HomeBlogWindow and Door Replacement BlogCan You Save Money on Energy Costs By Replacing Your Windows

There is never any doubt, new windows are more energy efficient that old windows. But the real question remains: Is the Net Present Value (NPV) of new window replacement higher than simply using your old windows and paying the additional amount monthly in utility bills?  There are additional questions that need to be answered as well: is the additional gain to your house’s overall price worth the new windows now?  Is aesthetic appeal quantifiable under our model?

The US Department of Energy claims that windows are responsible for 25-30% of heat gain and heat loss. (1)  Windows normally make up a small fraction of your entire home’s area as well, so significantly more heat is transferred through windows.  Needless to say, opening and closing doors accounts for a large amount of heat transfer as well.  However if we use the 30% value for old windows, how would that compare to new windows?  This was actually detailed in a report on an historic home in the Boulder area by The Center for Resource Conservation by a grant from the state of Colorado.

The report summarized that new windows reduced the heat transfer coefficient from anywhere by 3X-6X which is a linear relation to total heat transferred either into or out of the house.  Ultimately, that means that new windows would reduce the 30% value to closer to 5-10%.  Assuming a 22% energy savings overall is very significant and one reason why replacing windows is so popular. 

The report further summarized overall energy savings in certain geographic areas ranging between $300-$800.  This was based on a $9600 investment in windows (reasonable assumption) and simple paybacks between 12-30 years.  While the payback may seem very forward-thinking, it’s akin to buying a diesel vs. fuel truck – the resale is considerably higher and buyers know this.  A buyer with a 30 year loan is more likely to spend more than the replacement cost on the home as the $10,000+ in additional mortgage cost is offset by the monthly savings vs. monthly payments.  Home improvement loans are also available and while the interest rates are higher than mortgages, good credit can obtain very low rates.

We can expand on this as well with an NPV analysis containing a simple discount rate roughly equal to inflation (2.9%).  Using this model, the eventual breakeven point in terms of just utility savings is 28 years.  If we include the replacement cost in the resale of the house at any year, the NPV is immediately positive everywhere.  This doesn’t count any potential grants or savings directly from city, county or state entities, which could be numerous and significant.  This also considers an exclusive cash payment for the windows – with interest rates incredibly low many lenders give home improvement loans.  These are higher than traditional mortgages but the interest on new windows will be lower than the energy savings so ultimately you won’t be down money at any point. 

Finally, there is the undisputed truth that new windows just look nice. They can be painted and decorated and they’re clear and easy to see through.  While cost savings is ideal, it is always nice to be able to enjoy the beautiful North Carolina outdoors through clean and pristine Andersen windows.

  1. https://www.energy.gov/energysaver/design/windows-doors-and-skylights/update-or-replace-windows