Energy Efficiency & Sustainable Energy Financial Incentives for NH Residents: Save Money Going Green

Psst...want some free money? There may be no such thing as a free lunch, but there’s a lot of “free money” available to New Hampshire residents for sustainable-energy installations. New Hampshire energy utilities, the federal government, and some local governments have created these incentives to create more consumer demand for energy efficiency and renewable energy.

This article is aimed at Granite State homeowners and car owners, though incentives are also available for commercial building owners. As a residential customer you’ll need to know what activities qualify, how the programs work, and how to fill out the paperwork in order to receive these rebates, tax breaks, and other incentives.

In the end, you’ll benefit from improved energy performance at a lower cost and you’ll feel good about helping protect the environment.

The resources listed below include both New Hampshire–specific incentives and federal tax incentives that apply throughout the United States. It’s worth noting that most of the utility-based incentives are funded through the NH legislature-mandated System Benefits Charge on electric bills.

Incentives for Existing Homes

EPACT homeowner tax credits
The federal Energy Policy Act of 2005 or EPACT offers homeowners, builders and car owners a number of sustainable energy incentives.

For owners of existing homes, EPACT offers a personal income tax credit up to $500 for the material costs of qualified energy efficiency improvements, including boilers and furnaces, central air conditioners, water heaters, insulation, and high-performance windows and doors. Labor costs don’t qualify for the tax credit; contractors will need to provide you with a receipt that shows the material portion of the energy improvement. Or, you can install the materials yourself. The materials need to be certified as eligible under the tax credit, and there are additional restrictions. Make sure to check specific eligibility information.

Plymouth Area Renewable Energy Initiative www.plymouthenergy.org has an innovative approach, exportable to anywhere else in the state, to lower costs by recruiting volunteers to learn how and then help install renewable-energy systems.

Homeowners can get a separate 30 percent tax credit up to $2,000 for installing qualified solar energy systems in their homes. The tax credit applies only to solar hot water and solar photovoltaic electric systems installed for domestic use. Additional information is available from the Solar Energy Industries Association.

Note: Tax credits are much better than tax deductions because they reduce the net tax bill rather than reduce taxable income. Most of the provisions in EPACT became eligible with the 2006 calendar year, but many are phased out after a few years. So check to make sure the EPACT provision is still applicable.

NHSaves Home Energy Solutions and Home Energy Assistance programs
Home Energy Solutions (HES) is part of the NHSaves Core Energy Efficiency Programs offered by all of New Hampshire’s electric utilities. The program is designed for homes that use electric heat in a substantial portion of the living area. Some utilities may also offer similar services for customers with unusually high electric bills. Customers who participate in the HES program get a free comprehensive energy audit and significant utility cost-share for a host of cost-effective energy improvements. In fact, the electric utility provides up to $4,000 in services.

A typical package may include additional attic insulation, blower door-guided air sealing, a replacement bathroom fan (for moisture control), low-flow showerheads and aerators, compact fluorescent light bulbs, a new Energy Star-rated light fixture, and even a $150 voucher for replacing an old energy hog refrigerator.

In this hypothetical scenario, the electric utility may contribute around $2,400 and the homeowner pays only $900—quite a bargain for significant energy improvements. Income-qualified customers who participate in the similar Home Energy Assistance (HEA) program pay nothing for the entire package of improvements.

Lighting, washing machine, and air conditioner rebates
All New Hampshire electricity ratepayers can also receive rebates for purchasing energy- efficient lighting and appliances. Compact fluorescent lights (CFLs) use only about one-quarter of the electricity of conventional light bulbs, and New Hampshire residents can get a $1.00 instant rebate per CFL bulb. Rebates of $10.00 per fixture are available for energy-efficient light fixtures and torchieres. New Hampshire residents can also order discount-priced CFLs, light fixtures and other energy-saving items by downloading the NHSaves catalog or by calling 1-877-647-2833.

There is also a $50 rebate for front-loading clothes washers, which use dramatically less hot water, and a $25 rebate for super-efficient window air conditioners. Make sure you check the NHSaves.com website to make sure the offers are still valid.

Contact your utility if you are installing a new air conditioning system, swimming pool, or other item that may be a big electricity user. They may be able to offer specialized rebates for energy saving alternatives.

Natural gas energy efficiency programs
Northern Utilities revamped its residential energy efficiency program in mid-2006, and now offers many residential energy-efficiency incentives through its Partners in Energy program to customers who heat with natural gas. Customers can get a $150 rebate towards a qualified energy audit, and a 50 percent rebate up to $1,500 for building-shell energy improvements. Qualified improvements include attic, basement, rim joist and/or wall insulation, air infiltration sealing, duct sealing and insulation, as well as heating pipe insulation. There is also a $25 weatherization rebate for self-installed weather-stripping, low-flow devices and other minor energy improvements.

KeySpan has a similar, though less generous, energy-efficiency program. Their residential weatherization program offers 20 percent rebates for energy improvement rebates up to a total $750 rebate for homes constructed before 1995.

