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Utility Programs and Incentives for Zero-Energy Homes

There are many federal, state and utility tax credits, grants, rebates and other incentives available to support home energy efficiency and renewable energy systems. Although the incentives for efficiency and renewable energy are offered separately, they can often be combined to achieve a higher incentive level for zero energy homes. And a few Southwest utilities now offer incentives for highly efficient homes.

This section provides an overview and links to government incentives and utility programs for zero energy homes. Several types of incentives, including tax credits and rebates, are available for energy efficient technologies, renewable energy systems, or production of high performance homes. The incentives are summarized in the table below, followed by detailed program descriptions.
 

 

Energy Efficiency Incentives

Renewable Energy Incentives

State

Utility-Sponsored New Homes Programs

State tax credits for energy efficient new homes

Local incentive programs and funding

Solar PV buydown or rebate programs

Renewable energy system tax credits

AZ

 

CO

 

 

 

NV

 

 

 

NM

 

UT

 

 

WY

 

 

 

 

Federal Incentives

Tax Credits for Homebuilders

Home builders are eligible for a $2,000 tax credit for a new energy efficient home that achieves 50% energy savings for heating and cooling over the 2004 International Energy Conservation Code (IECC). At least 1/5 of the energy savings must come from building envelope improvements. There is also a $1,000 tax credit to the producer of a new manufactured home achieving 30% energy savings for heating and cooling over the 2004 IECC and supplements (at least 1/3 of the savings must come from building envelope improvements). The tax credits apply to new homes that have been acquired as a residence by December 31, 2008. For more information, visit www.energystar.gov/index.cfm?c=products.pr_tax_credits#s6.

Federal Residential Solar Tax Credit

The Energy Policy Act of 2005 established a 30% tax credit up to $2,000 for the purchase and installation of residential solar electric and solar water heating property. An individual can take both a 30% credit up to the $2,000 cap for a photovoltaics system and a 30% credit up to a separate $2,000 cap for a solar water heating system. For more information, visit www.energystar.gov/index.cfm?c=products.pr_tax_credits#s4.

Utility Programs and Incentives by State

Major utility programs and incentives in each state are listed below. For more detailed information about programs available in your specific area, visit the DSIRE website, a comprehensive database of incentives that promote renewable energy and energy efficiency.

Arizona

  • Arizona Tax Credit for Energy Efficient Homes
    Arizona provides an individual income tax subtraction to the original owner of a new energy efficient home. The credit may be claimed in the year that the house is sold. It is equal to 5% of the sales price excluding commissions, taxes, interest, points, and other brokerage, finance and escrow charges and cannot exceed $5,000. Energy efficient residences include new single family-residences, condominiums, or town houses that exceed the 1995 Model Energy Code Threshold by at least 50% (90 points) as determined by an approved rating program. The subtraction is valid for taxable years beginning after December 31, 2001 and ending before December 31, 2010.  For details, visit the Arizona Department of Revenue's website.
  • Arizona Public Service (APS)
    ENERGY STAR Homes Program
    APS has teamed with a number of Arizona homebuilders to create the ENERGY STAR® Homes program. APS collaborates with the homebuilders to ensure that these ENERGY STAR Homes meet or exceed the stringent 2006 EPA ENERGY STAR energy efficiency standards. Energy efficiency features incorporated into these homes include improved insulation, high-efficiency air conditioning systems, highly-efficient lighting fixtures and appliances, and energy-efficient Low-E windows, amongst others. Upon completion, a certified independent contractor tests the homes to ensure they are performing to the ENERGY STAR standard. For details, see the APS ENERGY STAR Homes program website.
  • Salt River Project
    PowerWise Homes Program
    Launched in June 2005, SRP's PowerWise Homes™ program works to provide participating homebuilders significant market exposure; heighten consumer awareness of energy-efficient homebuilding techniques, materials, and appliances; and spur demand for energy-efficient homes. Homes built under SRP PowerWise Homes requirements will be 35% more efficient than the federally recognized 1995 Council of American Building Officials Model Energy Code. For details, see the PowerWise Homes Program web site.

Colorado

  • Colorado Springs Utilities:
    ENERGY STAR New Homes Incentive
    The Builder Incentive Program is designed to encourage Colorado Springs homebuilders to qualify their homes under the U.S. EPA ENERGY STAR New Homes program. Builders will incur upfront costs to integrate energy-efficiency measures in their building practices and to pay for third-party verification. This program is intended to partially offset these costs. Qualified homes are eligible for incentives up to $850 per home. For more information, see the ENERGY STAR New Homes Incentive web site
  • Fort Collins Utilities:
    Integrated Design Assistance Program
    The Integrated Design Assistance Program (IDAP) offers financial incentives and free technical support to those interested in delivering high-performance buildings that exceed building code requirements for energy performance. Fort Collins Utilities customers can select from two options, the Whole Building Approach and the Prescriptive Approach. Each of these approaches provides different levels of incentives and technical support. For details, visit the IDAP  website.

