Going green at home: What it really costs to do good

Making the right choice for the planet often comes with a hefty price tag, especially when it comes to shrinking your home’s carbon footprint.

Rooftop solar panels, heat pumps and triple-paned windows promise to lower energy bills and carbon emissions. However, making these green renovations all at once could take up to 20 years to pay off in savings.

Take rooftop solar panels, for example. They require a significant upfront investment ($18,750 to $26,250) and may take 10 or more years to pay off, with factors like inflation, energy prices, and other economic conditions influencing the return on investment.

That said, for many people, saving money isn’t the only consideration when it comes to going green.

According to the Ontario government, there’s a growing urgency to ween households off natural gas. The Independent Electricity System Operator forecasts that electricity demand in Ontario will increase by 75% by 2050, driven by population growth, new manufacturing facilities, increased computing for things like AI data centres, industrial electrification, and electric vehicle charging.

So, as our electricity needs grow, homeowners are increasingly viewing green upgrades such as heat pumps and solar panels as ways to save money and energy. But are they worth the upfront cost?

Weighing the costs and benefits

As mentioned, green home upgrades often involve significant upfront costs -- but they offer long-term savings and environmental benefits that make them worthwhile for many homeowners.

Simply addressing home heat loss takes some money and effort but comes with many cost-saving and carbon-curbing advantages.

Heat loss occurs when warm air escapes from your home in colder months, or cool air leaks out during the summer. Poorly insulated walls, ceilings, drafty windows, and doors increase the amount of heat loss in a home. Reducing heat loss helps improve energy efficiency, thereby lowering energy bills.

Draft-proofing your home also allows other low-carbon systems to work much more effectively by keeping cold air in in the summer and trapping toasty air in in the winter.

For example, a heat pump is an energy-saving system that heats and cools your home. Instead of creating a source of heat, it moves heat from one place to another. In winter, a heat pump takes heat from the outside air (even when it's cold) and brings it inside to warm your home. In summer, it does the opposite by taking heat from inside and releasing it outside, working like an air conditioner.

However, they aren't cheap, often costing between $3,000 to $40,000. The final price depends on factors such as the brand, your home’s existing electrical system, and whether additional upgrades like insulation are needed.

This decision becomes even more compelling when considering the bigger picture of green home renovations.

Cost breakdown

If you’re considering fully overhauling your home with heat pumps, rooftop solar panels, energy efficient windows, insulation, and in-home battery energy storage, the total cost could be around $78,692 before rebates, according to data compiled by RATESDOTCA.

Government rebates like the Home Renovation Savings Program and the Canada Greener Homes Grant, may reduce the overall cost by about $35,558.

Below is a detailed breakdown of the estimated costs, rebates, and net savings for each upgrade type, based on data compiled by RATESDOTCA:

However, even with rebates, the remaining $42,750 investment will take almost 20 years to pay off in energy savings.

Offsetting your heating costs

To illustrate the potential energy savings of energy-efficient upgrades we ran the specs of a typical suburban GTA home through various energy and heat pump calculators from Hydro One and the Canadian Climate Institute and weighed them against the average cost of new insulation, windows and an additional heat pump.

According to Bluetti Power Station and Moving Waldo, the average monthly natural gas cost is $275.41, or $3,304.92 a year. However, by installing new windows, replacing your insulation, and adding heat pumps, you can save 40% on heating costs — which translates to approximately $2,258 a year. While it may take years to recoup the full investment, these immediate savings highlight the practical benefits of going green.

“I think that if you present the opportunity to most people, they won’t turn down the chance to do the right thing for the environment. It just kind of comes down to the cost,” says Sarah Grant, registered energy advisor and founder of Gold Finch Energy.

But you don’t have to commit to a full-scale green renovation project for your home to shrink your carbon footprint.  In fact, most people don’t.

Read more: As the climate changes, check these home insurance blind spots

Severe climate change is driving the race to cut carbon

The growing interest in green home upgrades isn’t motivated by potential savings and a vague desire to do good. Now, every passing season comes with stark reminder of the impacts of climate change. Canada is warming at twice the global average, leading to more frequent and severe heatwaves, wildfires, and flooding.

