Electrifying your home with help from the Inflation Reduction Act
Getting fossil fuels out of your life, one step at a time
Electrifying your home is about to become a whole lot cheaper as a result of the Inflation Reduction Act (IRA). But where to begin? These five steps can help you start your electrification journey.
By now, you may have heard the slogan “electrify everything.”
It’s a motto that breaks down one of the most complex problems of our time – global warming – into a simple solution: just identify the things in our lives that burn fossil fuels and replace them with things that don’t.
Electric appliances and equipment are typically much more efficient than those powered by fossil fuels, and draw their power from a grid that incorporates more clean, renewable energy with every passing year. That makes “electrifying everything” one of the most powerful things most of us can do to act on climate change. Our 2021 report Electric Buildings, for example, found that switching to electricity to power the vast majority of our homes and businesses would reduce carbon pollution by at least as much as taking 65 million of today’s cars off the road.
Electrifying everything is about to become a whole lot cheaper as a result of the Inflation Reduction Act (IRA), passed by Congress in August. Starting in 2023, Americans will be eligible for a raft of new incentives for electric appliances and energy-saving products – everything from electric induction cooktops to heat pump water heaters and space heaters. Some of those incentives, such as for rooftop solar panels, are available right now. And many of the incentives benefit renters, as well as homeowners.
That’s tremendous news for the climate and a big opportunity for American households to save money. But the idea of electrifying everything in one’s home can feel overwhelming. Where on earth to begin?
The organization Rewiring America has produced a series of essential guides to electrifying your home and navigating the incentives in the IRA. The guides are filled with the kind of practical advice anyone considering a home project needs – how to find a contractor, how to get financing, what kinds of equipment to consider, how much you can save with IRA incentives, and even how to schedule your household’s electrification journey over the course of a number of years.
So, a good first step is to download those guides. And you should do it right now.
Many of us put off household projects until the last possible moment. When it comes to electrifying your home, though, that’s a big problem. When a furnace or a hot water heater breaks in the middle of the night, homeowners are often desperate to replace them as quickly as possible – and that usually means replacing them with newer versions of the same, old fossil fuel-powered equipment. That can mean shackling yourself to inefficient, polluting equipment for another 10-20 years – a huge missed opportunity to save money and take action on climate.
With that in mind, here are five steps you can take right now to prepare for your electrification journey:
Commit to electrifying something. Electrifying everything can feel daunting, but most of us can probably commit to electrifying something over the course of the next year or two. Maybe the thing you choose to replace is an older piece of equipment that is on its last legs like an old furnace, a water heater, or an older car. Or maybe it is something smaller – under the IRA, low- and middle-income households will be eligible for up-front rebates on appliances like induction cooktops and window-unit heat pumps that cost only a few hundred dollars each. Whether your electrification project is big or small, the most important thing is to commit to starting somewhere.
Cut energy waste first. The best way to save energy is to avoid wasting it, and the IRA also includes big incentives for home energy efficiency improvements. The Whole Home Energy Reduction Rebates program will offer up to $4,000 in incentives ($8,000 for low-income households) for energy efficient retrofits that reduce household energy use by 35% or more, with lower incentives for less-ambitious projects. Separate incentives for home weatherization can help households seal air leaks and upgrade to energy efficient windows and doors. A home energy audit is an important first step to find out which upgrades are most likely to deliver the biggest savings.
Plan ahead. Big projects such as replacing a heating system or installing solar panels require a lot of homework – identifying contractors, soliciting bids, and determining what kind of equipment best suits your needs. Make sure to leave plenty of time – with rising demand and many contractors still unfamiliar with technologies like heat pumps, there is no guarantee that a contractor will be available the moment you want them. Rewiring America’s guide, Electrify Everything in Your Home includes lists of questions to ask potential contractors as well as detailed advice on choosing the best systems for you.
Don’t forget the basics. Electrifying everything in a home requires being able to deliver enough electricity to all those new appliances. For owners of older homes, though, this can be a problem, as older electrical service panels may not be designed to handle the additional load. If you think your house might require an electricity service upgrade (and Rewiring America’s guide can help you figure that out), reach out to an electrician well in advance of your first electrification project. The IRA provides incentives for upgrading older electrical panels below 100 Amps, as well as upfront incentives for low- and middle-income households on wiring upgrades. Upgrading your service early can ensure that however you choose to electrify – one appliance at a time or all at once – your home’s electrical system will be able to handle it.
Figure out which benefits you are eligible for. The IRA’s incentives for electric appliances and equipment are generous, but also a little complicated. Some electric vehicles are eligible for the full $7,500 tax credit, some aren’t, and some aren’t now but will be in January 2023. Low- and middle-income households are eligible for generous upfront discounts on heat pumps, electric stoves, heat pump water heaters and more, whereas upper-income households are eligible for a more limited set of tax credits. Tax credits will likely be available on January 1, 2023, while the upfront discounts for low- and middle-income households will be implemented by the states, and may not be available until later in 2023. Lastly, federal and state agencies are still in the process of figuring out how key incentives in the IRA will be implemented, so while the basic provisions of the IRA are set in stone, it’s not clear exactly how some of those benefits will be delivered. Knowing which benefits you are eligible for, and when they will become available, can help you choose and schedule projects so as to obtain the biggest possible savings.
That’s a lot to think about, for sure. But there is no one-size-fits-all approach to electrifying your home, and the incentives available in the IRA really are a tremendous opportunity for Americans to save money while also saving the climate. By passing the IRA, Congress has taken a big step forward to address climate change and kick our dependence on fossil fuels. Now it’s up to all of us to take the next step.
Associate Director and Senior Policy Analyst, Frontier Group
Tony Dutzik is associate director and senior policy analyst with Frontier Group. His research and ideas on climate, energy and transportation policy have helped shape public policy debates across the U.S., and have earned coverage in media outlets from the New York Times to National Public Radio. A former journalist, Tony lives and works in Boston.
Senior Director, Campaign for 100% Renewable Energy, Environment America
Johanna directs strategy and staff for Environment America's energy campaigns at the local, state and national level. In her prior positions, she led the campaign to ban smoking in all Maryland workplaces, helped stop the construction of a new nuclear reactor on the shores of the Chesapeake Bay and helped build the support necessary to pass the EmPOWER Maryland Act, which set a goal of reducing the state’s per capita electricity use by 15 percent. She also currently serves on the board of Community Action Works. Johanna lives in Amherst, Massachusetts, with her family, where she enjoys growing dahlias, biking and the occasional game of goaltimate.
Director, Environment Campaigns, PIRG
Matt oversees PIRG's toxics, transportation and zero waste campaigns and leads PIRG’s climate program to promote a cleaner, healthier future for all Americans. Matt lives in Amherst, Massachusetts, with his wife, two daughters and chihuahua.