By ANNA PRIOR
As the manager> and producer of a traveling vaudeville show, Amy Warnke was driving constantly, running up huge gas bills and leaving a Sasquatch-size carbon footprint. So buying a hybrid in her case, a 2007 Saturn Vue was almost a no-brainer. And it felt like a solution to her highway woes, until the day the battery died. A body shop near her New Jersey home couldn't keep the car running; neither could two different dealerships. "Apparently, you have to be a mechanical neuro surgeon to figure out where the battery is on a hybrid," says the 32-year-old Warnke. A spokesperson for General Motors, which owns the now-discontinued Saturn brand, says it stands by the quality of its products, and points out that some of Warnke's repair problems are covered by her warranty. But she's still flabbergasted by her final bill: more than $1,300. And that's not counting the cost and inconvenience of having her car in the shop for what turned out to be three months.
Even in tight-wallet times, a surprising number of consumers have shown they're willing to pay a premium for environmentally friendly products. Hybrid cars have more than doubled their market share in the U.S. since 2005. And spending on energy-related home-remodeling projects has been resilient, despite the housing downturn; it totaled $49 billion in 2009, up 29 percent since 2003, according to Harvard University's Joint Center for Housing Studies. But having paid a little extra to go green, many consumers are now encountering an unexpected irritation: They have to pay more than their neighbors to stay green. The price of maintaining, repairing and even getting insurance for green products can often be higher than for their ordinary counterparts. "There are hidden costs that people don't think about," says Tim Haab, an environmental economist and a professor at Ohio State University. And with many tax credits for energy-efficient upgrades likely to expire soon, some consumers are finding themselves having to recalculate the cost of being eco-conscious.
Industry experts say that in many cases, higher expenses are just the price to be paid for owning an upscale, niche product. Parts and expertise for upkeep can be in short supply few neighborhood handymen are likely to have a spare hybrid battery or green-certified home-coolant system lying around, for example. "It's not like they are making a million of them and selling them all at Home Depot," says Lino Carosella, an EPA-certified renovator in the Philadelphia area. Then again, just because a product becomes more popular doesn't mean its cost of ownership will drop. Insurance rates for hybrid cars, for example, are likely to rise in the near future, now that more people are driving them (and wrecking them).
To be sure, many people don't put dollars and cents first when going green, basing their decisions instead primarily on ethics and their desire to help the planet. And given the potential for long-term energy savings, many buyers will still probably come out ahead financially. But some green advocates fear that in a sluggish economy, even minor extra costs could bog down the green movement's momentum. We take a look at how some of these hurdles are tweaking the ownership math for cars, home improvements and appliances.
Energy-efficient home upgrades are the textbook example of green economics. Take solar panels: The typical solar-power installation costs about $24,000; as sun power kicks in and utility bills shrink, the systems generally pay for themselves in a decade. But many homeowners have found this equation doesn't account for other incidentals. Three years ago, former marketing executive Rob Saffer started building a certified green home in Woodstock, N.Y., complete with an advanced solar electricity system. Just as he expected, Saffer hasn't had to draw power from the local utility since he flipped the solar switch. But he's still paying a bill to the power company to his surprise, he's learned there's a service charge of $240 a year for residential customers to stay connected to the grid. Saffer also saw annual insurance premiums for his home rise by about $100 after his insurer decided that the system increased the house's value by $60,000, and he has to periodically plunk down another $100 to apply cleanser and antifreeze to the water-heating apparatus. "I still think the system will pay for itself," says Saffer, "but it will pay for itself more slowly than I was led to believe."
Certainly, all kinds of home power systems require regular maintenance; an upkeep contract on a traditional heating and air-conditioning system, for example, can cost up to $400 a year. But for many green homeowners, the cost of replacements and repairs is still a blank slate simply because the products don't yet have much of a track record. Solar power, which has been around for a few decades, offers a reminder that costs go beyond installation. Lyndon Rive, chief executive officer of Foster City, Calif. based solar panel installer SolarCity, says the biggest replacement cost is often the inverter, the circuit that converts solar energy into usable electricity. It costs $2,500 to replace an inverter, and a homeowner is likely to have to swap it out once or twice after their warranty expires. It's "the weak link," says Rive.
Many homeowners assume that green improvements will pay off by adding value to a home. So far, though, there hasn't been evidence of a "green premium," says Kermit Baker, director of the Remodeling Futures Program at Harvard University's Joint Center for Housing Studies. That's partly a function of the housing meltdown, which has kept a lid on real estate prices in general. In addition, because many green materials and products are still relatively new, the quality and durability is untested. Bamboo flooring, for instance, is a favorite among eco-friendly builders, in part because it's considered sustainable. But it can sometimes scratch more easily than hardwood, says Carosella, the Philadelphia remodeler. Mark Elwell, owner of Bamboo Flooring Hawaii, says high-quality bamboo that's at least five years old when harvested is stronger than some traditional hardwoods, like some oaks and maples. But he adds that due to lack of regulation and a rush of producers entering the business, "there's a lot of product out there that's young, and it's softer. You get what you pay for with bamboo."
