by greenwise on March 20, 2014

Residential electric bills are expected to rise two percent in 2014 and another two percent in 2015, according to the U.S. Energy Information Administration (EIA). The costs of heating oil and propane are also on rise, particularly after an extremely cold December that increased demand. Electricity expenses not only gobble up a good chunk of your paycheck, but the vast majority of the processes used to generate it in this country are bad for the environment. Of U.S. greenhouse gas emissions, 87 percent are related to energy consumption.

Is it time to invest in a renewable energy source for your home? Its better for Mother Earth, and it will reduce your energy costs over the long haul. But converting your home to a sustainable energy source like solar or wind power is an expensive proposition. We cant tell you whether you should do it or not, but we can lay out both sides of the argument.

Electricity Saving 101

Most Americans take for granted the fact that all they must do is plug something into a wall and 30 days later, pay the bill to power it. A deeper yet simple understanding of how electricity works can help you determine alternatives and save you money.

To determine how much electricity your appliances use, buy a cheap device generically known as a Kill-A-Watt. Its an electricity usage monitor—you plug any device into it, and it displays its wattage and amps. Of course, you could also determine this yourself by using a simple formula: watts = volts X amps.

Youll notice that your alarm clock (the kind with those red display numbers), your toaster that stays plugged in but hasnt been used in months and your cell phone charger with no cell phone attached all use electricity (watts), even when not in use. Simply unplug these and other items when not in use, and youll lower your next electric bill. Any device that produces heat (i.e. the hair dryer, coffee maker, etc.) also leaches energy. Monitor your use of these items to reduce your bill and help the environment.

While monitoring your appliance use and switching to LED light bulbs might help lower your bill, you can save even more energy by switching to an alternative energy source. However, you need to be sure an alternate source is right for you. Base your decision on your location, family size and needs.

Weigh the Options: Solar and Wind

If you are interested in investing in solar energy, consider your needs and abilities. Investing in solar is ideal for those living in states like California, Arizona, Florida and other places in the southern U.S. that get lots of natural sunlight. In other areas of the country, you might not get your moneys worth.

A complete solar energy package averages around $50,000, according to HGTV. You also have to make sure you store energy responsibly and account for any down times you might have. Just because you use renewable resources, you still have to conserve.

Another natural resource is wind power. According to Wind Energy America, wind turbine electricity costs generally about 5 cents per kWh. This is the cheapest renewable source for energy and very competitive with traditional energy sources. The Federal Energy Regulatory Commissions 2012 power trends report found that total megawatts of wind power installations topped that of natural gas by 23 percent.

The American Wind Energy Association determined that Texas produced the most wind-generated energy in 2012. Kansas, Iowa, Illinois, Pennsylvania and Colorado are five cold-weather states that made the top 10. As far as cons, there has been concerns that wind turbines account for part of the bird mortality rate.

Financing the Switch

Alternative energy sources are more affordable for average homeowners than ever. The average cost of solar panels was 60 percent lower in Q2 2013 than they were in the first half of 2011, according to the Solar Energy Industries Association. Photovoltaic systems, the ones strong enough to power an entire home, dropped 40 percent lower in the same time period.

Despite falling prices for both wind and solar energy, both are still quite expensive. The money you save from your Kill-A-Watt experiment is the first place to start accumulating funds. Keep in mind, federal tax credits up to 30 percent are possible for those who install wind and/or solar on their property.

For people receiving structured settlement or annuity payments, you may be able to sell your future payments to J.G. Wentworth or a similar company for a lump sum of cash now. That could potentially pay for 5,000 watts worth of solar panels or wind turbines up front.