What does the sentence the long-term savings on energy and water bills can offset these initial costs mean?

In the long run, the money saved on energy and water can make up for the upfront expenses.

Future savings on energy and water cannot help solve the problem of initial costs.

Though it costs less at first, the higher utility bills in the long run can balance things out.

Savings on energy and water bills for a short time can pay back the early investment.