Jim Bayless bought the 1983 ranch-style home on the brink of foreclosure last May and spent about $42,000 for energy efficiency improvements. “This house is more efficient than most new homes being built today,” he said.

Bayless works with a company called GreenBuilt, which specializes in energy improvements in older homes. SMUD offered Bayless incentives to create a demonstration home to show other homeowners how to do the same thing.

SMUD Project Manager Mike Keesee said the wave of foreclosures in the Sacramento area offers an opportunity to upgrade thousands of older homes that would be remodeled anyway.

“If you built (energy improvements) into a 30-year mortgage, we estimate you could be cash positive from day one,” Keesee said.

Energy improvements on Bayless’ home include new insulation in the attic and one outer wall, solar hot water, solar electric panels, a heat pump for the electric water heater, retractable window shades, and a rooftop solar tube to provide natural lighting indoors.

Bayless expects the annual $3,000 SMUD bill to drop to $1,000.

The demonstration house is located at 8901 Quail Hill Way in Fair Oaks and will be open to the public Saturday Oct. 24 from 11 a.m. to 3 p.m.