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Home Electrification and Efficiency Opportunities from the

Inflation Reduction Act

Presentation Slides: cclusa.org/ira-homeowners

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About Our Speakers

Firstname

Lastname

Director of Communications, �Name of Organization

Firstname

Lastname

Director of Communications, �Name of Organization

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Our Agenda

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Heat pump space heating

Heat pump water heating

Induction stoves

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Why go electric?

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Electric vehicles

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Rooftop solar and batteries

Home weatherization

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Building Electrification and Efficiency are Important

By upgrading our homes and buildings to electric and making them more energy efficient, we can save money and eliminate a major source of carbon and indoor air pollution.

cclusa.org/building-electrification-training

cclusa.org/building-electrification-advanced

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Why Go Electric?

Money: American households would save $1,800 per year on average by going fully electric
Health: Burning fossil fuels indoor is a major source of health problems like childhood asthma
Climate: Fossil fuel burning in buildings is a major source of climate pollution

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The Inflation Reduction Act

The Inflation Reduction Act was signed into law in August 2022. It can:

Save car owners over $500/year thanks to lower EV fuel costs
Save households $200/year thanks to lower electricity costs
Provide rebates and tax credits for electrification & efficiency

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Rewiring America Savings Calculator

cclusa.org/ira-calc

Rebates will be available covering up to $14,000 per household, plus tax credits that are now available

The home electrification and efficiency rebates in the bill include

heat pumps for heating/air conditioning, water heaters, and clothes dryers;
electric stoves;
electric cars;
home weatherization like improved insulation and windows;
rooftop solar and battery storage;
and wiring and breaker box upgrades.

One provision in the bill will cover 100% of the costs of these upgrades up to $14,000 for low-income homeowners, defined as those making less than 80% of the median local household income. And it covers 50% of the costs for middle-income households making 80 to 150% of the median local income. Rewiring America has provided a very useful calculator. If you go to the URL shown on this slide, you can plug in your information and see which rebates and tax credits you qualify for, and when they come into effect.

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Financial Incentives Buckets

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Your Home Electrification Bank Account

Tax credits are now available!

Will be applied via annual federal tax filings
Non-refundable but most reset every year

Energy efficiency home improvement 30% tax credit

Up to $2,000/year for heat pump space & water heaters
Up to $1,200/year for other upgrades
‘Bank account’ resets every year!

Solar and battery storage 30% tax credit

This tax credit can carry over

Electric vehicle tax credit

We can think of these as comprising a “home electrification bank account” for every American household. The tax credits will be applied when you file your federal tax return the following year, and they’re non-refundable. That means that for example, if you owe $500 on your federal tax return in 2024 and you have $1,200 in tax credits, you can only take advantage of $500 of the credits in 2024. But most of the tax credits reset every year, so you can take advantage by spreading out your upgrades.

There are 3 categories of tax credits. There’s a 30% tax credit for home energy efficiency upgrades, up to $2000 pear year for heat pump space and water heaters, and up to $1200 per year for other upgrades. These tax credits all reset every year. There’s a 30% tax credit for solar panels and batteries, and a separate tax credit for EVs. We’ll talk about each of these in more detail later in this presentation.

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Your Home Electrification Bank Account

Up-front rebates are in the works (available in 2024), to be distributed via state energy offices

High-Efficiency Electric Home Rebate Act (HEEHRA)

Up to $14,000 per household
100% covered for low-income households (under 80% of local median income)
50% covered for mid-income households (80% to 150% of local median income)

Home Owner Managing Energy Savings (HOMES) rebates for big modeled home energy savings

Most relevant for high-income households

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Upfront Rebate Status (Feb 2024)

Application submitted to DOE; rebates should be available spring-summer 2024:

CA, HI, NM, NY

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Upfront Rebate Status (Feb 2024)

Received admin funds; rebates should be available

later 2024:

AL, AZ, CO, CT, DE, KY, LA, MI, MN, MT, NH, OH, OR, PA, RI, VA, WA, WV, WI

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Upfront Rebate Status (Feb 2024)

Applied for admin funds; rebates should be available

late 2024–early 2025:

AK, GA, Guam, IN, KS, MD, NE, NV, NC, ND, PR, SC, Virgin Islands, DC

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Upfront Rebate Status (Feb 2024)

Has not yet applied for admin funds:

American Samoa, AR, FL, ID, IL, IA, ME, MA, MS, MO, NJ, OK, SD, TN, TX, UT, VT, WY

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Heating Dominates Building Emissions

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What is a Heat Pump?

