Energy efficiency in Michigan has had a big year, including state legislation to require all utilities to offer energy efficiency programs and increase their energy efficiency standard, requiring utilities to reduce energy waste by at least 1.5% a year.

And the federal Inflation Reduction Act provided funding for home energy rebates that the state of Michigan expects to offer to homeowners in late 2024. Individual households could receive as much as $14,000, including $8,000 for a heat pump system, $1,750 for a hot water heater, and $1,600 for insulation.

Meanwhile, Detroit moved to require municipal and large commercial and residential buildings to report on water and energy use, as part of an effort to reduce power use and associated emissions. DTE Energy also agreed to a settlement that requires the utility to take additional measures to promote energy efficiency in Michigan’s low-income neighborhoods and implement metrics to track the performance of energy waste reduction programs.

According to the Michigan Public Service Commission, residents see $3 worth of benefits for every $1 spent on energy efficiency in Michigan. But what does this look like in practice and how can Detroiters access these benefits? The following answers some common questions about energy efficiency and includes opportunities for residents to access resources.

Increasing energy efficiency in Michigan is one way the state and its residents can make our communities healthier and save money on energy costs. Experts say reducing the amount of energy we consume in the buildings we live and work in is a crucial strategy for reducing greenhouse gas emissions and addressing the climate crisis. 

And saving energy reduces the amount of fossil fuels burned for power and decreases greenhouse gas pollution and other harmful emissions, disproportionately impacting low-income areas and communities of color. 

Here’s your Planet Detroit guide to understanding energy efficiency and how it can save your wallet and the planet.

What is energy efficiency?

Energy efficiency means using less energy to achieve the same outcome. For homeowners and businesses, this often means reducing the energy used to heat or cool buildings, run appliances, or, in the case of businesses, produce goods. Energy efficiency is considered one of the easiest and most cost-effective ways to fight climate change and save money.

Common measures for energy efficiency in Michigan include using LED light bulbs, installing windows that reduce air leaks and heat exchange, and insulating walls. 

Why is energy efficiency important?

Increasing energy efficiency and lowering utility bills may be especially important in cities like Detroit, where high energy costs contribute to racial and economic inequity. In Detroit, Black households have a 54% higher energy burden (proportion of income spent on energy) than white ones. And the energy burden for low-income households is nearly four times higher than other households. 

Reducing energy costs lowers bills and may allow homeowners to keep their homes at a comfortable temperature during periods when those with certain health conditions like chronic obstructive pulmonary disease (COPD) and asthma may be more vulnerable.

Energy efficiency in Michigan also helps improve reliability by decreasing the electric grid’s overall power demand and stress. This helps prevent power interruptions, a major problem in the state. Lowering demand also reduces the use of dirty energy sources like natural gas. This takes a bite out of greenhouse gas pollution and reduces air pollution, a significant health issue in low-income areas and communities of color.

How is energy efficiency calculated?

According to the Environmental Protection Agency, programs calculate energy savings by looking at the difference between energy consumption after efficiency measures are in place and what consumption would have been like otherwise (the baseline). However, adjustments are sometimes made to account for other factors like weather and building occupancy that affect the baseline or energy use after efficiency measures are installed.

How do I learn about the energy efficiency of my house?

A common way of looking at energy efficiency is the Home Energy Score developed through the U.S. Department of Energy, which rates buildings on a simple 1-10 scale, like a car’s miles-per-gallon rating.

The score accounts for 50 building factors like window type and insulation to estimate how much energy a home will likely use. Homeowners looking to increase energy efficiency can schedule a Home Energy Score assessment with certified assessors to determine their current score and how efficiency improvements could lower it.

Experts say a home energy audit or assessment is a smart starting point for improving efficiency. This can tell a homeowner about their current energy use and provide a roadmap for reducing it.

These audits can cost between $100 and $600, but they provide unique insight into home energy use. Typical methods include things like conducting a blower door test or using a specialized fan to depressurize a home and look for leaks with an infrared camera. Different tiers of audits are available, with more detailed assessments suitable for a homeowner looking to make extensive improvements.

**Scroll to the bottom for resources on getting an energy efficiency audit of your home**

How much money can energy efficiency save?

Many energy efficiency measures come with a high up-front cost, with energy-efficient water heaters costing as much as $3,000 and attic insulation running as high as $3,500. But these measures can pay off in the long run. Here are some examples of savings homeowners looking to increase energy efficiency might expect on common upgrades:

• Light bulbs: An Energy Star-certified light bulb can be 90% more efficient than a standard bulb, last 15 times longer, and save $55 over the course of its lifetime.
• Windows: Energy-efficient windows can carry a high up-front cost of between $300 and $1,000 per window, but it’s estimated they can save homeowners 12% on their utility bills or between $100 and $600 per year.
•  Caulking and weatherstripping: The U.S. Department of Energy estimates caulking around windows can improve energy savings by 10 to 20 percent, and adding weatherstripping to doors can save 5 to 10 percent.
• Insulation: The EPA estimates the average homeowner can save 15% on heating and cooling costs and 11% on total energy costs by air sealing a home to prevent leaks and properly insulating walls, attics, basements, and floors over crawl spaces.  
• Water heaters: An energy-efficient electric heat pump water heater can cost $700 more than a standard electric water heater, but will save roughly $3,500 over the life of the appliance.

What about energy-efficient appliances?

If you’re a homeowner looking to increase energy efficiency, the home appliances you choose are an important part of the equation.  The EPA assigns the “Energy Star” label to products that meet criteria for energy efficiency, with the Energy Star website listing products that are organized according to efficiency and other criteria. Most appliances are also required to carry the EnergyGuide label, which gives the estimated yearly operating cost for the appliance and the range for similar models.

The New York Times lists boilers, furnaces and air conditioners as the most important appliances to replace for energy efficiency, with heat pumps offering energy efficiency savings for both. Hot water heaters are the next biggest energy consumer in the home and can also be replaced by heat pump models. In contrast, a smart thermostat is a relatively inexpensive fix that can save a homeowner $50 a year on average.

What other help is available for energy efficiency in Michigan?

As mentioned above, a range of incentives are available to help with energy efficiency through federal funding, including the IRA. However, many of these energy efficiency incentives could be out of reach for those without the money for upfront payments if the state offers this assistance via rebates. 

Eli Lieberman, director of clean energy financing for state green bank Michigan Saves told Planet Detroit the organization may offer funds to help those who can’t afford the upfront costs of efficiency upgrades. This assistance could be modeled on the Detroit Loan Fund, which has helped homeowners who don’t qualify for traditional financing obtain loans to pay for upgrades like new windows and HVAC systems. 

Utilities, nonprofits and other government units also offer programs to help homeowners with energy efficiency. These include:

•  Wayne Metro: The Weatherization Assistance Program offered by Wayne Metropolitan Community Action Agency provides low-income residents with assistance for insulation, air leak reductions, dryer vent installation, and smoke and carbon monoxide detectors. More information at waynemetro.org, 313-388-9799 and wmconnectcenter@waynemetro.org
•  DTE Energy: Utility customers can obtain a rebate that covers part of the cost of an assessment, which will look for leaks, drafts and condensation, evaluate the safety and efficiency of heating and cooling equipment, conduct thermal imaging of hot and cold spots, and estimate the costs and savings from recommended improvements. Low -income households may also qualify for energy-efficient products like water heaters, refrigerators, lights and weatherization services. More information is available at dteenergy.com,  (866) 796-0512 and energy_saving@dteenergy.com.