Guide to Financing

Summary: Rebates, tax credits, save money

Description

Paying for weatherization, electrification, and new appliances is an obstacle for many. While energy savings over time can cover a significant portion of the upfront costs, what are the options for paying for these projects? Luckily, there are federal and state incentives available to all income levels including tax credits, rebates, on-bill financing, and low interest loans. If you find this all overwhelming and bewildering, you aren’t alone. Everyone agrees it is too complicated- we’re here to help!

Big Ideas:

• Start with an energy audit and use the audit to create a plan to reduce your energy costs. 

• See what rebates, tax credits and/or free programs are available for your income. 

• Refine plan to take advantage of available resources. This could mean grouping work to take advantage of loan programs, or spreading work out over a number of years to maximize tax credits.

• Decide how much work to do and arrange financing if needed.

• Arrange work with Efficiency Vermont’s Efficiency Excellence Network (EEN) contractors if you plan to take advantage of rebate and/or loan programs.

A few Addison County energy cost facts:

• The median annual spending on energy costs across the county is about $7400 (about 9.8% of a median household’s budget), including $1583 for electricity, $2415 for home fuels, and $3400 for transportation fuels. Annual energy spending is pretty consistent across Addison County towns, despite a variety of median incomes. Percent of income spent on energy varies town to town from 6.7% to 14.3%. 

• While electricity costs through Green Mountain Power are pretty stable and rising only slowly, delivered fuel and gas costs have jumped around wildly in the past 10 years, creating budget uncertainty. The cost of piped gas (only available in Middlebury and Vergennes) is more consistent, but still has significant greenhouse gas emissions. 

• Electrifying heating systems with heat pumps typically saves money on heating costs compared to oil and propane. Winter electricity bills will increase, while oil or propane bills will decrease.   

• Weatherization/ energy retrofit work (particularly air-sealing and providing consistent insulation) can save 10% to 50% of heating/cooling costs, depending on the extent of the work. 

• Heat pump water heaters have one of the best returns on investment, and are currently eligible for large Efficiency Vermont rebates (income dependent), and save an average of 1 ton of carbon per year.

Financial resources available:

• Efficiency Vermont and power company (GMP, VGS) rebates:

• For weatherization and efficient electric equipment and appliances.

• Bonuses are available for low/moderate income (under 120% of median income).

• Efficiency Excellence Network contractors required. 

• Weatherization Assistance Program (WAP): 

• Free weatherization available if income qualified.

• Available through community service agencies like the Champlain Valley Office of Economic Opportunity (CVOEO).

• Federal 25C Tax Credits (smaller tax credits for equipment): 

• Up to $2000 available each year.

• May make sense to phase projects to take advantage of this over a number of years. 

• Federal 25D Tax Credits (for renewable energy projects): 

• Tax credit of 30% of project cost, no limit.

• Covers solar and battery systems, and ground source heat pump systems.

• Credit can be carried over to reduce taxes in future years.

• Federal Rebates from Inflation Reduction Act: (these are not yet available- expected by early 2025)

• Income qualified, supports equipment electrification and some weatherization.

• Up to $14,000 per household, covers up to 50% or 100% of cost depending on income.

• Weatherization Repayment Assistance Program (WRAP): on bill financing (through GMP or VGS): 

• Can cover remaining costs of weatherization and electrification after rebates and tax credits.

• 2% loan rate, up to 15 year term, carries with home if sold. 

• Limited contractors for this program- Efficiency Excellence Network contractors required.

• Home Energy Loans ($20,000 max.): 

• 0%-7%  loan rates available depending on income and term length (between 5 and 15 yrs).

• Efficiency Excellence Network contractors required. 

See our guide to options, organized by household income and home type, in the deep dive section.

Other useful explainers and tools:

Loan info:

https://www.efficiencyvermont.com/services/financing/homes/home-energy-loan 

Efficiency Vermont Guide to Financing Clean Energy Projects https://www.efficiencyvermont.com/blog/how-to/choose-between-two-options-to-pay-for-your-next-energy-saving-project 

General info:

Efficiency Vermont Clean Energy Incentives Calculator

One Page Summary

Deep Dive

Three scenarios- each with the same goal of full electrification:

1. Household income below 60-80% of median Income, smaller/older home, largest benefits available

2. Household income 80% to 120%-150% of median income, can use tax credits/rebates 

3. Household income above 120-150% of median income, larger home, fewer benefits available

A. Below 60-80% of median Income, smaller home or older leaky home, pays little in federal taxes, little borrowing capacity.

