Home Energy Management Reduce vs. Produce: When to Invest in Solar Versus Energy Efficiency Projects

Reduce vs. Produce: When to Invest in Solar Versus Energy Efficiency Projects


NATIONAL REPORT—Hotels spend about 6 percent of their operating budget on energy. Smaller lodging establishments will probably spend less in absolute terms, but roughly the same amount when measured as a percentage of overall operating costs.

Energy efficiency projects and solar panels can both reduce these energy costs by a substantial amount, and each offers different savings and costs. When deciding whether to pursue a solar energy system or an energy efficiency project, it’s important to always consider your budget, goals, and business needs.

It’s generally more expensive to invest in a solar energy system than it is to invest in energy efficiency projects. Costs associated with installing solar panels can vary substantially depending on your establishment’s location and rate of energy consumption, as well as the price of the panels and other equipment you choose to install. If your establishment has limited roof space, it’s a good idea to invest in high-efficiency solar panels. Panels with higher efficiency rates will cost more up front, but they can help you squeeze the most out of the sunlight that falls on your roof. Installing other high-end hardware like solar batteries or microinverters will also increase the overall costs of your solar system. A system that costs about $20,000 can produce around 14,000 kilowatt-hours annually, but you should contact a local installer for more specific information about how much a solar system would set you back.

Price tags on energy efficiency projects, on the other hand, cover a far broader range. Small projects (like replacing your light bulbs with newer LED bulbs) are easy and inexpensive, but more ambitious projects (like installing a new HVAC system) are much more expensive.

Insulation Made from Slag Wool

Since the average lodging establishment spends 60 percent of its energy budget on space heating, water heating, lighting, and air-conditioning, these are the best areas to target when planning an energy efficiency project. Adding insulation, for instance, can be a great way to lower heating and cooling costs. The most sustainable type of insulation is made from slag wool. Typically made of 70 to 75 percent recycled materials, slag wool insulation can itself be recycled. The price for insulation of this sort depends on your needs and the local rates, but you can expect to pay $3,000 to $6,000 per 4,000 square feet.

You could also reduce your facility’s heating and cooling costs by upgrading your HVAC system. Like insulation, energy-efficient air conditioners vary significantly in cost. If you’re the proprietor of a small bed & breakfast, you could spend around $3,000 (including installation costs) for a low-end model, $5,000 for a mid-range model, and up to $10,000 for a high-end central air conditioner. If you’re looking to upgrade the HVAC system for a larger low-rise hotel or motel, expect to spend around $10 per square foot. And if you’re interested in a new HVAC system for a multi-story hotel, you’ll likely pay a premium of about $21 per square foot. State or local financial incentives might partially subsidize the cost of a new air conditioning or heating unit for your establishment; check with your local energy department to find out more.

Of course, there are many other energy-efficiency projects that could make your lodging establishment more energy efficient. New appliances, light bulbs, televisions, water-saving showerheads and faucets—all could help you reduce energy costs.

But if you don’t want to merely reduce your energy bill and instead want to eliminate it entirely, installing a solar energy system is the way to go.

Both electricity costs and the amount of sunlight your lodging establishment receives vary with location, so it’s hard to predict exactly how much you stand to save by installing solar panels on or near your facility. Californians, for instance, stand to save three to four times more on their energy bills than their counterparts in Washington over the lifetime of the solar panels.

Different Financing Scenarios

The way you choose to finance your solar system will also affect your long-term savings. Savings from a system that was paid for outright will be greater than savings from a system that was financed with a loan. And if you choose to lease your system from a third-party operator, your savings will be lower still. But even leased solar systems that provide most or all of your energy needs will offer more savings than energy efficiency upgrades.

Solar energy systems have another advantage that could help make your green lodging establishment a success. Since they’re often easy to spot, solar panels can function as a kind of flag in the ground, a visible statement on your establishment’s commitment to sustainability. No amount of new insulation or energy-efficient appliances have the same visual impact that solar panels do. Going solar is therefore not only a great way to reduce your establishment’s carbon emissions and contribute to sustainability, but also a great way to promote your business and generate new interest in it.

From large hotels down to small bed & breakfasts, every green lodging establishment should be conscious of how they’re using electricity. Under ideal conditions, you could invest in both energy efficiency upgrades and a solar energy system. Unfortunately, financial constraints typically make doing both at the same time impossible. Instead, you should evaluate your organization’s finances and look for ways to gradually ramp up your facility’s energy efficiency over time. By developing a long-term energy plan that includes solar panels and smaller energy efficiency projects, you’ll ensure that your establishment’s energy expenditures decline or stay flat over time, even as your business grows.

If you’re still struggling to determine whether you should first take on energy efficiency upgrades or install a solar energy system, consult an energy auditor. Your electric utility might provide free energy auditing services, so contact them for more information. Alternately, contact a solar installer in your area to find out more about how going solar could help you save money and continue meeting your commitment to the environment.

Kyle Pennell is the Content Manager at PowerScout. The company helps businesses figure out if installing solar is right for them and get competitive bids from multiple installers. PowerScout’s long-term mission is to accelerate the adoption of solar (and other smart improvements), which will help mitigate climate change.