Home Insulation & Energy Costs - Finding the Balance

It's challenging for even a trained professional to evaluate the tradeoffs between investing in higher amounts of insulation and energy savings. Many people rely on rules of thumb or expert opinions but so much has changed in building science over the past 20 years that many opinions are now outdated or based on very specific climate conditions. To help make sense of the perplexing topic we've gone ahead and run the numbers hundreds of times in order to put together this helpful guide for HVAC & Insulation decision making before you build in any climate.


This analysis is based on the 8th edition Manual J calculation which is a protocol developed by Air Conditioning Contractors of America to determine the amount of heating and cooling (in BTUs) necessary for a target climate. We evaluate these parameters in three model climate zones; cold (Boston, MA), temperate (Baltimore, MD) and hot (Austin, TX).

For this analysis, our assumptions are based upon a house we designed that approximates the modal characteristics for new construction housing in the United States. (Census Bureau Annual Characteristic of New Housing - 2020 dataset)


Square Footage: 2,200SF ranch home
Occupants: 4
Windows: (16) X (6ftx3ft)
Ceilings: 9ft high
HVAC: 95% efficiency heating; 6.8 HSPF cooling air-source heat pump
$/Million BTU Heating: $14.90
$/Million BTU Cooling: $12.10
Design Heating Temperature: 70F
Design Cooling Temperature: 75F
Design Indoor Humidity: 50%
Cold climate: 150 annual cooling hours + 2500 annual heating hours
Temperate climate: 500 annual cooling hours + 2000 annual heating hours
Hot climate: 1500 annual cooling hours + 1000 annual heating hours
Feel free to reach out to us to get a copy of the data & spreadsheets.

The Rankings - Potential Annual Cost Savings:

Building Tightness $365 savings
Window Glass $279 savings
Ceiling Insulation $187 savings
Duct Location $153 savings
Crawlspace Insulation $130 savings
Wall Insulation $125 savings
Slab Edge Insulation $45 savings
These cost figured represent the annual savings from upgrading from the lowest tier of insulation we evaluated to the highest evaluated. Click the links to jump down to the second below with the associated charts for more granular information.

How to use this guide: 

This is meant to be a helpful reference to evaluate tradeoffs in energy savings when talking to your builder about the level of insulation installed during construction. For instance, your builder may pitch you on adding R-5 XPS foam board to the exterior of your 2x6 walls. If you scroll down you'll find that that has negligible energy savings in any climate and that the money would be much better spent on upgrading your window U-factor or performing enhanced air sealing details.

1.) Building Tightness:

Building tightness surprisingly had the largest potential impact on our study with the potential to save an average of $365/year if upgraded. Since the cost of upgrading your air sealing is so minimal, this is almost free money! That's why we focus so heavily on this aspect of the build. All of our house plans come with a full set of air sealing details to ensure that your building is 100% up to modern building science standards.
Construction Tightness vs. Annual Energy Costs

2.) Window U-Factor:

Window U-factors had the second largest potential impact on our study with the potential to save an average of $279/year if upgraded. We recommend getting quotes for several different types of glass. Generally, upgrading U-factor will pay for itself in about ~5 years. Remember, there may be energy tax credits available as well that need to be taken into account.
Window U-Factor vs. Annual Energy Costs

3.) Ceiling/Attic Insulation:

Ceiling insulation had the third largest potential impact on our study with the potential to save an average of $187/year if upgraded. Since heat rises, adding ceiling insulation can have the biggest impact in colder climates. Insulation is very affordable, but we noticed a diminishing marginal return around R-44.
Ceiling/Attic Insulation vs. Annual Energy Costs

4.) Duct Location:

Duct location had the fourth largest potential impact on our study with the potential to save an average of $153/year if upgraded from being in the attic to being in the conditioned space. Placing ductwork in the attic or crawlspace is just a needless waste of energy. We design all of our home plans to pre-coordinate a path for the ductwork in the conditioned space that's designed to also be cost effective to build with minimal ductwork and minimal soffits.

5.) Crawlspace Insulation:

Crawlspace insulation had the fifth largest potential impact on our study with the potential to save an average of $130/year if upgraded. This one may or may not be worth the extra cost. We calculate that the upgrade from our model home from R-13 to R38 would cost around $1750 which would take almost 14 years to pay for itself.
Crawlspace Insulation vs. Annual Energy Costs

6.) Wall Insulation:

Wall insulation had the sixth largest potential impact on our study with the potential to save an average of $125/year if upgraded. Despite the amount of attention paid to wall insulation, we find minimal energy savings to justify the added expense of really high end walls like ICF or double wall construction. Most code requires a 2x6 wall with R-19 insulation which is a reasonable cost/benefit.
We evaluate the following exterior wall insulation conditions across our 3 different climate models:
(A) 2x4 + R-13 fiberglass insulation
(B) 2x6 + R-19 fiberglass insulation
(C) ICF R-22
(D) 2x6 + R-19 fiberglass insulation + R-5 exterior XPS
(E) 2x6 + R-36 closed-cell spray foam insulation
(F) 2x4 double wall + R-45 cellulose insulation (12" total thickness)
Wall Insulation vs. Annual Energy Costs

7.) Slab Edge Insulation:

Slab edge insulation had the seventh largest potential impact on our study with the potential to save an average of $45/year if upgraded. This one also has minimal potential cost savings, since the cost of XPS foam board is so expensive it probably does not justify exceeding the code minimum.
Slab Edge Insulation vs. Annual Energy Costs

In Summary:

We put this data together for both your benefit and our benefit when we design houses. Our home designs are made to not only maximize energy savings but also cost savings in the short term and long term. In the future, we're going to look more in depth at cost and energy tradeoffs between different construction methods like foundation types (crawlspace vs slab on grade) and framing techniques (traditional vs advanced considering thermal bridging). Subscribe today so you don't miss out!

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