Heat pumps use electricity to move heat from one place to another to cool & warm buildings
They are are 3–5x more efficient than most current fossil fuel heating systems. It’s easier to move heat around than to generate it
Because they’re so efficient, they save energy and reduce emissions even with today’s electric grid

It’s called a heat pump! A heat pump basically moves heat from one place to another by using electricity to power a fan and air compressor. It can take heat from outdoor air (or water, or the ground) in the winter and bring it indoors, or take heat from the air in your home during summer and move it outdoors. The latter is basically what an air conditioner does, but a single heat pump unit can move heat in both directions, so you don’t need a separate furnace and air conditioner. They’re super efficient: three to five times more efficient than most current fossil fuel heating systems because it’s easier to move heat around than to make it by burning stuff. That means heat pumps reduce both emissions and monthly energy bills.

Source: Rewiring America’s Guide to the Inflation Reduction Act

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Heat Pumps Reduce Energy Bills

Estimated Homeowner Savings with Heat Pumps

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Will they Work in Cold Climates?

Yes! The Mitsubishi H2i works down to -13°F
US companies are developing heat pump units that can work below -20°F
60% of homes in Norway, 43% in Sweden, and 41% in Finland have heat pumps
>100k heat pumps installed in Maine since 2021

Aiming for another 175k by 2027

People sometimes worry that heat pumps won’t work in cold winter weather, but there are already units that work well into the sub-zero temperatures, including a Mitsubishi heat pump that works down to -13°F. The cold Nordic countries of Norway, Sweden, and Finland have been the biggest adopters of heat pumps. And Maine, which is one of the coldest states, is also doing a big heat pump adoption push to replace their widespread oil heating systems. Main installed over 100,000 heat pumps since 2021! And the reviews have been very positive, with the heat pumps doing the job even during the cold Maine winter

Sources: https://carbonswitch.com/best-cold-climate-heat-pump/

https://electrek.co/2022/12/26/us-companies-are-producing-heat-pumps-that-work-below-20f/

https://www.canarymedia.com/articles/heat-pumps/heat-pumps-sold-so-fast-in-maine-the-state-just-upped-its-target

https://reasonstobecheerful.world/heat-pumps-norway-efficiency-emissions/

Photo: https://www.pexels.com/photo/a-house-near-coniferous-trees-during-snow-fall-14683258/

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IRA Heat Pump Incentives

High-Efficiency Electric Home Rebate Act (HEEHRA) upfront discount for heat pump costs up to $8,000 (in effect approximately 2024)

100% covered for low-income households (under 80% of local median income)
50% covered for mid-income households (80% to 150% of local median income)

Section 25C of the US Internal Revenue tax code: 30% tax credit up to $2,000 (now available)

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Heat Pump Water Heaters

Heat pump water heaters work the same way
They are 2–3x more efficient than most current water heating systems
This translates to hundreds of dollars per year in energy savings for an average household

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IRA Heat Pump Water Heater Incentives

HEEHRA upfront discount for heat pump water heater costs up to $1,750 (in effect ~2024)

100% covered for low-income households
50% covered for mid-income households

25C 30% tax credit up to $2,000 (now available)

25C tax credit resets every year – consider upgrading space and water heating in different years

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Electric Stoves

Traditional electric resistance stoves heat up a metal element (like a toaster)
Induction stoves transfer energy to the pot or pan through a magnetic field
Both are way more efficient than gas stoves
Induction is super fast, accurate, and safe (cooktop surface doesn’t get very hot)
Much healthier: no methane gas, less indoor air pollution

In the world of electric stoves there are the traditional resistance models that heat up a metal element similar to the way toaster ovens work, and then there are induction stoves that use a magnetic field to transfer energy directly to the pot or pan. Both are much more efficient than gas stoves, which lose a lot of heat to the surrounding air. Gas stoves lose 60% of the heat produced, traditional electric resistance stoves lose 25%, and induction stove lose just about 15%. That lost heat is wasted to the surrounding air and will heat up your kitchen in the summer! Induction also provides very fast and precise heating, and the cooktop surface itself doesn’t get hot. And with electric stoves you’re not burning fossil fuels right in front of your face!

Photo: https://www.pexels.com/photo/fried-egg-in-pan-on-stove-5094087/

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Gas Stoves are Bad for Kids’ Health

A 2013 analysis of 41 studies found kids living in homes with gas stoves had a 42% higher risk of experiencing asthma symptoms, and a 24% increase in the risk of being diagnosed with asthma over their lifetime
A December 2022 study found that in the USA, 35% of homes use gas stoves, which are associated with 6–19% of current childhood asthma cases

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IRA Electric Stove Incentives

HEEHRA upfront discount for electric stove costs up to $840 (in effect ~2024)

100% covered for low-income households (under 80% of local median income)
50% covered for mid-income households (80% to 150% of local median income)

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Heat Pump Clothes Dryer Incentives

HEEHRA upfront discount for heat pump clothes dryer costs up to $840 (in effect ~2024)

100% covered for low-income households (under 80% of local median income)
50% covered for mid-income households (80% to 150% of local median income)

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What is Home Weatherization?