What’s more, as of 2021, Canada has the second highest per capita greenhouse gas emissions among higher-emitting countries. On average, each Canadian emits three times the global average.

As such, Ontario homeowners are increasingly looking to reduce their emissions and adapt to a rapidly changing environment.

Meanwhile, government grants and new developments in electrification—offering more options to move away from natural gas—are stoking this interest.

“There definitely has been a bigger demand, even with our existing client base," Ryan Meagher, a business development manager at BV Contracting, explains.

According to the Government of Canada, approximately 34.2% of the 165,000 households that have received a Canada Greener Homes Grant to upgrade their homes to be more energy-efficient were in Ontario.

Read more: How is climate change affecting home insurance premiums?

How do you know which upgrades are most effective for your specific home and energy usage?

While the cost of heat pumps can be expensive, waiting until your current air conditioner is near its end of life to replace it with a heat pump can be cost-effective in the short and long term.

For comparison, installing a central air conditioner in Ontario typically costs between $3,500 and $7,000, while the cost of a new heat pump could cost between $3,000 and $40,000, depending on the type and complexity of the system.  However, consider that you would also be able to cover some of the expense with up to $17,500 worth of rebates.

Lastly, a heat pump can lead up to $4,000 in energy savings per year– which means that it seriously pays off to green up.

But if you want to starting cutting emissions now, you don’t have to wait until your furnace kicks the button. Meagher suggests starting small and getting professional guidance.

"The first step starts with a pre-inspection with an energy advisor,” says Meagher, explaining that registered energy advisors assess the home’s energy performance and provide a detailed report outlining areas for improvement.

You may also want to look at your walls and windows first.

"Start with the low hanging fruit opportunities,” says Meaghan. He suggests using spray foam instead of batt insulation, which is typically made of fiberglass or mineral wool, to add more insulation to your home's exterior and choosing double-pane or triple-pane windows.

From there, you can go at your own pace. Grant also recommends starting with a clear understanding of the current state of your home, plan upgrades over time, and make improvements as opportunities arise.

She did just that when she noticed that her roof was starting to leak.

"Instead of just adding a new roofing membrane, we also added insulation underneath it,” she recalls. “The insulation cost about $2,000, and we did get a rebate for that as well. It was definitely worth our while—now, our house is more comfortable in the summer."

Learn more: Is severe flooding making your home uninsurable?

Solar panels reap the benefits of the sun’s rays – but at a cost

One item we haven’t discussed much yet is solar panels, which are photovoltaic panels that capture energy directly from sunlight and convert it into electricity. On the right home, they can reduce electricity bills by up to 90% and lower greenhouse gas emissions, keeping you from ever needing to rely on natural gas.

However, they’re a lot more complicated than adding different types of fluff to your walls. Despite the savings potential, Grant says most of the people who install rooftop solar panels are “lucky enough to be in a financial position where they can” and know that they’ll be in the same house for the next 15 years or more, so “they recognize that it is worthwhile of an investment.”

“There's not that same kind of trigger that you get when you know it's a cold winter night and your gas furnace doesn't work or it's a hot summer day and your air conditioner stops working,” Grant adds.

Unlike necessary replacements triggered by system failures, like switching to a heat pump when an air conditioner breaks down, the decision to go solar requires deliberate planning and confidence in its potential long-term benefits.

How do green upgrades impact your home insurance?

If you’re thinking about undergoing any type of renovation, it’s important to review your home insurance policy.

Many standard plans include these upgrades, but limits can vary. David Mayer, director of insurance at RATESDOTCA, says that some insurance companies will even have discounts available if there are certain green upgrades made to the home.

For solar panels, Mayer stresses the need to confirm coverage with a broker because some policies will include some limits specifically for a feature like solar panels.

However, he adds, “some companies do have an optional add-on for solar panels... it’s best to check with the broker/company to see if that is required or included in the base coverage.”

While other upgrades like insulation and windows are generally covered under broader policies, Mayer says it’s still important to keep records.

“It’s always good to keep track of if you made an upgrade... so [if] they’re rebuilding your house, you get the energy-efficient windows that you had,” Mayer says.

Finally, ask your insurer about discounts for green improvements. With careful review and documentation, you can make sure that your home upgrades are fully protected