What are Energy-Efficient Incentives?:
Incentives provide support for builders and energy consumers to access efficiency. The California Energy Commission (CEC) is a hot topic for debate amongst the construction industry, indefinitely. That’s because they are responsible for updating Energy Code standards. Businesses involved in construction must constantly adapt to a changing work environment. Thus, the government recognizes a need to facilitate this transition. Energy efficiency (EE) incentives are offered when buildings are either retrofitted or built new with efficient upgrades. Typically, homeowners or tenants are rewarded for retrofits. Adversely, new construction incentives apply to builders.
Tax Credits and Rebates:
Tax credits and rebates are the “meat and potatoes” of incentives. Of course, the IRS requires certification of efficiency before awarding rebates. You can qualify for most government credits using tax forms and providing proof of purchase. However, you must follow IRS instructions closely. Other programs have their own separate application process and deadlines. First, you will need to research the programs which apply to you, thoroughly! Contrarily, if you are still considering upgrades, the first step is scheduling an energy audit. An energy audit will determine your current energy usage and the most cost-effective upgrades. For consultation on this process in Central/Southern California, reach out to BarrierEnergy today.
The Consolidated Appropriations Act of 2021, originally a Covid Relief Bill, is responsible for Federal deductions. For example, section 179D outlines energy efficiency accommodations for commercial buildings. Former President Trump made 179D permanent. Additionally, residential architectures may be eligible to receive up to two thousand dollars in tax credits for achieving efficiency standards through the Home Energy Rating System Federal Tax Credit (Section 45L). These rebates cover both single-family and multi-family structures, as they’re allocated per dwelling unit. Currently, this Act applies to structures built through December 31, 2021. Hopefully, the proposed Moving Forward Act will eliminate the current 45L deadline.
State Level Subsidies:
On a State level, agencies such as CEC, California Department of Housing and Community Development, and California Public Utilities Commission participate in developing energy efficiency incentives. California is enthusiastic about investing in energy efficiency programs and subsidies. These investments are paying off, and producing billions in proceeds! For instance, the Cap-and-Trade program for emissions has been highly lucrative. Developed by California Air Resources Board, it allows companies to make money for reducing emissions while penalizing those that do not. Similarly, the California Clean Energy Jobs Act stimulates the “Green Economy”. It allocates funds to educate green-collar workers while providing new job opportunities, simultaneously. Overall, these organizations wish to establish equal opportunity for the public to achieve efficiency. Hence, special focus is placed on programs for low-income communities.
Research and development are essential to gauge the success of California’s efforts. Naturally, the CEC publishes a yearly Energy Policy Report to assess what goals have been reached and what effects their policies have made. Also, this routine period establishes a time to determine what changes need to be made moving forward. Another key component is the Electric Program Investment Charge. This allowance is used for improving methods of energy production.
California Hub for Energy Efficiency Financing administers statewide financing options for all types of properties. Plus, special loans and grants are available through California’s Energy Conservation Act of 2001. Continue reading about more financing programs in our article on Loans for Energy Efficiency Improvements.
Builders – Residential:
Builders tax credits apply to homes built or manufactured from Jan 1, 2018, till Dec 31st, 2021. The IRS can award builders or contractors up to two thousand dollars for meeting special energy efficiency requirements. Manufactured homes that meet Federal Manufactured Home Construction and Safety Standards are suited to win an additional thousand dollars. See Form 8908 for more details.
Homeowners – Residential:
Through Form 5695, homeowners of residential properties may earn tax credits. Contrary to commercial properties, there is currently a deadline for these tax credits. Existing residences may obtain $500 for installing energy-rated equipment until Dec 31st, 2021. Time is running out! Please note, residential rebates only apply to principal homes, not rentals. Check out ENERGY STAR for a comprehensive list of qualifying equipment. Proof of purchase is mandatory.
Commercial properties and residential properties qualify for different reductions. Solely for commercial properties, $.60-$1.80 per square foot may be tax-deductible. Through 179D, any structure built after Dec 31st, 2017, may be eligible to receive a federal credit. Of course, the property must meet certain energy efficiency criteria. For business owners who’re interested in savings, I would also recommend checking out SoCalGas. They have their own application processes for gaining equipment rebates, exceptional financing, and grants. Whether you’re an industrial, commercial, or agricultural professional, this is BIG news!
The state created California Capital Access Program explicitly for small business owners. This loan reserve accommodates financing options for efficiency retrofits. By offering incentives to financial institutions, businesses that may not qualify for a loan otherwise are given opportunities. CalCAP can cover 100% of loan losses. Participating lenders have freedom from risk.
In terms of energy access, public buildings are of unique importance. Society relies on public facilities to educate and provide other necessities. Therefore, they require unique attention. Programs such as Energy Partnership, Bright Schools, and California Lending for Energy Environmental Needs, provide financial backing to an array of public organizations to pursue energy efficiency and energy production. After all, it’s vital to provide energy security to hospitals, schools, and cities.
California’s voters seem to agree. Proposition 1D of Assembly Bill 127 administered $100 million in grants towards modernizing K-12 schools. Expectedly, it passed with overwhelming support in 2006. Parents want to invest in their children’s futures, just as the general public wants to invest in healthcare.
It doesn’t end there. PG&E is accepting applications for their ReMAT Feed-In Tariff. Recently amended, this senate bill allows renewable energy customers to enter into wholesale electric energy contracts.
Renewable energy tax credits are available for fuel cells, small wind turbines, solar panels, geothermal heat pumps, and more, thanks to the Consolidated Appropriations Act of 2021. Furthermore, there is an Investment Tax Credit that offers 10%-30% on renewable energy installment costs. Eligible builders and owners can apply for either residential or commercial properties.
Read on about programs supporting electrification in our article on Santa Barbara’s natural gas ban.