Weatherization refers to a series of steps you can take to reduce the amount of energy required to heat & cool your home
Weatherization may involve air sealing, insulation, door & window upgrades, and ventilation improvements
First step is a home energy audit (30% tax credit up to $150)

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Weatherization Saves Energy & $$$

Up to 20% of the money spent on home energy by an average American is wasted
Weatherizing homes reduces energy waste and bills
Low income households could save up to 35% on their energy bills through weatherization projects

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IRA Home Weatherization Incentives

HEEHRA upfront discount for insulation, air sealing, ventilation costs up to $1,600 (~2024)

100% covered for low-income households
50% covered for mid-income households

25C 30% tax credit (now available, resetting every year) up to $1,200 per year:

$150 for home energy audits
$1,200 for insulation and air sealing
$250 per door up to 2 doors
$600 for windows

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Inflation Reduction Act Incentives

Home energy retrofits modeled to achieve big energy savings ineligible for HEEHRA can instead qualify for the HOMES upfront rebate (in effect ~2024):

≥35% energy savings: lesser of $4,000 or 50% of project costs
20–34% energy savings: lesser of $2,000 or 50% of project costs
15–19% energy savings: a payment rate per kWh saved up to $2,000
For low-income households: those rebates are doubled up to 80% of project costs

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Electric Vehicles

EVs are more efficient than gasoline cars and save money

About one-third the fuel cost per mile
About one-half the maintenance cost

Better for health & the environment

No tailpipe pollution
Lower lifetime greenhouse gas emissions
Mining for battery components like lithium happens once; drilling for oil is unending

The IRA also has incentives for electric car purchases. Electric motors are much more efficient than internal combustion engines, which lose a lot of waste heat to the surrounding air. EVs have only about one-third of the fuel cost per mile as gas cars, depending on where you live, and only about one-half the maintenance costs because they have far fewer moving parts that can break and don’t require oil changes. EVs produce no tailpipe pollution and create far less lifetime carbon pollution than gas cars. The production of their batteries does result in some environmental impacts associated with mining, but you only have to mine the metals for a battery once. Drilling for oil to refine and transport and burn in an internal combustion engine, on the other hand, is unending.

maintenance cost source: https://www.thecooldown.com/green-business/hertz-evs-cars-electric-vehicles-rental/

Lower environmental impact: https://citizensclimatelobby.org/blog/blog/are-clean-technologies-and-renewable-energies-better-for-the-environment-than-fossil-fuels/

Photo: https://www.pexels.com/photo/person-holding-car-electric-charger-11678699/

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IRA New EV Incentives

30D tax credit up to $7,500 for new EVs assembled in North America if meeting these criteria:

New car MSRP up to $55k, vans/SUVs/trucks up to $80k
Individuals earning under $150k, or $300k jointly
$3,750 tax credit will apply if most of the battery’s critical minerals come from the US or free trade partners
$3,750 if most battery components made/assembled in USA
Loophole: All leased EVs qualify for $7,500 tax credit

In 2024 the tax credits become transferable to auto dealers, essentially converting them to upfront discounts

The EV tax credits, under Section 30D of the tax code, are pretty complicated. There’s a tax credit of up to $7,500 for new EVs assembled in North America if they meet the criteria listed here. Cars have to sell for under $55,000 and vans or SUVs or trucks for under $80,000 to qualify. And the buyer must have an income less than $150,000, or $300,000 if married and filing jointly.

The Treasury Department is working out which models qualify for two $3,750 halves of the tax credit. One half only applies if most of the battery’s critical minerals come from the US or our free trade partners. The other $3,750 half can only be claimed if most of the battery components were made or assembled in the USA. But until Treasury finalizes that guidance, all new EVs can qualify for the whole $7,500.

There’s also a bit of a loophole in that car dealerships can purchase the cars as commercial vehicles, which have a separate $7,500 tax credit without any of that sourcing criteria, and the deduct that tax credit from the EV leasing price. You thus might be able to find better deals leasing than buying EVs, so shop around.

One other important detail is that in 2024, all the tax credits will be transferable to auto dealers. The dealerships can then apply the tax credits to lower the price of the EVs they sell, and then we won’t have to worry about all these details!

