Author: Kim Adams

Summary of Building Electrification Rebates for 2023

The new tax credits in the IRA, together with the Colorado state tax credits and utility rebates for heat pumps and heat pump water heaters, should help persuade existing homeowners, new home buyers, and builders to consider installing more of this equipment in 2023. Here is a summary of how all of these incentives add up for homes in Colorado.

Incentives for Existing Homes

Federal – IRA Tax Incentives and Rebates

Under the Inflation Reduction Act (IRA), heat pumps and heat pump water heaters (HPWHs) are eligible for a 30% tax credit, beginning in tax year 2023, up to a limit of $2,000 per taxpayer. (The tax credit applies to the cost of the equipment, not the additional installation costs.)

If the homeowner is income-qualified (less than 150% of AMI), he/she is eligible for a larger rebate on heat pumps and HPWHs, of up to 50% of the equipment costs. These rebates will be determined by the Colorado Energy Office (CEO), and they will likely not be available until early 2024. These low-income equipment rebates are in addition to the 30% tax credits but cannot be combined with the “HOMES” efficiency rebates (described in the next paragraph).

If the homeowner is doing a comprehensive set of energy efficiency improvements that result in significant overall energy savings, there will be additional rebates of up to $4,000, available through the “Hope for HOMES” section of the IRA. The amount depends on the overall savings, and the specific amounts will be determined by CEO. This would be in addition to the 30% tax credit for heat pumps and HPWHs described above. However, these rebates will also not be available from CEO until early 2024.

State Tax Incentives

In 2022 Colorado also approved tax credits for heat pumps and HPWHs, beginning in the 2023 tax year. The equipment cost is eligible for a 10% state tax credit, and in addition, is exempt from the state sales tax, which is 2.9%.

Utility and Local Government Rebates

All the rebates for heat pumps and HPWHs from utilities and local governments in Colorado are listed on Love Electric at: https://loveelectric.org/rebates/. These rebates are in addition to the tax credits and tax exemptions described above.

Summary for Existing Homes

The example in the table below summarizes how these rebates and tax incentives add up.

Heat Pump system cost

Federal tax credit (30% up to $2,000)

State tax credit plus sales tax exemption (12.9%)

Utility rebate – Tri-State co-op

Total amount of rebates and tax credits

Efficient, non- cold climate heat pump – $16,000 total ($8,000 for equipment) $2,000 $1,032 $1,800 $4,832

Incentives for New Homes

Federal Tax Incentives and Rebates

The 30% tax credit for heat pumps and HPWHs in the IRA, which applies to the equipment cost as described above, also apply to the buyer of a new home with this equipment.

If the homebuyer is income-qualified (less than 150% of AMI), he/she is eligible for a larger rebate on heat pumps and HPWHs, of up to 50% of the equipment costs (or up to 100% if less than 80% of AMI). These rebates will also be determined by CEO. These low-income equipment rebates are in addition to the 30% tax credits.

In addition, if the new home is Energy Star certified, the developer/builder can receive a tax credit of $2500. For a Department of Energy Zero-Energy Ready home, the developer/builder would receive a tax credit of $5,000.

State Tax Incentives

The homebuyer is also eligible for the state tax credits mentioned above (10% income tax and 2.9% sales tax) for the equipment costs of the heat pump and HPWH in the new home.

Utility and Local Rebates

Some utilities have additional incentives for efficient and electric new homes, which are summarized here. (Scroll down to “Rebates and Tax Credits for Builders.”)

Summary for New Homes

Most of the utility rebates go to the new home builder, but the federal and state tax credits go to the home buyer. For example, let’s say a new home is built to the requirements of the 2018 IECC and has a 3-ton cold-climate heat pump and HPWH with total equipment costs of $12,000. Assuming the home buyer is not income-qualified, he/she would qualify for a federal tax credit of $2,000 and state tax credit/exemptions of $1,550, for total tax benefits of $3,550. If the home is in a Tri-State Co-op service territory, the builder would also receive a rebate of $2,150 for the heat pump and heat pump water heater.

Moving the Market for Efficient and Electric New Homes

Each year, about 50,000 new homes are sold in Colorado, with slightly more than half of these single-family homes. So far, most of these new homes continue to rely on natural gas for heating, and are generally built to the minimum efficiency standards of the local building code. This status quo aspect of the new homes market only exacerbates the climate crisis.

Although a modest trend at this point, some builders/developers are building new homes that are more energy-efficient, with better indoor air quality and minimal carbon emissions; and people are happy to buy these types of homes as they become available. These homes have the following features:

  • Healthy – electric cooking and heat recovery ventilation
  • Efficient – good air sealing, insulation, high quality windows
  • Electric – efficient heat pump for space heating, heat pump water heater

Many of these homes also have solar PV systems, which further reduces the electricity costs and carbon emissions.

In 2019, Rainer and Karen Gerbatch bought a new, all-electric home in the Geos neighborhood in Arvada. Their “solar cottage” is highly efficient, is heated with a small geothermal heat pump, and the solar PV system generates more electricity than the home consumes annually. The Gerbatch’s also love that the home is very quiet and comfortable, with very low energy costs. In addition, the home cost slightly less than an average home of its size in Arvada.

