· energy efficient home upgrades · 4 min read
Water Heaters Federal Incentives Overview
Water heating is a fundamental aspect of our daily routines, encompassing activities from refreshing morning showers to essential tasks like dishwashing.
Water heating is a fundamental aspect of our daily routines, encompassing activities from refreshing morning showers to essential tasks like dishwashing. As the global focus shifts towards energy efficiency and sustainability, water heating emerges as a critical area for innovation. Accounting for nearly 20% of a home’s energy usage, the choice of a water heating system can significantly influence both your energy bills and environmental footprint. The Inflation Reduction Act of 2022 has initiated federal rebate programs, encouraging homeowners to transition to more efficient water heating solutions. This guide explores various energy-efficient water heaters, their efficiency ratings, and the federal incentives available.
Heat Pump Water Heaters
Heat Pump Water Heaters (HPWH) are a key component of the Inflation Reduction Act, recognized for their exceptional efficiency. They are incorporated in both the Electrification Rebate Act (HEHRA) and the Energy Efficient Home Improvement Credit (25C).
Why HPWS are featured in the IRA
HPWHs, unlike traditional water heaters, extract heat from the surrounding air to heat water, a process that renders them 3-5 times more efficient. Learn more about their advantages in our article on Heat Pump Water Heaters.
Federal Incentives
- HEEHRA: Offers up to 100% coverage of costs, including installation, for households earning less than 80% of the Area Median Income (AMI). For those in the 80-150% AMI bracket, 50% of costs are covered.
- Energy Efficient Home Improvement Credit 25C: Provides a 30% tax credit, capped at $2,000.
Tankless Water Heaters: Efficiency On-Demand
Why it’s included in the IRA
Tankless or on-demand water heaters have surged in popularity due to their energy-saving potential. These units heat water only when needed, eliminating the energy wastage associated with maintaining a hot water tank. Explore more in our article on Tankless Water Heaters.
Federal Incentive
The Energy Efficient Home Improvement Credit 25C grants a 30% tax credit on the project cost, up to a $600 limit. To qualify, heaters must have an Energy Star rating and a Uniform Energy Factor (UEF) greater than 0.95.
Solar Water Heaters: Sun-Powered Savings
Why they are included in the IRA
Solar water heaters utilize the sun’s thermal energy, offering a renewable and efficient solution for water heating. These systems significantly reduce reliance on fossil fuels, fostering a sustainable future. Discover more in our article on Solar Water Heaters.
Federal Tax Credit
The Residential Clean Energy Tax Credit (25D) provides a 30% credit on both equipment and installation costs, with no upper limit. To qualify, systems must generate at least 50% of their energy from the sun and be certified by the SRCC or a similar state-endorsed entity.
Energy-Efficient Storage Water Heaters
Why they’re also included in the IRA
While they may not offer the substantial savings of other water heater types, upgrading to an Energy Star certified model can still lead to significant savings, particularly when replacing older, less efficient units.
Federal Energy Eficient Credit
The Energy Efficient Home Improvement Credit (25C) awards a 30% tax credit on the project cost, up to a $600 maximum. For more details you can refer to the Criteria for Energy Star Certified Storage Water Heaters here
State-Level Incentives
Various state governments and local utilities offer rebates for energy-efficient water heating solutions. Although HPWHs are the most common recipients due to their high efficiency, some states also incentivize tankless and solar water heaters. To find offers in your state, visit the Database of State Incentives for Renewables & Efficiency.
Conclusion
In the quest for energy efficiency and sustainability, the Inflation Reduction Act of 2022 has opened up a world of possibilities for homeowners. From solar water heaters and heat pump water heaters to energy-efficient options, there are numerous avenues to explore. Each of these systems offers unique benefits and is supported by federal incentives, making them more accessible to the average homeowner. When choosing a water heating system, it’s crucial to consider your specific needs, budget, and the potential environmental impact. Remember, every step towards energy efficiency not only saves you money but also contributes to a more sustainable future.