Nevada

  • Nevada Power:
    ENERGY STAR Plus' Homes
    In 2008, Nevada Power will begin offering an incentive for homes that are 15% more efficient than an ENERGY STAR Home.  The program received approval from the Public Utilities Commission of Nevada in March 2008, and designed to capture the opportunities that exist in the housing market in the high growth area of Las Vegas. The builders in southern Nevada currently adopt the ENERGY STAR standards in approximately 70% of the new home construction. This program would encourage the builders to move to the next level of energy savings in their construction practices. The project has an Action Plan budget of $4.27 and a lifetime energy savings target of 90.16 million kWh. For more information, visit the Nevada Power website.

New Mexico

  • Public Service Company of New Mexico (PNM)
    ENERGY STAR Home Rebate
    PNM is offering homebuilders a rebate for each Energy Star-qualified home they build. Homes that earn the Energy Star Home rating must meet guidelines for energy efficiency set by the U.S. Environmental Protection Agency. Typically, these homes have 20-30% more energy-efficient than standard homes and must include effective insulation and air sealing; high performance windows, doors and skylights; tight construction and ducts; and independent testing and inspection. For details, visit the PNM ENERGY STAR Home Rebate website.

  • Sustainable Building Tax Credit
    SB 463, enacted in April 2007, established a personal tax credit and a corporate tax credit for sustainable buildings in New Mexico. The amount of the credit varies according to the square footage of the building and the level of certification achieved, as indicated on the following chart:

    Residential Buildings:
    Rating Level Occupied SqFt Tax Credit/SqFt
    Build Green NM Gold First 2,000 $4.50
      Next 1,000 $2.00
    LEED-H Silver First 2,000 $5.00
      Next 1,000 $2.50
    LEED-H Gold First 2,000 $6.85
      Next 1,000 $3.40
    LEED-H Platinum First 2,000 $9.00
      Next 1,000 $4.45
    Energy Star Manufactured Home Up to 3,000 $3.00

To receive the tax credit, the building owner must obtain a certificate of eligibility from the Energy, Minerals and Natural Resources Department after the building has been completed. The Department will only grant certificates in any given calendar year until the equivalent of $5,000,000 worth of certificates for commercial buildings and $5,000,000 worth of certificates for residential buildings have been awarded in that calendar year. Further, no more than $1,250,000 of the annual amount for residential buildings can be applied to manufactured housing.

The taxpayer must then present their certificate of eligibility to the Taxation and Revenue Department to receive a document granting the Sustainable Building Tax Credit. If the total amount of a Sustainable Building Tax Credit is less than $25,000, the entire amount of the credit can be applied to the taxpayer's income tax in that year. If the credit is more than $25,000 the credit will be applied in increments of 25% over the next 4 years. If a taxpayer's tax liability is less than the amount of credit due, the excess credit may be carried forward for up to seven years.

For more information, see the Sustainable Building Tax Credit website.  

Utah

  • Questar Gas:
    ThermWise Builders
    Questar Gas is offering builders rebates for building more energy-efficient new homes. High-efficiency gas equipment in new homes range from $50 - $750 for storage water heaters, tankless gas water heaters, gas furnaces and boilers and solar-assisted gas water heaters. Rebates for the certification of an ENERGY STAR home is $500 or $800, when combined with the federal tax credit. For details, visit the ThermWise Builders website.

  • Rocky Mountain Power:
    ENERGY STAR New Homes Program for Builders
    The Rocky Mountain Power (RMP) ENERGY STAR New Homes program offers cash incentives to contractors who build energy-efficient homes. To qualify for this incentive, the new home must meet the basic ENERGY STAR specifications and have low-e windows. Contractors building qualified homes can earn rebates worth $350 per single-family home, or $250 per unit for multi-family homes. Additional rebates ranging from $10 per unit to $300 per home are available to contractors who install energy-saving measures/equipment which surpass ENERGY STAR home requirements. Participating contractors also have the opportunity to be featured in RMP-sponsored advertising and marketing, and can have access to additional cooperative marketing funds to promote their company as a program participant. For more information, visit the ENERGY STAR New Homes Program for Builders website.

There are many federal, state and utility tax credits, grants, rebates and other incentives available to support home energy efficiency and renewable energy systems.