Green Technology
Where Are the Incentives for Home Energy Management?
Proposals before the U.S. Congress would offer tax credits or rebates for home energy efficiency upgrades.
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Will homeowners ever get rebates for installing home energy monitoring or management systems such as EnergyHub?
March 07, 2012 by Steven Castle

Thinking of upgrading your home and adding energy-saving features like an energy management system or lighting control—and wonder if you can get some sort of federal tax credit or rebate for your troubles?

Don’t get your hopes too high.

You can still earn a federal tax credit of 30 percent of the cost of a renewable energy system like solar photovoltaic system, solar thermal, geothermal, wind turbines and the like, through 2016. But virtually any other energy efficiency systems you install in your home—from basic insulation to more efficient furnaces to an energy management system—gets no help from the U.S. government. Unless some legislation is passed.

Some states and local utilities do offer tax credits and rebates for energy-efficiency home improvements, so check with your utility or look for state programs through the DSIRE web site.

Congressional Action Possible

Several Congressional bills are in the works that address energy efficiency in the United States, though there is slim chance of any offering real incentives—as in tax credits and rebates—for equipping a home with energy management systems.

About the only pending federal legislation that directly addresses tax credits for homeowners investing in energy efficiency upgrade is the Cut Energy Bills at Home Act introduced by Senators Olympia Snowe (R-Maine), Jeff Bingaman (D-N.M.) and Dianne Feinstein (D-Calif.) According to the Alliance to Save Energy, the tax credit is based on annual predicted energy cost savings from heating, cooling, hot water and “permanent lighting” in a primary residence. For a minimum credit of $2,000, homes would need to reduce energy costs by 20 percent; for each additional 5 percent savings beyond that, the credit would be worth an additional $500. However the credit could not be greater than either $5,000 or 30 percent of the taxpayer’s expenditures (inclusive of labor, diagnostics and modeling costs).

Improvements would have to be “designed, implemented, and installed” by a contractor accredited by the Building Performance Institute (BPI), Residential Energy Services Network (RESNET), or similar accreditation.

The bill was introduced last November and must go before the Senate Finance Committee, because of the tax credit.

Home Star Reborn?

Another bill, being introduced by Peter Welch (D-Vt.), dubbed the Home Owner Managing Energy Savings Act, would reprise a part of the former Home Star bill (also known as cash for Caulkers) introduced in 2009 to provide instant rebates to homeowners investing in energy efficiency upgrades. Rebates from $2,000 for 20 percent to 24 percent reductions in energy to $8,000 for 50 percent reductions (and not to exceed 50 percent of cost) would be offered. The program would appropriate $500 per year from 2013 to 2016, totaling $2 billion.

Home Star rebates are also in President Barack Obama’s proposed budget. Home Star also required certified energy efficiency contractors to install and measure energy savings. Whether high-tech systems such as energy management and lighting control could be included was debatable in the previous attempt to get the package passed. Home Star had been approved by the House of Representatives but stalled in the Senate.

If these Home Star-like bills actually pass the committee level, we’ll have to see if high-tech concerns hop aboard the lobbying bandwagon to make electronic energy management systems in the home a part of it. But in this Congress, anything that costs money without being tied to cuts elsewhere is unlikely to be approved.

What About Tax Credits?

The expired energy efficiency tax credits for furnaces, central air conditioners, windows, doors, roofs, water heaters, etc. may also be reprised. “The overwhelming majority of policy makers recognize the value of these incentives for consumers and businesses, because they do work,” says Rob Mosher, director of government relations for the Alliance to Save Energy. But the chance of the tax credits being passed may depend on what they are tied to. For example, they could be tied to the Bush-era tax cuts set to expire at the end of this year—and that could spark a whole political firestorm that prevents any meaningful energy efficiency tax credits.

Or they could be tied to a broad tax reform effort and get lost in that. ASE, for one, has been lobbying to get the energy efficiency tax credits considered as a separate item. “The real question is, is there enough political will in Congress to consider these expired provisions outside of broader reforms to the tax code,” says Mosher.

PACE Loans?

Can’t get tax credits or rebates? How about a PACE (Property Assessed Clean Energy) loan, in which communities offer loans for clean energy or energy efficiency retrofits and homeowners pay it back over time through their property tax bills? Though that program has been put on hold due to loan risk concerns by Federal Housing Finance Agency (FHFA), Fannie Mae and Freddie Mac. Check PaceNow for updates.

And who knows what political rhetoric will take place in Congress—during a presidential election year—if gas prices spike as expected. There might a true clarion call for comprehensive energy efficiency measures, but more likely home energy efficiency will get lost amid the hue and cry for lower gas prices and domestic drilling.

“Based on barriers already facing consumers, if these measures are allowed to expire, you’re going see a group of individuals not [invest in making their homes more efficient], says Mosher. And those early adopters will influence others, and still others.

It’s too bad. I’m rooting for meaningful incentives for energy efficiency in the home, because people need them to invest in systems and equipment that can save them money. These measures can also spur the home energy efficiency market, enabling energy auditors to custom electronics installers to grow and create jobs. I’m still hopeful, but the political climate still appears set against such measures.

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Steven Castle - Contributing Writer
Steven Castle is Electronic House's managing editor. he has been writing about consumer electronics, homes and energy efficiency topics for two decades. He is also the co-founder of GreenTech Advocates.

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