My wife and I are excited about buying our first house. Unfortunately, it needs a new HVAC system and water heater. I’m glad I work where I do, because I was well aware of the state of the equipment from the very first time we saw the inside of the house when we were just “browsing.” Since we’ve got connections and time, we decided to look into all our options. Maybe, we thought, we should go with the high efficiency systems since we plan on living in the house for many years to come. Turns out, that’s not a great option.

The most immediate incentive is that the federal government offers tax credits for 2013 when you install high efficiency, energy saving things in your home: $300 for ≥ 16 seer for Air Conditioners, $150 for Furnances with an AFUE ≥ 95, and $300 for water heaters with an efficiency ≥ .82. But they won’t give you more than $500 total in 2013.

I looked into the higher efficiency 40 gallon gas water heater replacement first. Turns out it was going to cost us QUADRUPLE for that increased .24 of efficiency, and the annual operating costs were only going to be $81 less. Our quick estimate is that it would take nine years to break even, so we’d have about four to six years where we’d be saving money before we needed to replace the water heater–and the water heater would only be under warranty for ten years, so we’d be out of luck if it died shortly after if finally paid off. No, thanks. I expect more of a return on investment.

This isn’t to say higher efficiency water heaters aren’t worth it for some folks. Your needs may vary significantly from young, first-time homeowners. Maybe your concerns about your carbon footprint outweigh the bottom dollar, or perhaps you live in a house where you really could save more money with greater efficiency.