Energy conservation and use of renewable energy are ongoing trends in home building and remodeling.
Under current law, the window of opportunity remains open for claiming tax credits in connection with new construction. The window for remodeling current homes is closing, however, with the credits due to expire at the end of December.
The federal Energy Star rating approved by the Environmental Protection Agency constitutes a stamp of approval given only to newly constructed homes and new appliances. Existing homes can’t receive an Energy Star rating, but can be eligible for tax credits when they use appliances with the Energy Star designation.
Under current law, owners of new or existing homes can benefit from a tax credit of 30 percent of the cost of such items as geothermal pumps, small wind turbines and solar energy systems. The credits are in effect through the end of 2016 and there’s no limit to the dollar value that can be claimed, although the EPA warns that not all Energy Star products qualify for tax credits.
For current homeowners who want to cash in on tax credits for improving efficiency, time is limited unless Congress extends the Dec. 31 deadline. Installation of some Energy Star appliances and such other efficiency related items as improved insulation can earn a homeowner a 30 percent tax credit up to a lifetime expenditure of $1,500.
“The new tax credit … aligns with industry research indicating that even the most aggressive efficiency goals for new homes won’t make a dent in overall energy consumption,” said Greg Miedema, remodelers chairman for the National Association of Home Builders, in a NAHB story published early last year. “Instead, remodeling and retrofitting the nation’s older homes is by far the more efficient solution.”
For new construction, the cost of building an Energy Star home can be less than one might think.
“If you’re building anything above minimum (building codes), you’re not very far away (from paying for an energy-efficient home),” said Vernon Nelson, a professional energy rater for EnergyWise Consulting in Grand Junction, a firm that helps builders and remodelers improve energy efficiency. “The home is more durable, quieter, has better air quality and costs less to own because utilities are less.”
Nelson, a 30-year resident who used to build homes for a living, said he and his co-workers have found a satisfying niche in promoting energy efficiency. “It’s very rewarding,” he said. “It’s good, clean science.”
And did he envision, years ago, the current emphasis on conservation and alternative energy sources? “Yes, I did, but nothing like we’ve seen.”
Nelson attributes the nationwide interest in such efforts to three factors that affected the country over the past decade: the terrorist attacks in 2001, gasoline prices that topped $4 a gallon in 2008 and the recent economic downturn that has cut into families’ nest eggs.
“I think American consumers are uneasy about their future,” he said, which could account for the interest in saving money on home energy costs. He said many new appliances are much more efficient and cost-saving than their counterparts of only 20 years ago. For example, he said it’s not uncommon to save more than $100 a year in electricity by replacing a freezer with a unit that has an Energy Star rating.
Despite the interest in conservation, Nelson said most American homes are not as energy efficient as the ones with Energy Star ratings.
That leaves much potential work ahead for him and his colleagues in the energy efficiency industry.