Financial Incentives for Home Energy Efficiency

April 10, 2020

If you are looking to make your home a more energy-efficient place to live, you are not alone. Local utilities, state and federal agencies are incentivizing American households to make the upgrades necessary to reduce their carbon footprint, lessen the strain on the greater electrical grid, and curb the effects of climate change. 

Though the following incentives are all managed by third parties and are subject to change, here are some of the Florida and California incentives available, as well as a few federal tax credit programs that are helping make residential energy efficiency more affordable.  With all tax incentives, please get tax advice for your specific circumstance from a qualified tax advisor.

Federal Incentives for Residential Energy Efficiency

There are two federal residential energy tax credits (Form 5695) currently available that can reduce your federal tax liability and thus reduce the overall net cost of installing alternative energy equipment and other upgrades that make your home more efficient.

The Nonbusiness Energy Property Credit

This credit extends to energy efficiency home improvements through December 31, 2020 for 10% of the cost, excluding installation, up to a lifetime limit of $500:

●      Energy-efficient exterior windows, doors, and skylights
●      Roofs (metal and asphalt) and roof products
●      Insulation

Or this tax credit can be applied to  qualifying home efficiency system upgrades, for a specific amount between $50 and $300:

●      Energy-efficient heating and air conditioning systems, including Air Source Heat Pumps
●      Water Heaters, Hot Water Boilers, and Furnaces (natural gas, propane, or oil)
●      Biomass stoves

The Federal Solar Investment Tax Credit (ITC)

ITC is found on your tax forms as the Residential Energy Efficient Property Credit. The ITC is for solar energy systems, geothermal heat pumps, and small scale wind.  Unlike the nonbusiness energy property credit, this solar tax credit does not have the same lifetime limit. Eligible solar energy systems installed by December 31, 2020, can reduce your federal tax liability by 26% of the total installation costs. For example, if your solar energy system costs $30,000, the 26% tax credit would be worth $7,800.

However, these tax savings won’t be around forever. The solar tax credit will decline in 2021 to 22% of the total installation costs and then will be eliminated for homeowners in 2022 but remain at 10% for commercial solar projects.

To qualify, you must own your solar PV system, live in residence, and have sufficient taxable income. 


California Rebates & Incentives

Many of the rebates for Californians depend on your utility company. We have broken some of the utility incentives down for you here:

Sacramento: SMUD

Combining your home efficiency upgrades pays off with rebates from the Sacramento Utility District (SMUD). Rebates through the Home Performance Program can total over $12,000, and cover air sealing and insulating, heating and cooling, heat pump water heaters, and other all-electric appliances. Work must be done through an approved contractor.

Central & Northern California: PG&E

PG&E is offering rebates ranging from $50 for smart thermostats to $300 for heat pump water heaters. You can get the details in their residential catalog here, including information about how to apply for your rebates.

Southern California Edison (SCE)

Homeowners in Southern California can browse through the SCE marketplace to find the latest in energy-saving products and HVAC rebates on a wide range of appliances:

●      $75 on smart thermostats
●      $25 on Home Area Networks (HAN)
●      Discounted pricing on heat pump water heaters (up to $1,000)
●      Discounted pricing on central HVAC heat pumps (up to $300 per ton)
●      Discounted pricing on mini-split HVAC heat pumps (up to $600 per ton)

Get all the information here.


The Self-Generation Incentive Program

This California solar incentive program offers rebates for PG&E and Southern California Edison customers who include battery storage in their solar installation plans. If your system qualifies, you can receive $850 per kilowatt-hour under the “Equity” category or $1,000 per kilowatt-hour under the “Equity Resilience” category. Qualifications can depend on whether your home is in a high threat fire district.

San Diego Gas & Electric (SDGE)

For San Diegans, SDGE is offering instant rebates on the following equipment:

●      $250 on qualifying electric heat pump water heaters
●      $100 on gas water heaters
●      $75 for smart thermostats
●      $200 on variable speed pool pumps

You can browse the product lists here, and learn how to apply for your instant rebates.

Florida Rebates & Incentives

Some of the available Florida energy incentives are broken down by utility as well: Florida Public Utilities, Florida Power and Light, and Duke Energy.

Florida Public Utilities

Floridians can save $100 on the cost of replacing their air conditioner or installing a heat pump to replace a resistance heater or furnace. Get the details here.

Florida Power & Light

Through the Energy Savings Programs and Rebates from Florida Power & Light, you can save $150 on qualifying air conditioner replacement and up to $190 on insulation upgrades.

Duke Energy

By using an approved contractor, Duke Energy is offering a total of up to $1,450 in savings on the following:

●      HVAC installations
●      Heat pump water heaters
●      Insulation and air sealing the attic
●      Duct sealing
●      Efficient pool pumps


Combining Rebates with PACE

Once you have found the right rebate or incentive program for your next project, you can utilize the flexibility of PACE financing to spread out the remaining costs with no money down.

PACE financing has low fixed interest rates, and comes with many benefits over more traditional home improvement financing options and it comes with built-in consumer safeguards to keep you protected. 

Want to learn more about utilizing incentives and PACE for your next energy efficiency project? Contact Renew Financial today at 844-736-3934.