While there is no incentive for an independent energy audit, KeySpan offers a sophisticated online Home Energy Analyzer tool and in-person energy audits upon request.

Both KeySpan and Northern Utilities also participate in the GasNetworks Rebate Program. The rebate program offers:

• a $10 per window rebate for ENERGY STAR windows
• a $25 rebate for programmable thermostats
• a $300 rebate for a high-efficiency indirect-fired or tankless hot water heater
• up to $500 for a high-efficiency gas boiler or furnace.

LIHEAP, EAP and CAP programs
Income-qualified homeowners and tenants can participate in a variety of energy assistance programs, regardless of their heating fuel source. The county-based community action agencies (CAAs) administer fuel bill assistance as well as weatherization assistance programs, with funding coming from the federal government, the state System Benefits Charge on electric bills, social service agencies and utilities. Approximately one-half the System Benefits Charge funds the Electric Assistance Program (EAP) which subsidizes electricity costs for low-income residents. Other residential energy incentives
All new homes and most remodeling projects must comply with the New Hampshire Energy Code. Energy code compliance information is available from the New Hampshire Public Utilities Commission. New Hampshire Electric Cooperative offers its customer members special pricing for installing an ultra-efficient Marathon electric hot water heater.

New Hampshire state law allows municipalities to exempt certain “renewable energy property” from local property taxes. Such property includes solar photovoltaic, solar thermal, wind energy and central wood-fired heating systems. For example, a $20,000 solar photovoltaic system could be exempt from property taxes if it is part of a house in a participating municipality. The New Hampshire Office of Energy and Planning has a list of participating municipalities, links to the Department of Revenue Administration exemption application form and RSA legislation on procedures for adoption of exemptions, as well as additional renewable energy incentives.

New Hampshire state law also allows net metering, which enables grid-tied renewable energy producers to get credit for the electricity they sell to the electrical grid.

All the electric and gas utilities have commercial and industrial energy efficiency programs with a separate suite of incentives. Contact your gas and electric utilities for more information about these non-residential programs. Homeowners who use fuel oil, propane or wood to heat their homes don’t qualify for utility- or state-sponsored incentives, but they can still take advantage of federal tax credits.

Peak load curtailment, PSNH’s HEATSMART and the forward capacity market
How about being paid to turn off your air conditioner or avoid elevators on hot summer days? This may sound strange, but utilities see peak load curtailment strategies as a cost-effective alternative to new power plants used only when there is a high demand for electricity.

Although not yet common in New Hampshire, companies in other states work as intermediaries with the power grid to compensate large electricity users for voluntarily curtailing their electrical use during occasional peak load periods.

Real-time electricity pricing is a similar wave of the future. Utilities may offer an electric rate that, for example, was 40 percent cheaper at night, five percent cheaper most other times, but 200 percent more expensive during peak load periods. Some utilities already structure commercial electricity rates this way.

In fact, PSNH currently offers a special HEATSMART rate for residential and small commercial customers that is generally 25 percent less expensive than their standard rate. However, HEATSMART power can be turned off for up to four hours during extremely high demand periods. HEATSMART is only available on circuits with permanent electric heat and electric hot water heaters. The electricity provided in the rest of the house isn’t interruptible, nor at the lower rate. The program also requires a back-up heat source and extensive rewiring for the new HEATSMART meter. The substantial savings may be worth the typical $700 to $2,000 residential installation charge in electrically heated homes.

Even more intriguing is the new Forward Capacity Market program offered by our regional electrical grid, ISO New England. Although primarily designed to fund construction of new power plants, the program is also open to energy-efficiency proposals to overcome future capacity constraints in the regional electrical grid. Potentially a utility or even a private company may pay to you to install energy- efficiency improvements because it is less expensive than building a new power plant. Imagine that!

 

New Home Construction Incentives

Energy Star homes
New Hampshire electric and natural gas utilities, in conjunction with the federal Energy Star program, offer incentives to builders who build an Energy Star-certified home. To be certified as Energy Star, both the plans and the actual construction of the home are verified by a home energy rate (HERS rater). The new home must meet a performance standard that is approximately 20 percent more energy-efficient than the New Hampshire Energy Code requires.

Energy Star home builders typically receive incentives for installing Energy Star-labeled lighting, appliances, heating and cooling units, as well as free plans’ analysis and performance testing. Apartment complexes and condominiums can also be Energy Star certified. Energy Star homes are becoming increasingly popular. Energy Star-qualified homes captured more than 10 percent of the new-home market share in New Hampshire and 11 other states in 2005.

Geothermal Energy Star homes
New Hampshire’s largest electric utility Public Service of New Hampshire (PSNH) also offers an enhanced Energy Star home rebate program for those who build a new home with a geothermal heat pump (also called ground-source or geoexchange) heating and cooling system. Such a system uses a geothermal heat pump to extract heat from either relatively warm well water or a coolant circulated through a closed loop piping system. The system provides heat, air conditioning, and domestic hot water at roughly one-third of the fuel cost of a fossil fuel system. Geothermal up-front costs are substantial and the home’s building shell must also meet high performance standards for the PSNH program. In return, PSNH provides up to a $7,250 rebate depending on the square footage of the home. New Hampshire Electric Cooperative has a similar incentive offering up to $6,000 per geothermal heat pump installation, and other New Hampshire utilities may offer additional new home construction incentives.

