Energy Rebates – How they Work and Who is Eligible

Ready to get a new water heater? Or have you been thinking about making your home less drafty and want to look at air sealing / adding insulation? There is money for you at the federal, state and local level! Get money back while saving money because you’re saving energy! We’ll discuss the different rebates available and how to get them.

Also, you don’t want to put a new, efficient motor on a boat that has holes in it. The same goes for adding insulation or upgrading your furnace, tackle the holes (and duct leakage) first, and you’ll reap the benefits!

Now it is important to know the difference between a CREDIT versus a REFUND.

Credit – You must have a large enough tax liability to take advantage of this.

Example: You want to take advantage of the $7,500 EV tax credit. You make sure you purchase a qualified EV, but you only owe the government $3500 in taxes. At best, you may get a $3500 credit towards your tax liability, but nothing else. Basically, if you do not owe that much in taxes, you will not receive the full amount. Regardless, if you’re interested in pursuing this, you can access the vehicles that qualify here. Also read on for some really neat Colorado incentives!

Rebate – You will get this money regardless of how much you actually owe in taxes. This is typically only available on a local level.

FEDERAL – The federal government passed the IRA (Inflation Reduction Act) back in 2022 and the rebates are available until September 30th, 2031.

First, here’s some really handy websites to help you navigate this:

• www.energy.gov/save
• www.energystar.gov/rebate-finder

There are two types of credits available, one is focused on renewable energy, while the other is focused on energy efficiency upgrades to your home. There is also credits available to builders of Energy Star and DOE Zero Energy Ready Homes! Check out the IRA site here for more information.

Residential Clean Energy Credit (25D) –

Applicable to both new construction and existing homes. This is good for solar, geothermal and battery storage. Essentially, you will get a 30% credit on the system and there is no annual maximum or lifetime limit.

Energy Efficient Home Improvement Credit (25C) –

This credit is for any window / door / insulation upgrades, new HVAC systems / water heaters and home energy audits.

The maximum credit you can claim each year is:

• $1,200 for energy property costs and certain energy efficient home improvements, with limits on doors ($250 per door and $500 total), windows ($600) and home energy audits ($150).
  • Windows / Doors – must meet EnergyStar requirements for YOUR climate zone. Basically, just make sure your location is highlighted on the window sticker…

• Insulation / Air Sealing – IECC requirements in effect 2 year prior to installation.
• $2,000 per year for qualified heat pumps, biomass stoves or biomass boilers

The credit has no lifetime dollar limit. You can claim the maximum annual credit every year that you make eligible improvements until 2033. The credit is nonrefundable, so you can’t get back more on the credit than you owe in taxes. You can’t apply any excess credit to future tax years. The credit also applies to improvement to or replacement of a panelboard, sub-panelboard, branch circuits or feeders that have capacity of at least 200 amps and are installed to enable the “installation or use” other eligible property under this Section 25C.

STATE –

The state offers a few incentives, but as of August 2024, has not yet received federal IRA funding for energy rebate programs. Stay tuned to this as they should be rolled out by the end of 2024. The Colorado Energy Office is in charge of this funding and allocation so check out the website here.

These offers are currently available:

• Heat Pumps – Available for many types of heat pumps or other technology. All heat pumps must be Energy Star certified.

• Electric Vehicle (EV) –
  • State Credit – A $5000 credit is issued when you purchase or lease a new EV / plug-in hybrid!
  • Vehicle Exchange – Have an old car? Trade it in for $6000 towards a new EV / plug-in hybrid; $4000 when you’re purchase a new vehicle.

• Weatherization (air sealing / insulation, etc.) – This service may be of no-cost to the homeowner! You must apply through the website and use a certified contractor. For the mountain area, this is the contact:
  • Northwest Colorado Council of Governments: 1-800-332-3669 | jhuggins@nwccog.org
    • Counties served: Chaffee, Clear Creek, Eagle, Garfield, Grand, Jackson, Lake, Moffat, Park, Pitkin, Rio Blanco, Routt, & Summit. Mail Applications to: PO Box 2308, Silverthorne, CO 80498
  • Services include: Energy audits, Energy conservation education, Air infiltration sealing, Insulation in attic, floors, and walls, Furnace repair or replacement, LED light bulbs, High efficiency appliances, Solar, Air source heat pumps

LOCAL –

When we get to the local level, there are REBATES available! No tax liability is necessary. These are mostly provided by your local utility company, Xcel and Black Hills are listed below. There are also rebates that are often matched by local non-profits who support energy efficiency and electrification.

Xcel Rebates –

• Heat Pumps
• Evaporative Coolers
• Heat Pump Water Heater
• Smart Thermostat
• Air Sealing
• Energy Audits

Black Hills Rebates –

• New Construction – HERS Rating
• Natural Gas Water Heating
• High-Efficiency Heating
• Thermostat
• Envelope Measure Retrofit
• High Efficiency Appliances

Some local non-profit organization that may match the utility rebates:

• Vail Area – Walking Mountains
• Aspen Area – Community Office for Resource Efficiency (CORE)

We’ve discussed credits vs rebates, credits on the federal and state level as well as rebates on the local level. I hope that you’ll make some energy upgrades to your home soon and enjoy the increased comfort, indoor air quality and efficiency!