Homeowners interested in adding rooftop solar panels, installing heat pumps and otherwise green-ifying their houses have plenty to like in the big climate, health and tax package likely to pass Congress in the coming days.
Why it matters: For consumers, the bill — called the Inflation Reduction Act (IRA) — has an array of rebates and tax breaks that will reduce green tech’s upfront costs. That tech, in turn, generally leads to lower long-term energy bills, among other benefits.
- More broadly, for every home that goes green, our communities get just a little cleaner — and fewer greenhouse gases are emitted, helping to curb the climate crisis.
Among the IRA’s most important green home provisions: It extends a 30% federal tax break for rooftop solar installations for 10 years.
- That incentive has been repeatedly left teetering on the legislative edge over the last few years. Guaranteeing its existence for another decade adds certainty for homeowners and the rooftop solar industry alike.
- Plus, home battery systems — which store energy generated by rooftop solar systems for later use, say, during a blackout — will qualify for the 30% credit for the first time.
- Such systems also allow homeowners to sell excess power back to the electric grid, further reducing their energy costs.
Other IRA highlights include:
- Rebates and tax credits for installing new, energy-efficient appliances — including heat pumps, electric stoves and electric dryers — as well as new circuit breaker boxes, which sometimes need to be replaced when retrofitting older homes.
- New incentives for developers to build energy-efficient homes, or to retrofit older ones.
- And $40 billion to jump-start the U.S. solar panel, battery and other green tech industries.
What they’re saying: “In transitioning from a fossil fuel economy to a clean energy-powered, efficient electric economy,” says Ari Matusiak, CEO of electrification advocacy nonprofit Rewiring America, “what we will be doing is effectively transferring wealth back from energy producers to energy consumers.”
- Matusiak adds that the IRA will help homeowners go electric whole cloth rather than piecemeal.
- “If you have a fossil fuel operating system in your home, it makes sense” to have gas-powered appliances like stoves and water heaters, he says. “But as you electrify, it doesn’t make sense for you to have half of one and half of the other.”
The IRA’s tax breaks and rebates will also benefit companies that do the actual work of modernizing homes.
- Donnel Baird, CEO and founder of retrofitting startup BlocPower, says the low- and moderate-income customers he works with “want to shift to clean energy for a variety of reasons, but they often can’t afford the upfront costs — they don’t have the budget.”
- The IRA’s incentives, he says, will “make it so much easier and so much cheaper for working people and low-income people to access clean energy.”
Baird also argues that electrification will have big public health benefits, citing recent research saying gas stoves emit pollutants that can worsen or cause respiratory illnesses.
- “Cooking with gas in our homes is going to end up being like lead paint,” he says. “It’s this thing that we all thought was fine. And then it turns out that lead paint causes neurological disasters in kids,” he says.
Yes, but: Modernizing homes will still be expensive, even with the IRA’s rebates and tax breaks — yet options like leasing equipment can reduce up-front costs for many.
What’s next: The IRA has already cleared the Senate, and it’s broadly expected to pass the House by the end of this week. If that happens, the various homeowners incentives will phase in over time after President Biden signs the bill into law.
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