The Inflation Reduction Act is a great opportunity for homeowners everywhere to take advantage of whole home energy solutions.
It’s an enthusing time in the energy world.
The signing of the Inflation Reduction Act (IRA) has brought terms like “heat pumps'' and “photovoltaics” into the national spotlight and homeowners’ vocabularies. One thing that’s flying under-the-radar: how both clean energy generation and efficient energy usage can come together for homeowners, landlords, and renters to save money and energy.
The initial upfront costs of energy-efficient appliances and retrofits has long been one of the largest barriers for homeowners and property managers. The spread of rebates and tax breaks offered by the IRA will go a long way toward removing and reducing this barrier. Homeowners and property managers can now save money upfront as they add rooftop solar, install heat pumps, and switch out natural gas-powered dryers for electric, energy-efficient upgrades.
The diversity of incentives is one of the most intriguing parts of the IRA - there’s something in there for everyone.
Homeowners who have previously been on the fence about adding rooftop PV and home battery systems can make the transition with the tailwinds of a sizable tax break: a 30% tax credit that will be extended at a flat rate for 10 years is included in the IRA. This will revolutionize the demographics of Americans who can install solar and storage.
Landlords and real estate portfolio managers will be guided consistently towards smart-money investments in clean energy generation and efficiency. The diversity of incentives offered and the ability to package them together to achieve maximum savings will bring energy savings to Americans who previously have been left out, including renters, marginalized communities, and first-time homeowners.
As companies in the clean technology industry seek to help homeowners make the most of the tax credits and rebates, real-time data and energy usage monitoring tools will be key in identifying areas for immediate energy savings. Home energy audits will allow homeowners and energy services companies to seamlessly work together to create customized plans. As consumers save money from their solar, storage, and efficiency upgrades, they’ll be able to reinvest the savings into future improvements and installations.
Homeowners, real estate investors, and property managers can choose from a menu of rebates and tax credits that come with installing new, energy-efficient appliances, including heat pumps, water heaters, and stoves - with insulation ventilation, and wiring improvements included as well. Consumers can take as many of these rebates as they would like, up to a total of $14,000.
Every step taken toward clean energy generation (i.e., solar panel installation) and managing energy usage within a home (i.e., insulation improvements) can be compounded. Generating energy through solar panels, storing energy in residential battery systems, and using this energy to run electric-powered appliances all work together towards increased sustainability for homeowners - financially and environmentally.
The installation of rooftop solar and/or the upgrades included in the Home Rebate program are all only the starting point for a chain reaction. Take, for example, a landlord who owns a set of four Single Family Rental (SFR) homes in a neighborhood. This landlord, as he installs rooftop solar at a discount and switches the appliances within his rentals for energy-efficient options, does so knowing that he has a return-on-investment waiting. Homes that are cheaper to heat, cool, and power and have reduced carbon footprints are extremely attractive for renters. Institutional landlords have the potential to scale these technologies and reach millions of renters who have not had access. Simply put, there is a great opportunity to make energy use a more interactive and mindful experience for renters.
As consumers rush to take advantage of these savings, energy-efficiency and solar companies will be forced to compete and innovate to find ways to meet demand. This same way of innovation and competition took place over a decade ago following the Obama Administration’s Recovery Act of 2009, which brought an estimated 900,000 jobs in the six years that followed. This corporate growth and innovation helped spur some of the companies leading the charge in decarbonizing the energy sector today.
Innovation driven by competition will not be the only industry result of the increased demand. As individual homeowners and real estate portfolio managers seek to install rooftop solar, batteries, upgraded appliances and other energy-efficient improvements, they’ll be stimulating the domestic construction and contracting industries. Electricians, plumbers, and solar installation technicians will be busier than ever. The $70B+ in clean domestic manufacturing investments provided by the IRA will drive the creation of new jobs - an estimated 912,000 new jobs per year for the next 10 years.
Holistic, whole home carbon reduction is the intended goal of the bill’s residential incentives and earmarked funding. There’s no question that homes that generate, store, and use renewable electricity will be a key part of achieving the emissions reduction goals outlined by the federal government. It will be rewarding to watch homeowners, landlords, and renters all share the benefits of this journey.