To promote these types of new homes, the Beneficial Electrification League of Colorado (BEL-CO) is launching a New Homes section of our Love Electric website. (See loveelectric.org/new-homes. ) The website will help educate new home buyers about the benefits of healthy, efficient, and electric new homes and provide resources including:

  • Case studies of new all-electric homes in Colorado
  • Developments with these types of homes for sale.
  • Lists of architects and builders who can help you build a custom all-electric new home.

A growing number of builders are building efficient, “green” new homes such as Energy Star-certified homes, but many are hesitant to go to the next level, towards all-electric (or mostly-electric) new homes. To help these builders take the next step, the Love Electric New Homes section provides resources including:

  • Examples of healthy, efficient, all-electric new home developments and custom homes
  • Utility, federal, and state rebates for zero-energy and all-electric new homes
  • Local building codes that encourage or require all-electric new homes
  • Lists of qualified heat pump installers.

As local building codes are updated, new homes built in Colorado will become more energy efficient. Utility rebates and state and federal tax credits will also encourage installation of more heat pumps. BEL-CO hopes to complement these positive forces and contribute to a shift in the market towards high-performance homes that will save people money on their energy bills, offer superior comfort and indoor air quality, with minimal carbon emissions.

As Both Incentives and Gas Prices Increase, Coloradans Look to Electrifying Homes as a Solution

Rebates and tax credits for heat pumps, which use electricity to both cool and heat buildings, are among the energy-related provisions in the Inflation Reduction Act of 2022. At the same time, natural gas prices are higher this winter than in previous years, also driving homeowners to consider heat pumps as a way to reduce heating costs.

(Photo by Helen H. Richardson/The Denver Post)

Read the full article here.

Heat Pump Contractors Will Play a Key Role

With $25 billion from the Inflation Reduction Act (IRA) dedicated to home energy efficiency and electrification upgrades, contractors and electricians will play a key role in helping homeowners take advantage of the tax credits and rebates. This article from RMI interviews Sealed, an innovative company that designs, manages, and finances home weatherization and electrification projects in five U.S. states.

Colorado Electrification Leadership Summit

Thursday, October 27, 2022

Mounted Heat Pump on Residential Home

The Beneficial Electrification League of Colorado (BEL-CO) is inviting utilities, local governments, new home builders, heat pump distributors, and other stakeholders to share insights and help us build momentum in electrifying Colorado’s single- and multi-family homes.

Discussions will include: 1) state policy updates and new federal funding to drive more building electrification, 2) opportunities/challenges in building more efficient and electric new homes.

Learn More

Build Forward Workshop + Expo

On Saturday, October 15th, the Colorado Green Building Guild is hosting a day of workshops and exhibitions in Superior, Colorado. You can learn more about the event here. This event is mainly focused on rebuilding from the Marshal Fire, but the information and resources could also apply to building high performing homes anywhere in the state.

Colorado Heat Pump Rebates and Tax Credits for 2022 and 2023

Although there may be supply chain constraints on some heat pump products, new rebates and tax incentives make this year — or next — an excellent time for homeowners to consider adding a new heat pump.

Heat pumps are very similar to central air conditioning (AC) systems, but they have a reversible valve that allows them to provide both heating and cooling. Because Colorado’s electricity is becoming more and more renewable-based, heat pumps significantly reduce the home’s carbon emissions from heating.

Link to full article: swenergy.org/colorado-heat-pump-rebates-2022-2023

Webinars for Homeowners and New Home Buyers

These webinars are sponsored by the Walking Mountains Science Center, Holy Cross Energy, BEL-CO, Energy Smart Colorado, Community Office for Resource Efficiency (CORE), Garfield Clean Energy (CLEER), and High Country Conservation Center.

Heat Pumps Webinar for Existing Homes

Existing Homes

These two webinars are free, one-hour webinars, from 5:00 – 6:00 PM.

These webinars target a) homes with radiant heating systems and b) homes with propane or gas furnaces. Heat pumps offer cooling during summer months, while reducing consumption of fuel for heating during cooler months, lowering your home’s carbon footprint, and reducing heating costs in most cases.

Dates:

  • July 19th: Mini-Split Heat Pumps for cooling (and heating). This webinar targets homeowners interested in adding mini-split heat pumps to homes with radiant (in-floor) heat, homes with hydronic baseboard heat, or homes with electric baseboard heating.
    Registration: walkingmountains.regfox.com/heatpumpwebinar

Presenter:

David Petroy, Founder/Energy Analyst, NTS Energy LLC


Cold Climate Heat Pump New Construction for New HomesNew Homes

Cold Climate Heat Pump New Construction, w/HPWH. This webinar (two dates for the same information) will highlight the benefits of heat pumps in new single-family homes, comparing the benefits of various heat pump options vs the traditional heating and cooling options. We will also discuss heat pump water heaters (HPWHs) and their benefits.
Registration: walkingmountains.regfox.com/heat-pumps-for-new-construction

Dates:

  • August 30th
  • October 4th

Presenters:

Cold-Climate Air-Source Heat Pumps:
David Petroy, Founder/Energy Analyst, NTS Energy LLC
Heat Pump Water Heaters (HPWH):
Tim Gaughan, Region Sales Manager – Utilities & HE Products, Rheem Manufacturing Company

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Love Electric aims to accelerate the adoption of heat pumps, heat pump water heaters, and other efficient electric technologies in homes and businesses across Colorado, to lower consumer energy costs, reduce greenhouse gas emissions, and provide improved health, comfort and other benefits. Love Electric is an initiative of the Beneficial Electrification League of Colorado (BEL-CO).

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