Embracing renewable energy technology and energy-efficient practices that reduce fossil fuel consumption is critical to building a resilient Southeast where people and place can thrive for generations to come. The move toward electrification can help us build a more just and sustainable world while benefiting multiple areas of society — the health of the environment will improve when we burn fewer fossil fuels, consumers will gain access to more reliable and affordable energy systems, and electrical utilities will receive more demand for their product. This movement away from fossil fuels is well underway in Southeast Alaska — the region receives 95% of its electricity from hydropower, making it a national leader in renewable energy. However, barriers remain, both for the distribution of renewable energy throughout the region (most hydropower generation is concentrated in Juneau, Ketchikan, and Sitka), and for households, organizations, and businesses that want to switch to clean energy technologies.
Download this quick guide on ways to improve your energy efficiency and save money!
Understanding the IRA and the Different Types of Incentives
Signed into law on August 16, 2022, the IRA includes billions in investments intended to lower energy costs, promote widespread investment in clean energy, and make clean energy technologies more accessible to Americans. Many of the benefits for individual households come in the form of tax credits or rebates. The incentives are not reserved for homeowners, but changing the energy infrastructure of a home will likely require the support of a building’s owner. For more information, see this article from Vox for information on how renters can benefit from the IRA.
IRA Tax Credits are available now by filling out the corresponding IRS form when filing taxes. Tax credits reduce what you owe in taxes. If your tax burden was going to be $5,000, but you qualify for $2,000 in tax credits through the IRA, you would then only owe $3,000. The IRA tax credits have no lifetime limit and can be claimed every year that the IRA funding keeps the program running. You can not get cash back for IRA tax credits (they are nonrefundable). For a more comprehensive explanation of available energy-related tax credits, consult the IRS webpage.
IRA Rebates, which are refunds for part or all of the cost of energy upgrades, are still being organized by the State of Alaska and will likely be available in early 2024. Rebates will be paid to a customer during the transaction, not when they file taxes. Most of the rebates are designed for households that are under 150% of the area median income (AMI). In addition, some funding through the HOMES program is open to households of any income that pursue certain kinds of energy-saving retrofits. The number of rebates is expected to be limited and it is not yet known how competitive it will be to access this benefit. Total rebates are limited to $14,000 per household. Alaska Housing Finance Corporation and Alaska Heat Smart will have information about how to claim the rebates as they become available.
Nonprofit and private organizations in Southeast Alaska are also providing technical support, financial incentives, and financing to support households transitioning to clean energy technologies or improving their energy efficiency.
To best understand the incentives you may qualify for and how you might use them, we recommend you start by estimating your percentile area median income and requesting a free home heat pump assessment from Alaska Heat Smart. In an assessment, Alaska Heat Smart will make a report that includes a home’s current heating needs, identifies existing issues and potential improvements, provides guidance on collecting and analyzing bids from local contractors for heat pump systems, and shares information on financing and incentives.
Key Areas for Energy Change in Southeast Households
Heat Pumps and Heat Pump Water Heaters | Many of the local and federal incentives focus on promoting heat pump installation. Heat pumps are appliances that run on electricity and collect warmth from the ground, water, or air and concentrate it to heat or cool the home. They are widely considered to be the most cost-effective and sustainable way to regulate home temperatures, regardless of the region’s climate. Heat pumps offer an efficient and sustainable alternative to traditional furnaces and air conditioners by using half as much energy as other heating systems and avoiding fossil fuels. While their up-front costs are higher than the traditional technology, the resulting monthly cost savings often pay back that investment — consult online guides and get a home heating assessment to find out what the costs and payback period might look like for your household. There are also incentives and awards available for qualifying Southeast Alaskans to offset the purchase price.
Weatherization | Weatherization is the process of sealing a building to protect it from the elements and to maximize energy efficiency. It usually starts with a home energy audit or a heating assessment and can involve improving insulation, air sealing, and ventilation. Windows and doors are sometimes replaced or modified as part of weatherizing the building.
Electric Vehicles | Electric vehicles, or EVs, are vehicles that utilize electricity rather than combusting fossil fuels to power the engine.
Energy-Efficient Appliances | There are also many additional ways to reduce home energy use by upgrading appliances and electronics including smart thermostats, light fixtures, light bulbs, and other Energy Star-rated appliances.
Programs for Southeast Alaskans
1) Inflation Reduction Act Tax Credits
Energy Efficient Home Improvement Credit | IRS Form 5695. Tax credit for qualified energy, efficiency and heating costs. Covers up to 30% of qualified expenses, with no lifetime limits. Open to all income levels. Households can claim up to $3,200 per year across the following categories:
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$1,200 for energy property costs and certain energy-efficient home improvements, with limits on doors ($250 per door and $500 total), windows ($600), and home energy audits ($150)
- $2,000 per year for qualified heat pumps, biomass stoves, or biomass boilers.
Residential Clean Energy Credit | IRS Form 5695. Tax credit for qualifying new clean energy purchases, including solar electric panels, solar water heaters, wind turbines, geothermal heat pumps, fuel cells, and battery storage technology. Covers up to 30% of qualified expenses. Open to all income levels.
Clean Vehicle Credit | IRS Form 8936. Tax credit for the purchase of an electric vehicle (EV). $7,500 for the purchase of a new EV, 30% credit up to $4,000 for the purchase of a used EV, and a 30% credit up to $1,000 for the purchase of an EV charger. Eligibility depends on modified adjusted gross income (AGI), filing status, and the type of vehicle.
Electric Panel Upgrade Tax Credit | IRS Form 5695. Covers 30% of the cost of electric panel purchases up to $600. This counts towards the $1,200 available per year for efficiency improvements under the Energy Efficient Home Improvement Credit listed first. Open to all income levels.
