DXT1 vs DXT5 - When do I need an Alpha channel?

[Lagruej]

Hey everybody, so I've been working on importing some assets into SSE, and I've come across some information that leads me to believe I'm taking up needless space by using DXT5 for all textures.

As I understand it, the Alpha channel affect different texture map parts differently.

Diffuse Alpha = Opacity?
Normal Alpha = Fake lighting/grit
Height Alpha = ????

Basically these are the three map channels I want to use for my textures. I'm pretty good on normal maps, I can make them work well enough in game by using black/dark grey for most things, and lighter when a little more shine is needed.

The questions I have are:

1) Does a Diffuse need an Alpha channel if you don't want any Opaque parts?
2) Does a Height texture need an Alpha channel?
3) If a Height texture does need an Alpha channel, how does it affect the overall appearance in game, should the channel be darker or lighter and what are the effects.

Edited May 14, 2020 by Lagruej