While the federal inflation reduction act currently provides homeowners thousands of dollars of electrification incentives through tax credits, that is only one piece of a larger savings puzzle.
The next biggest piece are federal rebates established under the IRA. Unlike the tax credits, which require homeowners to have enough taxable income in order to benefit, rebates return money directly for all eligible electric appliance purchases. The catch is that federal funding must flow through state programs, and states are on varying timelines to make funding available.
According to Stephanie Berardi, a spokesperson for the Pennsylvania Department of Environmental Protection (DEP), the state will go live with its Home Electrification and Appliances Rebate (HEAR) program in spring 2025. The program will apply to Energy Star-certified appliances such as heat pumps and electric stoves, wiring and weatherization measures. Exact rebate amounts will vary depending on household income and other variables, but will offer up to $8,000 for heat pump-powered HVAC systems (compared to only $2,000 currently available through tax credits), up to $6,500 for electrical system upgrades, $1,750 for heat pump hot water heaters and $840 for electric stoves.
Berardi says rebate instructions will be available on the DEP’s website once the program goes live. There will not be an annual limit on rebates, which will be honored for all eligible purchases until an estimated $100 million in funds is exhausted. Homeowners can expect to receive a rebate within about two months of submitting an application, Berardi says.
Local programs and rebates
Nidhi Krishen, deputy director for climate solutions for the Philadelphia Office of Sustainability, says Philadelphians should also be aware of the following local incentives and programs that support home electrification and weatherization.
Utility rebates
- PECO offers rebates of up to several hundred dollars for electric heat pumps, heat pump water heaters and other efficient appliances.
- PGW also offers rebates for gas customers who add roof insulation, with and without air sealing, as well as tankless water heaters.
Weatherization Assistance Program
The Pennsylvania Department of Community & Economic Development operates a federally funded program to help income-qualified residents weatherize their homes. Individuals at or below 200% of the federal poverty level can qualify for a free home energy audit and improvements to weatherize their home and improve energy efficiency, with an average expenditure of more than $7,000.
Businesses and nonprofits
- Tax deductions are also expanded under the IRA for new and retrofitted commercial buildings achieving a minimum 25% energy/cost savings. Deductions range from $0.50 per square foot to $5 per square foot, depending on total savings and bonuses for meeting prevailing wage and apprenticeship criteria. Commercial property owners can also reach out to the Philadelphia Energy Authority’s C-PACE program, which can provide financing to help commercial property owners pay for energy efficiency, water conservation, clean energy, indoor air quality and resiliency projects.
- For entities that do not owe income taxes, the IRS’s Elective Pay now allows eligible nonprofits to receive a cash payment from the IRS for eligible clean energy investments equal to the full value of clean energy tax credits. These tax credits can also be combined with most Department of Energy grants and loans.
- PECO offers a Direct Install program for small businesses, which provides free on-site energy analysis, the installation of energy-saving items and increased savings on upgrades including interior and exterior lighting, refrigeration and hot water measures. To participate, businesses can fill out an interest form on PECO’s website or reach out directly to one of the Program Providers.