Sources: https://crsreports.congress.gov/product/pdf/IN/IN11996/2

https://www.irs.gov/newsroom/topic-a-frequently-asked-questions-about-the-eligibility-rules-for-the-new-clean-vehicle-credit

Lease loophole: https://www.reuters.com/business/autos-transportation/us-treasury-says-consumer-leases-can-qualify-ev-tax-credits-2022-12-29/

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IRA Used EV Incentives

25E tax credit for used EVs is the lesser of $4,000 or 30% of the sales price if meeting these criteria:

Individuals earning under $75k, or $150k jointly
EV is at least 2 years old
Price cannot exceed $25k
Weighs less than 14,000 lbs
Battery capacity must be at least 7 kWh (roughly a 32-mile electric range)
Purchased from a dealership, first transfer
No made-in-North-America or sourcing requirements

In 2024 the tax credits become transferable to auto dealers, essentially converting them to upfront discounts

The tax credits for used EVs are less complicated. To qualify for a credit of the lesser of $4,000 or 30% of the sales price, a used EV must meet the criteria listed here. The buyer must have an income under $75,000, or $150,000 if married and filing jointly. The EV must be at least 2 years old and sold for less than $25,000. It can’t be a heavy-duty vehicle like a bus.

The battery has to have a capacity of at least 7 kilowatt-hours, which means most plug-in hybrids qualify. The EV must also be purchased from an auto dealership, and you can only be its second owner. But there are no complicated sourcing requirements like those for new EVs. As with the new EV tax credit, the used EV credit will become transferable to dealers in 2024, and thus will be reflected in the sales price at that point.

Source: https://electrificationcoalition.org/wp-content/uploads/2022/08/SAFE_1-sheet_Webinar.pdf

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IRA EV Charger Incentives

30C 30% tax credit for an EV charger up to $1,000 if living in a non-urban or low-income community. “Low income” refers to communities in which one of the following applies:

Local poverty rate at least 20%
If in a metropolitan area: median local family income doesn’t exceed 80% of the greater of statewide median family income or the metro area median family income
If outside a metropolitan area: local median family income doesn’t exceed 80% of statewide median family income

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Rooftop Solar and Batteries

Produces zero-emissions electricity
Mining for minerals only happens once; extracting fossil fuels is unending
Guards against fluctuating electricity rates
Solar plus battery storage can protect against power outages

The IRA also has incentives for rooftop solar and home battery storage systems. These are great because solar panels produce zero-emissions electricity. There is an environmental impact associated with the mining of minerals to manufacture the solar panels and batteries, but this is a one-time impact unlike the neverending extraction, transport, refining, and burning of fossil fuels.

Combining solar panels with battery storage can also protect your home against power grid outages, and solar panels guard against rising electricity rates by reducing your reliance on your utility.

Source: https://citizensclimatelobby.org/blog/blog/are-clean-technologies-and-renewable-energies-better-for-the-environment-than-fossil-fuels/

Photo: https://www.pexels.com/photo/light-city-people-water-9875680/

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IRA Solar and Battery Incentives

25D 30% uncapped tax credit for rooftop solar (available now)

Average 6 kW solar system costs $15,300; 30% tax credit would be worth $4,600

25D 30% uncapped tax credit for electrical panel upgrade if in conjunction with rooftop solar
25D 30% uncapped tax credit for battery storage

Average 10 kWh battery storage installation costs $16,000; 30% tax credit would be worth $4,800

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IRA Electrical Panel & Wiring Incentives

All of these new electricity demands may require electrical panel and/or wiring upgrades (consult with an electrician)
HEEHRA upfront discount for panel costs up to $4,000, wiring costs up to $2,500 (~2024)

100% covered for low-income households
50% covered for mid-income households

25C 30% tax credit (now available, resetting every year) up to $600 per year

All of these electrification measures may require electrical panel and/or wiring upgrades. That’s especially true for many heat pump water heater and induction stove installations, which often require 240-volt outlets (although some 120-volt options are coming on the market). Consulting with an electrician to determine ahead of time what upgrades you might need is a good idea if possible.

If you need these upgrades, once the up-front rebate programs are set up around 2024, the Inflation Reduction Act will offer up to $4,000 in upfront discounts on electrical panel upgrades and $2,500 for wiring upgrades for low- and middle-income households. There’s also a 30% tax credit available up to $600 for these upgrades under Section 25C of the tax code, resetting every year.

Photo: https://www.pexels.com/photo/electrical-box-on-a-pole-outdoors-8827000/

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Thank You!

Presenter Name

E-mail: yourname@citizensclimate.org

Phone: 123-456-7890

www.citizensclimatelobby.org