New and Bigger Opportunities for Beneficial Electrification Rebates

The Inflation Reduction Act (IRA) of 2022 is the largest bill in American history to tackle the threat of climate change: $369 billion is allocated to be invested in reducing emissions from the residential section with the goal of reducing emissions 40% from 2005 levels by 2030. This bill encourages electrification of homes through incentives of up to $14,000 per home for specific energy efficiency measures and smart technologies starting in 2023. The incentive amounts are based on the household's income levels and the area's median income, with the highest amounts available to households making less than 80% of area median income (AMI).

 

Closer to home, State of Colorado data show that around 70% of Colorado homes heat with natural gas instead of alternatives like electricity, which is significantly higher than the 47.8% national average. Heating in residential and commercial buildings made up about 10% of Colorado’s greenhouse gas emissions or over 12 million metric tons of carbon dioxide. According to data from the State of Colorado, greenhouse gas emissions could be cut in half if electric heat pumps were used to heat and cool buildings. In the first 10 years after the tax incentives for heat pumps go into effect, the state estimates that greenhouse gas emissions will be reduced by over 446,000 metric tons of carbon dioxide.

 

Following are the 2023 rebate and tax incentive opportunities for beneficial electrification and energy efficiency products for homeowners through this bill, as well as State of Colorado credits and exemptions and GCEA rebates. These rebates and incentives can drive down the cost of electrifying your home to help make purchases affordable, as well as help offset the cost of energy efficiency improvements.

 

The Energy Efficiency Home Improvement Credit is available to homeowners and covers 30% of qualifying home improvement costs each year up to $1,200, except for electric heat pumps, heat pump water heaters, and biomass stoves and boilers. Following are eligible improvements and annual credit limits:

  • $150 for home energy audits
  • Up to $250 per exterior door, up to $500 for all exterior doors
  • Up to $600 for exterior windows and skylights, central air conditioners, and electrical panels
  • Up to $2,000 for electric heat pumps and electric heat pump water heaters

 

The High Efficiency Electric Homes Rebates (HEEHR) is available to households earning less than 150% of an area’s median income (AMI) and is available through 2032. There is a total home cap of $14,000 per home when a household earns less than 80% AMI and rebate amounts are based on the following AMIs:

  • 80 to 150% AMI: 50% of costs up to household rebate caps
  • <80% AMI: 100% of costs up to household rebate caps

 

Following are the annual rebate amounts:

  • Up to $8,000 in rebates and up to $2,000 in tax credits for heat pump technology and for space heating and cooling
  • Up to $4,000 in rebates for smart electrical panels
  • Up to $2,500 in rebates for updated electrical rewiring
  • Up to $1,750 in rebates for electric water heaters
  • Up to $1,600 in rebates for insulation, air sealing, and ventilation upgrades
  • Up to $1,200 in tax credits for energy efficient windows and doors upgrades
  • Up to $840 in rebates for electric stoves and electric heat pump clothes dryers

 

The State of Colorado Senate Bill 51 targets heat pump systems, heat pump water heaters, and energy storage systems and provides tax credits and state sales tax and use tax exemptions and is available through 2032:

  • Income tax credit of 10% of the purchase price of the heat pump system, heat pump water heater, or energy storage system
  • 9% state sales and use tax exemptions for heat pump systems, heat pump water heaters, and energy storage systems

 

The GCEA rebates listed below are those related to the IRA and Colorado Senate Bill 51, with funding coming from GCEA’s PowerWise Pledge Program and the GCEA Energy Efficiency Rebate Program:

  • $90 for electric heat pump clothes dryers
  • $100 for electric-to-induction stove replacements
  • $350 for gas-to-induction stove replacements or new construction plus an additional 25% off the purchase price up to $150
  • $50 for electric water heaters installed during new construction
  • $70 for electric water heaters replacing natural gas or propane water heaters or member when member signs up for Time of Use (TOU) rate
  • 50% of cost up to $740 for heat pump water heaters
  • 50% of cost up to $4,800 for Tier 2 air source heat pumps greater than 2 tons
  • 50% of cost up to $1,000 per energy storage system when member’s system is non-dispatchable and the member is not on a TOU rate
  • 50% of cost up to $2,000 per energy storage system when member’s system is dispatchable and member is on a TOU rate

 

Totals:

  • Up to $930 in rebates for heat pump clothes dryers
  • Up to $940 in electric-to-induction stove replacements
  • Up to $1,340 in rebates for gas-to-induction stove replacements or new construction
  • Up to $2,490 in rebates plus an additional income tax credit of 10% and sales tax exemption of 2.9% for electric and heat pump water heaters
  • Up to $14,800 in rebates plus an additional income tax credit of 10% and sales tax exemption of 2.9% for heat pump technology for space heating and cooling
  • Up to $1,000 in rebates plus an additional income tax credit of 10% and sales tax exemption of 2.9% for non-dispatchable energy storage systems and member is not on a TOU rate
  • Up to $2,000 in rebates plus an additional income tax credit of 10% and sales tax exemption of 2.9% for dispatchable energy storage systems and member is on a TOU rate

 

The IRA, State of Colorado, and GCEA rebates and incentives will help more Americans afford energy efficiency and beneficial electrification improvements and products, which will benefit our environment through reduced emissions and cleaner air and will help to keep more homes comfortable with lower utility costs. GCEA is proud to offer rebates for smart and efficient products that improve our members’ lives and drive down costs.  For more information on beneficial electrification and energy efficiency rebates and incentives, contact us at 970-641-3520.