EPACT new home-builder tax credit
For new homes, the federal Energy Policy Act of 2005 (EPACT) offers a $2,000 business tax credit to builders if they build and sell a home with heating and cooling systems 50 percent more energy-efficient than a typical code-built new home. The energy code reference in EPACT is the International Energy Code Council (IECC) 2004 standard, which is reasonably similar to New Hampshire’s current Energy Code.

The 50 percent better-than-code standard is challenging because New Hampshire’s current energy code already requires new homes to be more efficient than most existing homes. While this is a high standard, the benefits are numerous. In addition to the tax credit, such an ultra-efficient home would be more comfortable, have lower utility bills, reduce environmental impacts, have a higher resale value, and would be eligible for an energy-efficient mortgage.

 The installed energy features need to be verified by a Home Energy Rating System (HERS) rater. The HERS rater would provide you with a numerical index of your home’s energy performance, ranging from 0 for a zero net-energy use to 300 or more for an energy-hog home. Just as hybrid cars have impressively high EPA miles-per-gallon ratings, your new ultra-efficient home would have an impressively small HERS index.

To some extent, the various new home incentives may be combined with utility and other incentives. For example, an ultra-efficient building envelope, solar-hot-water-heated home, with geoexchange in PSNH’s territory could be eligible for several incentives and be very comfortable with very low heating and cooling expenses.

 

Transportation Incentives

 

Hybrid car tax credits
As of January 1, 2006, the hybrid automobile tax deduction became a much-preferable tax credit that reduces an individual’s federal income tax dollar-for-dollar. The actual tax credit you receive depends on both the specific hybrid model you buy and the year you buy it. The 2005 EPACT law includes a complicated tax-credit formula that incorporates both the fuel-economy improvement and pollution reduction from the specific hybrid system in each model.

The original 2006 tax credit ranged from $250 for a “mild hybrid” system in a Chevrolet Silverado truck, to $3,150 for a “full hybrid” Toyota Prius. However, after October 1, 2006, the tax credit for the Prius will be lower because Toyota has already sold more than 60,000 hybrids. The EPACT writers wanted to create a more competitive marketplace by phasing out the tax credit for manufacturers who sell a large volume of hybrids. Model-by-model tax credit information can be found at the American Council for an Energy-Efficient Economy as well as from the Internal Revenue Service.

Other transportation incentives
Some employers provide their employees with an additional financial bonus for purchasing a hybrid car. Other employers, particularly in large urban areas, provide free bus passes or other incentives for using mass transit or biking to work. Their reasoning is that it is cheaper to pay employees to take a bus than build extra parking lot spaces.

Although the incentives are hidden, most mass-transit services are subsidized by fuel taxes. The more people who use mass transit, the more cost-effective the service becomes, and the more fuel is saved. Ditto for bike paths and other transportation alternatives.

Biodiesel fuel gets up to a $1.00 per gallon federal excise tax credit at the fuel blending stage. Congressional policy makers hope this will spur greater use of biodiesel which is cleaner-burning and more renewable than regular diesel fuel.

To compare New Hampshire’s with energy incentive programs in other states, consult the Database of State Incentives for Renewables and Efficiency (DSIRE).

Note: Programs listed in this article are valid as of November, 2006, but may have changed since the article was written. The author believes the above descriptions are accurate, but neither he nor UNH Cooperative Extension is responsible for errors or omissions in the programs described.

Sidebar: Why do utilities want us to use less energy?
Good question! After all, utilities are in business to sell energy. Why would they want to sell less of it?

Utilities are motivated to reduce their peak load demand, such as electrical demand on hot summer days, because it’s expensive to build and operate generated capacity that’s only used occasionally. However, their enthusiasm for energy efficiency and renewable energy programs depends on other factors as well.

In many states, elected officials and public utilities regulators encourage or require sustainable energy programs. The New Hampshire legislature has mandated a System Benefits Charge as part of the electricity rate to fund energy efficiency programs and programs that help low-income consumers. New Hampshire natural gas suppliers have similar, though less-transparent ratepayer- funded energy assistance and efficiency programs. The efficiency programs may be run by the utilities and their designated contractors as in New Hampshire and Massachusetts, or as in Vermont and Maine they may be run by an independent efficiency utility. Because utilities are generally in business to sell energy, regulators may also give utilities financial incentives for selling less energy or for providing alternative energy services.

By Andy Duncan, Chair, UNH Cooperative Extension Energy Advisory Team

Duncan, who has a Ph.D. in environmental behavior and policy, taught Environmental Science at New England College. He is now focusing on energy efficiency as a principal in an energy performance company and through civic activities.

Learn more about home energy efficiency:

• How Does Your Home Perform? Ways to Reduce Your Home’s Energy Bill

Posted January 24, 2007