for more than 40 years to achieve energy and cost savings for low-income households. That assistance will be in high demand with job losses related to the ongoing pandemic mounting.

  [1] https://yaleclimateconnections.org/2020/10/september-2020-was-warmest-september-on-record-noaa-reports/#:~:text=September%202020%20was%20the%20warmest%20September%20since%20global%20record%20keeping,by%20September%202015%20and%202016.

[2] https://www.energy.gov/sites/prod/files/2019/01/f58/WIP-Energy-Burden_final.pdf