Tommy Gibbons is the Chief Innovation Officer at Hempitecture Inc. a public benefit corporation producing low-carbon, nontoxic, biobased building materials. He is also a research fellow with the Department of Energy at Oak Ridge National Laboratory.
Insulation is not something Americans spend much time thinking about. It hides in the walls as we go about our daily lives and we rarely consider whether it's working properly or if adding more insulation can save us money. Greening our lives has meant substituting pollutive energy sources with renewable ones, but what do we think of changes that reduce our energy use?
The Department of Energy, the White House, and now much of Congress agree reducing American energy use for heating and cooling buildings is an idea worth making policy. The new Inflation Reduction Act (IRA) carries a swathe of incentives for making homes more energy efficient. The IRA incentives for insulation upgrades are large and available to everyone.
I share this guide because I hope you will capitalize on these incentives and be motivated to use our HempWool® insulation in your renovation. The three separate incentives are as follows (and a fourth that is directed at nonprofits):
The High-Efficiency Electric Home Rebates (HEEHRA) program includes $1,600 for insulation. HEEHRA will cover 100% of insulation costs (up to $1,600) for low-income consumers and 50% of insulation costs (up to $1,600) for moderate-income consumers*.
The 25C tax credit provides a 30% tax credit for insulation up to $1,200 per year for consumers of any income.
Since insulation can help a larger retrofit achieve energy savings of at least 15%, it is covered by the Home Energy Performance-Based, Whole-House rebates (HOMES). Rebate amounts are below and depend on the estimated energy savings. Incentives for low-income households are doubled, or up to 80% of project costs.
Retrofits with modeled energy** system savings of 35% or more: the lesser of $4,000 or 50% of project costs
Retrofits with modeled energy system savings of 20-34%: the lesser of $2,000 or 50% of project costs
Retrofits with measured energy savings of 15% or more: a payment rate per kWh equal to $2,000 for a 20% reduction in energy use
The Biden- Harris Administration has also launched a first-of-its-kind $50 Million program to help Nonprofits make critical energy upgrades. Eligible nonprofits can apply for funding in individual grants of up to $200,000 to make critical energy upgrades at their buildings so they can direct more resources toward mission-driven work in their communities. The deadline to submit a response to this RFI is December 22, 2022, by 5:00 PM ET.
*For the HEEHR and HOMES rebates, "low-income" is defined as less than 80% Area Median Income (AMI), and "moderate-income" is defined as 80-150% AMI.
**Modeled energy savings are measured through a variety of software that complies with the BPI-2400 standard, SnuggPro is one software example.
The good news is some of these incentives like 25C can be applied in separate years so you can purchase insulation for your crawl space one year, earn the credit and then insulate your roof the next year. Note the HOMES and HEEHR cannot be applied for the same insulation project, so to get 1 and 3 in the same year, you would have to conduct separate insulation upgrade projects (for example: insulate the crawl space in the spring and then the attic in the winter). Keep all your itemized material and labor invoices/receipts for when tax season comes, but most online tax preparation services should be ready for consumers to use these tax credits and will ask about energy efficiency upgrades.
Cashing in on these incentives means you’ll get the tax credits, but you’ll also reap the benefit of energy savings in the future. With current markets teetering and few seemingly safe places to invest, now could be the right time to invest in lowering your future energy bills and taking advantage of these new incentives. Where does the investment pay off the most? Uninsulated open roof rafters are easy targets for reducing heat loss in the most important part of the building, plus they don’t require opening a wall to add insulation which means lower installation costs.
If you’re interested in getting more calculated about your investment, it’s wise to get an installation + material estimate (multiple bids are best), deduct your tax credits, and compare that cost to 15x the estimated annual energy savings. That tests whether your payback will occur within the next 15 years. After 15 years, that energy savings becomes an annuity you earn for the rest of your life at that property. I personally expect energy prices to increase in the future in most places, so what you are saving this year could be even more in future years and accelerate your investment pay off. Also, insulation upgrades should increase the resale value of your property immediately to savvy buyers and realtors, so your investment could have an immediate payoff as well.
Now is the time to take an insulation upgrade seriously. An energy audit or thermal imaging camera can help find where the weak spots exist in your thermal envelope, but you likely already know where the drafty parts of your home are. I encourage you to compare all the available insulations that could work for your project; if you want a natural, nontoxic choice that’s energy-efficient and has a low carbon footprint, you can buy HempWool® directly from our Idaho factory at buy.hempitecture.com. Whichever insulation solution you choose, I’m thankful you're taking action to reduce our collective energy use and footprint, neighbor!