1. Meet with energy navigator and make plan for an energy audit.

2. Check with Champlain Valley Office of Economic Opportunity (CVOEO) about weatherization eligibility and potential time frame for work. (An energy navigator can assist with this step)

3. If CVOEO eligible, schedule CVOEO audit and make a plan for electrification based around that scope of weatherization work. Discuss budgeting/financing options with CVOEO finance experts.

4. Check on the amount of federal taxes paid to determine the extent of ability to use tax credits. 

5. Start with do-it-yourself button-up projects, and a single heat pump in main living space or primary bedroom if possible, while waiting for CVOEO weatherization. 

6. When available, review IRA rebate eligibility and make a plan to take best advantage of IRA electrification rebates.

7. Consider a WRAP or Home energy loan to cover additional projects (typically less than cost of energy savings for a low or no interest loan). 

B. Moderate income, older leaky home or home built in the last 20 years, pays enough federal taxes to take advantage of tax credits, some borrowing capacity.

1. Meet with energy navigator and make plan for an energy audit.

2. Check on the amount of federal taxes paid to determine extent of ability to use tax credits. 

3. With energy audit in hand, work with energy navigator to make a multi-year plan.

4. If able, start with do-it-yourself button-up projects and a single heat pump in main living space or primary bedroom. 

5. Select EEN contractor or agency to work with for weatherization and electrification scope of work (to qualify for rebates, low interest loans, and WRAP on bill financing).

6. When available, review IRA rebate and tax credit eligibility and make a plan to take best advantage of IRA electrification rebates and tax credits- perhaps extending wok over several years. 

7. Consider a WRAP or Home energy loan (typically less than cost of energy savings for a low or no interest loan), or a home equity line of credit (HELOC) to cover additional projects.

C. Higher income, home ready for significant renovation/retrofit or just want to get off fossil fuels quickly and comfortably, eligible for tax credits but not most rebates, likely to have cash or borrowing capacity. 

1. Meet with energy navigator and make plan for an energy audit.

2. With energy audit in hand, work with energy navigator to make a multi-year plan.

3. Select contractor to work with for weatherization and electrification scope of work (EEN contractor required to qualify for low interest loans and WRAP on bill financing, but incentives may not be a significant portion of the renovation cost).

4. Review IRA tax credit eligibility and make a plan to take best advantage of IRA electrification tax credits, perhaps extending wok over several years. 

5. Consider WRAP on bill financing, folding energy work into mortgage, or a home equity line of credit (HELOC) to cover additional projects.

6. Consider addition of solar and battery systems or ground-source heat pump to take advantage of tax credits.

Steps to Take

Finding and committing money to electrify your home is a big decision. Some of it will depend on why you are doing this: To save money? To be more comfortable? To make your home more healthy? To reduce you and your family’s carbon footprint? Some of our willingness to invest in the short term depends on the reasons we are making these investments, and how quickly we want to enjoy the benefits. 

Here are some good steps to take in figuring out how moving to an clean energy home will impact your budget: 

1. Collect your annual energy use and cost information for all energy sources. 

2. Consider your energy and home renovation priorities for the next five to ten years.

3. Get an Energy Audit (required to take advantage of weatherization rebates and loan programs).

4. If you are waiting for a particular piece of fossil fuel equipment (boiler, car, water heater, range) to need to be replaced before swapping in an electric replacement, it is good to line up a plan ahead of time. 

5. Determine your capacity to do the work yourself. 

6. Check out the Energy Navigator Finance Guide for information about your income and project type. 

7. Create an energy plan for your home (with the help of an energy navigator and an energy audit). Your plan will help you understand the cost of each part of the overall effort, as well as the energy and cost savings from each element. It will also show your eligibility for various programs, (many are income sensitive), and how to spread out projects over time, ensuring that you maximize benefit from rebates and tax incentives. 

8. Decide how much work to do and arrange financing if needed.

9. Arrange work with Efficiency Vermont’s Efficiency Excellence Network (EEN) contractors if you plan to take advantage of rebate and/or loan programs.