How much does heat cost?

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Rising temperatures can have a significant impact on home energy costs.

Understanding how extremely hot days are projected to increase in the future can help communities develop heat solutions and better prepare for seasonal energy use changes. As temperatures increase, additional cooling measures may become necessary to maintain a comfortable indoor temperature on the hottest days of the year, increasing home energy costs.

To further communicate the impacts of rising temperatures across the United States, the First Street Foundation Extreme Heat Model calculates the impact rising temperatures have on a home’s air conditioning usage and the energy costs associated with this increased use. Annual electricity consumption is calculated for this year and 30 years from now to show how the AC costs will change for any property over the next three decades. 

Please note that the costs associated with increased energy usage do not impact a property’s Heat Factor. These estimates are included to further communicate the impact rising temperatures have on the costs associated with increased air conditioning usage and energy consumption.

Calculating AC electricity consumption  

As temperatures increase in the summer months so does air conditioning usage, causing a property’s electricity bills to be higher during these months. However, the cost to cool a home depends on the temperature outdoors and specific property characteristics. The square footage of a home and year it was built affect its expected AC usage and efficiency. The latitude, number of cooling degree days, and the degrees of cooling required to maintain a consistent indoor temperature provide information on the location of the home and its annual temperature ranges.

Factors affecting AC usage and efficiency 

The following factors are used to estimate a household's annual electricity consumption in kWh:

  • Square footage: Larger homes are more expensive to cool than small homes.
  • Age of the home: Newer homes with built-in air conditioning are inherently more energy efficient than older homes
  • Cooling degree days: The number of days when air conditioning would be recommended to maintain a comfortable indoor temperature. The number of cooling days is the difference between the daily average temperature and 65 degrees. For example, a day with an average temperature of 85 degrees has 20 cooling days (85-65=20). It's important to note that cooling days on Risk Factor only consider air conditioning, not other cooling devices such as fans. 
  • Latitude: The latitude of a property is used to determine what International Energy Conservation Code (IECC) climate zone it resides in. ICEE climate zones are based on summer temperatures, humidity, and other environmental factors. 


Calculating the cost of heat 

A property’s annual electricity consumption is translated into the price that each household will pay for electricity. However, the average cost of electricity in a particular area is dependent on how the local grid is supplied, the companies that supply an area, and the number of homes. Using historic data on energy rates over the past five years (2016-2021), energy costs during the months of June to September are calculated for each state.

Energy consumption data comes from the 2015 Energy Information Administration (EIA) Residential Energy Consumption Survey (RECS). The 2015 RECS survey contains property-level information on energy consumption, energy prices, and property characteristics

It's important to note that the costs associated with heat only consider air conditioning costs and do not account for reductions in heating costs or other electricity usage. 

Know your risk

Understanding what areas in the United States will face the largest increase in the number of health caution days is important so individuals and communities can be prepared to deal with the impacts associated with these dangerous days. This is especially important when thinking about impacts such as health conditions, the availability of air conditioning, and strain on the energy grid during periods of high demand. Search your U.S. address on Risk Factor to find personalized heat risk assessments for your property. 

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