2) Inflation Reduction Act Rebates
Rebates will be administered by the State of Alaska and are expected to be available in early 2024. It is unknown how competitive it will be to access rebates.
Weatherization rebates | Anticipated early 2024. Point of sale rebate that covers insulation, air sealing, and ventilation. Rebates cover 100% of costs up to $1,600 for households under 80% area median income (AMI), and rebates of 50% up to $1600 for households under 150% AMI.
HVAC heat pump rebates |Available early 2024. Point of sale rebate for 100% of costs up to $8,000 for households under 80% AMI. Rebates cover 50% of costs up to $8,000 for households under 150% AMI.
Water heater heat pumps | Available early 2024. Point of sale rebate for 100% of costs up to $1,750 for households under 80% AMI. 50% of costs up to $1,750 are covered for households under 150% AMI.
Electric panel | Available early 2024. Point of sale rebate for 100% of costs up to $4,000 for households under 80% AMI. 50% of costs up to $4,000 are covered for households under 150% AMI.
Electric/induction stove | Available early 2024. Point of sale rebate for 100% of costs up to $840 for households under 80% AMI. 50% of costs up to $840 are covered for households under 150% AMI.
Electric wiring | Available early 2024. Point of sale rebate for 100% of costs up to $2,500 for households under 80% AMI. 50% of costs up to $2,500 are covered for households under 150% AMI.
Heat pump clothes dryer | Available early 2024. Point of sale rebate for 100% of costs up to $840 for households under 80% AMI. 50% of costs up to $840 are covered for households under 150% AMI.
HOMES Program | Available early 2024. Rebate for whole-house energy-saving retrofits. Rebate amounts vary greatly by energy savings level, project cost, and type of home but start at homes that undergo a 15% change in energy use and distribute $2,000 to $8,000 per home.
3) Local Resources
Home heat pump assessment from Alaska Heat Smart | At no cost to the household, Alaska Heat Smart will analyze the home and energy use to create a report about potential heat pump installation options, including finding contractors and financing. Currently available in Juneau and Sitka.
Clean Heat Incentive Program (CHIP) from Alaska Heat Smart | Provides between $1,500 and $3,000 for heat pump purchase and installation costs to qualifying homeowners in Juneau and Sitka below 125% AMI.
Sitka Tribe of Alaska Heat Pump Program | Financial assistance for Sitka Tribe of Alaska enrolled members to install heat pumps, coming soon. Contact Alaska Heat Smart for more information.
Sitka Carbon Offset Fund | Year-round Sitka residents who have home heating systems that run on oil can apply for a grant from the Sitka Carbon Offset Fund, a local project that pools donations from visitors and residents to fund heat pump conversion awards. The fund focuses on serving households with financial need, with tiered award sizes based on income.
Juneau Carbon Offset Fund | Lower income Juneau households can apply for financial assistance to replace their oil-burning heating systems with efficient and emissions-free air source heat pumps that run on Juneau’s abundant fish-friendly hydroelectricity.
Alaska Power & Telephone | AP&T offers beneficial electrification incentives to their customers in the communities of Prince of Wales, Skagway, Haines and Gustavus.
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Electric Vehicles | $1,000 incentive for electric vehicles.
- AP&T also offers an incentive for EV chargers installed by tribes and municipalities.
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Heat Pumps | $500 heat pump incentive for its customers.
- Sealaska provides an additional $500 match for corporate shareholders!
- Alaska Mini-Split Heat Pump Calculator | A free tool, developed with financial support from AP&T, that helps you evaluate the economics of heat pumps. Note, be sure to check your latest utility rates, to make sure the most up to date information is being used in the calculations.
Regional credit unions, banks, and private lenders offer heat pump and home improvement loan options.
Learn More
Rewiring America - IRA Fact Sheets
Department of Energy - Energy Savings Hub
The White House - IRA Guidebook
IRS - Guide to the IRA
Rewiring America - How to Electrify Your Home
Vox - Renter’s Guide to the Inflation Reduction Act
Contact SCS - [email protected], 907-747-7509
Quick Guide to Using IRA Incentives
These slides provide a simple and action-oriented introduction to the benefits available to households through the IRA, as well as other relevant energy incentives available in Southeast. Find details on what products and home improvements are covered, the value of the benefits, and what IRS forms to use when filing taxes.
Download the guide here!
Contractor Incentives
The IRA also includes tax credits (available now) and rebates (anticipated in 2024) for contractors who are doing new construction, retrofitting or electrifying of homes and buildings.
Download SCS's Contractor Incentive guide here!
45L New Energy Efficient Home Credit | Tax credit for new construction or substantially reconstructed homes that meet the ENERGY STAR program or Zero Energy Ready Home requirements for “extremely efficient homes.” Contractors may claim up to $5,000 per unit.
179D Energy Efficient Commercial Buildings Deduction | Tax credit for building owners or contractors who design a retrofit plan of a commercial building resulting in a reduction of at least 25% in total annual energy and power costs or energy use intensity. Contractors may claim up to $5 per square foot.
Electrification Rebates (HEEHRA) | Program that will provide up-front consumer discounts on energy products for low and medium income households. Contractors may also be able to claim a rebate of up to $500 per qualifying electrification project, wherein they install electric machines in low and moderate-income communities.
Efficiency Rebates (HOMES) | Program that will provide point of sale rebates for consumer weatherization upgrades including insulation, air sealing, and ventilation. Contractors may also be able to claim a rebate of up to $200 per qualifying efficiency project, wherein they perform energy-saving retrofits in disadvantaged communities.