How the climate bill could save you money on your energy bill
With the signing of the Inflation Reduction Act (IRA), new federal financial policies will help homeowners and renters offset the upfront costs of electrifying and converting their homes to renewable energy.
These cost savings will be a result of federal electrification rebates, tax credits and grants provided by the new bill. The billions of dollars allocated for these programs will incentivize green home investments, lowering energy bills, increasing property values, and helping the environment.
Home energy rebate programs (with a budget of $9 billion) could give you thousands of dollars back for buying electric appliances, along with electrification upgrades to power those energy-efficient devices. Those retrofits could include upgrading electrical panels and wiring, properly insulating and sealing your home, and installing an electric heat pump system and heat-pump water heater.
Starting in 2023 (with some able to be applied to investments made this year), homeowners can also receive tax deductions of up to 30% for efficient home retrofits. These tax credits apply to the same upgrades previously mentioned in addition to other electric improvements such as rooftop solar and home battery systems. They also apply to more efficient doors and windows, and even purchasing electric vehicles.
In addition, affordable housing grants will provide billions to disadvantaged communities to install efficient electrification, water and energy systems. In order to prioritize accessibility for lower- and middle-income households, the rebates and tax credits from the Inflation Reduction Act will cover two-thirds to the full cost of installation for certain electrification upgrades.
What if I rent?
Many of the bill’s incentives apply to homeowners rather than renters. Since leases typically prevent home renovation or retrofitting, some home electrification upgrades will prove impossible to be made by renters.
Although your lease might prevent you from upgrading certain aspects of your space, you can still replace your old incandescent light bulbs, stove, or laundry machine with energy-efficient appliances – and qualify for electrification rebates. You can also install weatherizing material and implement cost-effective measures to seal your home such as hanging thermal curtains, plugging leaky windows with caulk, or sealing frames with weatherstripping tape.
If your state offers community solar, you could switch your electricity bill to support local solar gardens. This means you pay the solar garden for your monthly energy use (which is credited on your utility bill) and the equivalent consumed energy is sent to your local energy grid from the solar garden. This could help you save 10-15% on your electricity bill.
Finally, bring up these electrification upgrades with your landlord. Not only does it improve the properties’ living conditions and carbon footprint, but it is also a financially viable investment that could increase property values – all good things for any landlord.
Exactly how much money could I save?
Although the amount of money you could receive depends on your household earnings, many investments in energy-efficient upgrades will save you thousands of dollars a year. If the IRA’s programs are successful, this could create a positive feedback loop of reduced costs and improved quality in clean-energy investments – which ultimately means your green home could save you even more money over time. To see exactly how much money you can save, check out Rewiring America’s savings calculator and then start electrifying everything!