Once again, I’ve found myself fantasizing about my dream home. It would be smallish, just outside of the city and filled with super efficient appliances powered by renewable energy sourced from my own property. Maybe even a wind turbine or two (I just read a book about building your own wind turbine). Right at the peak of this fantasy, I was jolted back to reality as I began to think about how tremendous the up-front costs of putting together a system like this could be. Before I became entirely discouraged, I remembered a commercial I’d seen earlier about incentives available to consumers looking to improve the efficiency of their homes, buy efficient appliances, or install renewable energy systems.
Your tax dollars at work
As it turns out, I wasn’t the only one concerned about the up-front costs of the most efficient technologies for our homes. The current administration has made environmental sustainability a high priority for our nation and, as part of the American Recovery and Reinvestment Act, earmarked a significant chunk of money for energy efficiency. Part of this money will go toward helping you make your own home more efficient by purchasing new appliances and installing renewable energy systems.
It is now possible to receive a tax credit worth 30% of the energy efficient upgrades you make to your home (up to $1,500). This is an improvement over the existing credit of only 10%. This credit would apply to the following types of energy saving improvements:
- Adding insulation to your home to help keep the heat inside during the winter and outside during the summer
- Installing a reflective roof in order to minimize the amount of heat that is absorbed into your home during hot weather
- Replacing existing doors and/or windows with better insulated ones to, again, keep that heat where it’s supposed to be
- Upgrading your HVAC system or water heater to a more efficient model
- Installing a biomass stove that burns a plant derived substance for heating purposes (like wood or pellets). This option surprises me as the EPA says that pollution from wood burning is the #1 cancer risk here in Oregon.
There is a small catch to all of this, however. If you want to cash in on these credits, they have to be installed and operational by the end of 2010. Luckily, Frugally Green readers are very money savvy, so they shouldn’t have any problem saving up for some of these things by the end of next year.
Since adding insulation is the most cost effective improvement for most people, here’s a pretty good FAQ targeting that audience as well as a “heat map” showing the US Department of Energy’s recommendations for insulation levels for different regions of the country. These resources are provided by an insulation company, but I found them to be fairly useful for my research.
The government has also decided that getting homeowners to install their own renewable energy systems is a top priority. This is why they have made the terms even more favorable for those of you that really want to go the extra mile. If you install a RE system at your primary residence, you are eligible for a tax credit worth 30% of the cost with no dollar limit. This credit would apply to:
- Geo-thermal heat pumps that derive their energy from the mass of the earth
- Solar water heaters that trap heat from the sun to warm your water
- Photovoltaic systems which absorb the sun’s rays and convert them to usable electricity
- Small wind turbines that convert the power of the wind to electricity through an alternator
- Fuel cell systems which can take nearly any liquid or gaseous fuel and cleanly convert them to electrical energy
The time frame for implementing these RE systems is also much more generous. You are eligible for the credit until the end of 2016. If you’ve had an inclination already to implement some type of renewable energy on your property, you now have, at the time of this post, 7 1/2 years to get your funds together to save 30% on the cost of the system. I should also note that if you’re cursing the daylight right now because you’ve already done something like this, you can still take advantage of a, admittedly much less robust, credit for systems that have already been installed.
Also, this chart published by Energy Star is a good place to see all the federal tax credits available to you for the various items that qualify.
State and local incentives
You might be interested to know that the federal government isn’t the only one offering some help to get us on a more sustainable path. Many states and even local governments offer incentives to make your home more efficient or install renewable energy. DSIRE is the Database of State Incentives for Renewables and Efficiency. Their website provides a map that you can click through in order find all the applicable rebates and tax incentives available to you for the state that you live in.
For instance, here in Oregon, residents are eligible for personal tax credits, property tax exemptions, and even direct rebates for the purchase of super-efficient appliances or the installation of renewable energy systems. These incentives can really add up and help to make the purchase of a highly efficient appliance or RE system very competitive with their industry standard competitors.
Even without the incentives being offered to us, we should carefully consider the cost savings and benefits that we can realize by purchasing more efficient products. It’s important to remember that becoming frugally green is a long-term commitment and, as such, requires us to occasionally look past the initial cost of an item in order to see the long-term savings that it will provide not only us, but society as well.