On July 13th the Federal Government renewed their ecoENERGY retrofit program.  This $400 million program boasts grants up to $5,000 to homeowners who do energy efficient retrofits to their home.

The theory is that this program incents people to make changes to their home that they wouldn't otherwise make themselves.  

Well, let's do some math on this:

Let's say you want to replace your traditional hot water heater with a tankless instantaneous water heater (which by the way, is something I really do want to do in my home).

According to Direct Energy, replacing your traditional water heater with a new traditional water heater will cost you $1,150 (which includes installation).  

If you instead replace it with a tankless, instantaneous water heater, those cost between $4,000 and $5,000.  But it's much more energy efficient.

So, how would you go about getting some of that $400 million in (borrowed) government cash?

Well, for starters you need to register with the federal government.  After that is done, you need to organize an energy audit of your home. 

The initial audit costs around $300.  

Then you go ahead and book the installation of your new water heater.  Once it is in, you need to book a second energy audit and show them your receipts.  That one costs around $150.

Once that is all done you can submit it to the ecoENERGY retrofit program and wait for your cheque... for... wait for it... $315.

Check the math again: 

Cost of new water heater: $4,000 (and up)

Cost of energy audits: $450

Rebate: $315

Total: $4,135

So, by applying for this program you can get a $4,000 new water heater for $4,135.

If you happen to live in Alberta, where the government (broke) provides $100 per energy audit, you would actually be ahead $65.

BUT...

The traditional style water heater out of the box it is about 62% efficient, but that will drop to 40% after a few years. However, an instantaneous water heater will be between 82% and 94% energy efficient.

And the new instantaneous water heater will reduce your water tank energy costs by 30% - 50%, which represents 20% - 30% of your bill right now, or reduce your heating bill by 6-15% overall.  If you spend $2,000 on heating per year right now, that represents a savings of $120 - $300 per year.

If you have to replace your water heater anyway, meaning you have to spend at minimum $1,150, the additional $2,850 could be repaid in 9.5 years.

So, the real incentive is the savings after year 10, not the $65 you are ahead (if you live in Alberta) or the dis-incentive of a loss of another $135.

End of the day:

Government: -$515 (Fed: $315, AB: $200)

Home-owner: -$135 (+$65 in AB)

Energy auditors: +$450

The only people making money off this program are the energy auditors.  

So, save yourself some time and money and work out the savings on the energy efficiency and see if it is worth your while before making the retrofits.  And don't bother applying for the ecoENERGY retrofit program unless you are spending tens of thousands of dollars and replacing windows, doors, insulation, furnace, etc.  And even if you are, don't count on getting any money from the program, because you have to have your final audit done before March 31, 2012.

UPDATE:

I was on Alberta Primetime the other day talking about the program... video here: http://www.albertaprimetime.com/Stories.aspx?pd=2600