Home Household appliances Here’s how the US Climate Act will lower household energy bills

Here’s how the US Climate Act will lower household energy bills

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Democrats passed the big climate bill – the Inflation Reduction Act (IRA) – in the US Senate on Sunday 51-50. It is expected to pass the House of Representatives this week, and President Joe Biden says he will sign it as soon as it lands on his desk. Here’s how the IRA helps homeowners achieve energy efficiency and lower their energy bills.

Rebates and tax credits are included in the IRA for homeowners who replace oil or gas heaters, boilers, water heaters and stoves with high-efficiency electric appliances.

Electrification nonprofit Rewiring America writes in an August 5 brief, “IRA Benefits to Disadvantaged Communities”:

A household with an efficient electric heat pump for space heating and cooling, a heat pump water heater, an electric vehicle and solar panels would save $1,800 per year today.

These savings will result in lower monthly energy bills, reduced bill volatility, and a decrease in disproportionately high energy loads within disadvantaged communities. It’s important to note that these savings add up – so much so that if a household invests their energy bill savings through electrifying their appliances, these savings will reach over $30,000 after 10 years and $140,000 after 25 years.

The $4.28 billion High Efficiency Electric Homes Rebate Program, part of the IRA, will provide an upfront rebate of up to $8,000 for the installation of heat pumps, which can both heat and cool homes. It also offers a rebate of up to $1,750 for heat pump water heaters. (Editor’s note: We just installed an air-source heat pump water heater in our house. It costs a whopping $108 per year to operate.)

There’s also a rebate of up to $840 to offset the cost of a heat pump dryer or electric range, including induction ranges.

If a home needs an electrical panel upgrade to support new electrical appliances, there’s up to $4,000 in rebates to help. There’s also a rebate of up to $2,500 for electrical wiring upgrades.

And for one of the cheapest and fastest ways to make a home more energy-efficient – ​​insulation and sealing – you get a rebate of up to $1,600.

The IRA offers a tax credit of up to $2,000 for the installation of heat pumps for homeowners who do not qualify for the rebate, and the installation of an induction cooker or new windows and energy-efficient doors qualify for tax credits of up to $1,200 per year.

Owners will be able to collect a maximum of $14,000 in total in rebates. Household income cannot exceed 150% of the area median income as calculated by the Department of Housing and Urban Development to qualify. (Here’s a handy regional median income finder from Fannie Mae to see what your limit is.) It appears that, according to the bill itself, rebates and tax credits begin after December 31, 2022.

The program will be administered by the states and will run until September 30, 2031.

Read more: If America’s Big Climate Bill Passes, Here’s How It Could Boost Solar and Wind Energy


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