When hybrids first started to gain some traction, people who bought them became awfully popular with auto insurers. Early adopters were seen as model customers, more responsible on the road than the average driver, says Greg Horn, vice president of industry relations at Mitchell International, a provider of information services to insurance companies and body shops. As a result, many auto-insurance providers gave discounts of 10 percent off premiums.
That honeymoon, alas, may end soon. As gas prices went up and more people bought hybrids, the number of accidents and tickets rose too, making the hybrid-driver profile riskier. Horn estimates that premiums for hybrids could rise by 20 percent over the next six months to a year. Not only will hybrid owners lose their discount, but they'll actually pay about $100 a year more than the average driver.
If insurance does rise, it won't just be because of bad driving. It'll also be because it's more expensive to repair a hybrid. On average, claims for collision-damage repairs are $182 more than on a nonhybrid car a difference of 6.5 percent per job. Engine problems can be pricier too, because many mechanics aren't familiar with hybrids' high-voltage drive systems, says Bob Rodriguez, manager of special testing programs at the National Institute for Automotive Service Excellence, a trade group. Consequently, hybrids are likely to wind up getting worked on at a dealership, where overhead costs are often higher than at independent shops.
Maggie Gilliam, a child-services supervisor in Orange County, Calif., always takes her 2007 Honda Civic hybrid to the dealer, but contrasting her bills with those for her husband's nonhybrid compact can be fairly painful. Over one stretch, Gilliam says, the bill for three repair trips for her Civic was $1,745; for the nonhybrid, it was less than $500. Still, Gilliam says she's glad to do her part to help the environment: "I wanted to be part of the big change." A Honda spokesperson says that once the company's warranty is taken into account, "hybrids do not cost more to repair than a regular vehicle."
Eco-consciousness and water don't always mix. Carol Bevins bought a front-loading LG high-efficiency washing machine three years ago in hopes that she could cut down on water usage for her family of three. These days, though, the Lebanon, Va., sleep-disorder lab technician says she pines for the days of her old water guzzler. Not only was the eco-friendly washer $500 more expensive than the standard washers she looked at, but she says stores near her home tend to charge at least $2 more per bottle for the special detergent it requires. All that might have been worth it, of course, if the eco-friendly washer were getting the job done. But instead, Bevins says, "it spurts a little water in there, and you can't get your clothes clean." Bevins says she has to wash each load multiple times to get stains out.
A spokesperson for LG says Bevins's problems could be the result of her washer being installed or maintained improperly; the company says the machine's drum has to be cleaned once or twice a month. And manufacturers say many stores don't charge extra for green detergent. But complaints like Bevins's are common among owners of eco-friendly washing machines and dishwashers. Most of these devices lower their environmental impact by using less water per load, but that can leave owners uncertain about how best to get their clothes and dishes clean. Suzanne Shelton, president and chief executive of Shelton Group, an agency that specializes in sustainability and energy efficiency, says problems with cleaning products are one of the biggest concerns in consumer focus groups in part because eco-friendly detergents are also proving to be less tough on dirt than their traditional predecessors. "Do I pay more for the totally natural cleaner and then use twice as much water because I have to wash everything twice?" wonders Shelton. "Or do I save by using the chemicals and only doing the wash once and using less water?"
Waiting for Payback
Once maintenance, insurance and other extra costs are factored in, some green products can take longer than expected to pay for themselves.
|Industry Estimates||Our Estimates|
A 2010 Honda Civic hybrid costs $3,545 more than a nonhybrid model, but drivers reap a few hundred dollars in gas savings each year, according to Edmunds.com.
Insurance experts expect premiums to rise for hybrids; if they do, it would take several thousand more miles behind the wheel to make up the cost difference.
|Home Solar Electricity||
For a home in New York state, installing solar electricity costs about $18,000, says Westinghouse Solar; tax incentives and savings on energy bills close the gap.
Maintenance can add $5,000 or more in costs over the life of a typical system, solar installers say. (Westinghouse says its own maintenance costs are lower than that.)
|High-Efficiency Washing Machines||
The green premium is small: Whirlpool, for example, asks $70 more for the high-efficiency version of its basic washer and estimates it trims water bills by $15 a year.
10 years or more
Some owners say they have to wash loads multiple times, reducing the savings. Whirlpool and other makers say that with proper use, re-washing shouldn't be needed.