Knowledge Is Power: Understanding Energy-Efficient Window Installation Costs and Consumer Drivers

June 12, 2019 — While it’s fairly common knowledge that energy-efficient windows can help homeowners both save energy and improve the level of comfort inside their homes, the total cost of installing these types of windows is largely a mystery to the average homeowner. Transparency across the industry is lacking, and costs can vary significantly at different points in the value chain.

A recent Clean Energy Manufacturing Analysis Center (CEMAC)/Joint Institute for Strategic Energy Analysis (JISEA) technical report, Cost Modelling for Energy-Efficient Window Replacements, seeks to help address these knowledge gaps. In the report, researchers James McCall, Ran Fu, Rob Tenent, and Margaret Mann assessed the role of hardware and non-hardware (or “soft”) costs in the total installed cost of energy-efficient replacement windows to pinpoint the central drivers of soft cost variation.

Using a bottom-up cost model, researchers zeroed in on the key cost drivers in window replacement products. The report included several soft costs for window replacement, such as dealer profit; installation labor; labor overhead and profit; sales, general, and administrative expenses; shipping; state sales tax; permit cost; and contingency.

To gather data, researchers relied on six key sources:

  1. Window replacement and insurance industry professional estimation software,
  2. Window invoices collected through social media platforms,
  3. Direct installer invoices,
  4. Surveys of window replacement industry organization members,
  5. Direct contact with past industry members, and
  6. A retail cost analysis of online window suppliers.

To determine hardware costs, Lawrence Berkeley National Laboratory, D+R International, and NREL worked with manufacturers, performed secret shopper exercises, and completed an online search of products available on the Home Depot and Lowes websites, respectively.

Researchers identified several key findings:

  • On average, window hardware costs accounted for approximately 55% of total installed cost; soft costs comprised the rest.
  • The average cost of window replacement discerned via real-life invoices and cost modeling was roughly $600 per window. The cost variation in real-life window invoices ranged from $200 to $980 per window replacement.
  • Data gathered via invoices and other real installation costs came in at 15% to 20% higher than insurance industry cost estimation models.

To identify non-cost barriers to increased window replacements and provide a more complete view of the industry, NREL researchers convened an industry roundtable meeting. Out of this meeting emerged three means of encouraging customers to replace their windows with more energy-efficient models:

  • Consumer education – reduces upfront customer acquisition costs and provides consistent messaging across the industry;
  • Communication of window replacement benefits and trade-offs – helps consumers make rational investment decisions and reduce upfront costs; and
  • Improved ease of quality window product identification and installation certification – lets customers know that they are receiving a quality product and could reduce consumers’ “decision paralysis.”

Armed with an improved understanding of the hard and soft costs of energy-efficient window replacement, as well as the drivers that encourage consumer adoption, the industry can forge a path toward increased adoption rates, while consumers reap the energy savings.

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