Rebuilding for Resilience: A Guide to Incentives

Rebuilding for Resilience A GUIDE TO INCENTIVES February 2023

Rebuilding for Resilience: A Guide to Incentives February 2023

By Carrie Schuman, Ph.D., SCCF Coastal Resilience Manager

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n the wake of Hurricane Ian, Sanibel, Captiva, and Southwest Florida communities are rebuilding. There is a great deal of opportunity for the region to make choices that increase resilience to specific events like Ian, and against the broader backdrop of climate change. This guide from SCCF includes a variety of available financial incentives that can help homeowners, businesses, and other entities make some of these choices while taking advantage of potentially significant savings.

The majority of incentives represent new or updated programs resulting from the passing of the 2022 Inflation Reduction Act. One of the most obvious ways many of these incentives contribute to resilience is through their collective potential to reduce greenhouse gases. This translates into reducing rising temperatures and subsequently, the intensity of future climate change impacts that we’ll need to adapt to. However, there are additional benefits.

Adopting solar and other renewable energy sources means less dependence on a volatile fossil fuel market, and the availability of backup power as battery technology improves. Energy-efficient appliances can help streamline overall energy usage, resulting in lower bills. Savings range from hundreds of dollars to potentially several thousand.

Incentive descriptions include some basic information about the potential cost savings and eligibility requirements. Many of these opportunities are offered as tax credits, which reduce a consumer’s federal tax bill. For example, a taxpayer taking advantage of the residential clean energy tax credit can subtract up to 30% of the cost of their renewable energy system from their tax bill for the year the system is installed. The credit will apply when taxes are filed in the following year, so there is some delay in receiving the benefit. Some of these tax credits also have a direct-pay option for entities that don’t pay taxes – such as schools, nonprofits, and local municipalities – that functions like a tax refund in the amount of the claimed credit. Please carefully review timelines and eligibility, and seek outside guidance from a Certified Public Accountant (CPA) or other financial professionals as needed.

IMPORTANT NOTE: Incentives marked with an asterisk (*) must follow IRS prevailing wage requirements for full credit amounts.

Incentives marked with a diamond (◊) must follow IRS labor apprenticeship requirements for full credit amounts.

ENERGY GENERATION ENERGY ENERGY EFFICIENCY EFFICIENCY

INCENTIVE

WHAT’S COVERED

POTENTIAL SAVINGS

Residential Clean Energy Tax Credit

Solar panels, solar water heaters, geothermal heat pumps, wind turbines, battery storage

30% of system and installation costs

Net Metering

Excess solar energy production

Credits on statements for energy produced – paid at retail rate

Clean Electricity Investment Tax Credit (ITC)

Geothermal, solar, wind, fuel cell, waste energy

30% of system and installation costs if labor and wage requirements are met

Clean Electricity Production Tax Credit (PTC)

Wind, biomass, geothermal, municipal solid waste, marine and hydrokinetic, hydropower

2.6 ¢/kWh for first 10 years of system’s operation

Rural Energy for America Program (REAP)

Renewable energy systems (multiple types); the purchase, installation, and construction of energy efficiency improvements (multiple types)

Grants up to 40% of eligible project costs ($2,500 - $1 million for renewable energy, $1,500 - $500,000 for energy efficiency), loans up to 75% of project cost

Energy Efficiency Home Improvement Tax Credit

Home energy audits; windows, doors, and skylights; central air; electric panels; heaters, hot water boilers, and furnaces fueled by natural gas, propane, or oil; *electric or natural gas heat pumps or heat pump water heaters; *biomass stoves and boilers

Reimbursement varies across categories $1,200 total maximum combined yearly limit for most improvements; $2,000 yearly limit for items marked with an *

Energy Efficient Commercial Buildings Property Deduction

Buildings designed to be energy efficient

$.25/ft2 - $1/ft2 depending on improvement in energy efficiency; increases to $2.50/ft2 - $10/ft2 if labor and wage requirements also met

High Efficiency Electric Home Rebate Act (HEEHRA)

Heat pump HVACs, water heaters, dryers; electric stoves; breaker boxes; electric wiring; ventilation, insulation, air sealing

100% project and installation costs for lowincome households, 50% for moderate-income household; maximums vary by category up to a total of $14,000

Home Owner Managing Energy Savings (HOMES) Rebate

Home energy upgrade projects

$2,000 - $4,000 depending on energy improvement; doubled for low- and medianincome households

Utility-Offered Programs

For example, FPL offers rebates on air conditioning units and ceiling insulation

Varies

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TRANSPORTATION HURRICANE-PROOFING

INCENTIVE

WHAT’S COVERED

POTENTIAL SAVINGS

Clean Vehicle Credit

New and used electric, hybrid, and hydrogen fuel cell vehicles

$7,500 for some new vehicles, $4,000 for some used vehicles (Income and additional requirements apply)

Commercial Clean Vehicle Credit

Electric and fuel cell vehicles

15% - 30% of vehicle costs with maximums based on vehicle weight

Alternative Fuel Vehicle Refueling Property Credit

Fueling support for clean vehicles

6% - 30% costs for qualified clean-fuel vehicle refueling property, up to $30,000; 30% or up to $1,000 for residential or nonqualifying properties

My Safe Florida Home (MSFH) Program

Free home inspection, mitigation grants for home upgrades to strengthen against wind damage through structural and roof improvements, upgraded windows and doors

$2 for every $1 a homeowner spends up to $10,000

Energy Generation................... 3

Energy Efficiency..................... 6

Transportation.......................... 9

Hurricane-Proofing................. 11

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E N E R G Y G E N E R AT I O N Residential Clean Energy Tax Credit While this tax credit covers multiple types of renewable energy systems, most Florida residents are likely to apply it to solar. Starting in 2023 and extending through 2032, the credit will cover 30% of the costs to install qualifying renewable energy systems — including solar, wind, geothermal, or fuel cell. The credit drops to 26% in 2033, and then 22% in 2034. The credit also covers battery storage technology with a capacity of at least three kilowatt-hours (kWh). The IRS has created an FAQ that provides more details about this incentive.

To Claim Credit: Fill out IRS Form 5695

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Net Metering Net metering allows solar rooftop users (and those using some other forms of renewable energy) to connect their system to local electrical grids to feed energy back at times when they produce extra. Electric utilities then reimburse these users for that energy, often in the form of credits on their bills. Customers pursuing net metering programs will likely need to sign an interconnection agreement and may have some associated connection fees.

The practice of net metering, as well as the current reimbursement rates, came under fire during the 2022 Legislative Session and are likely to come up for discussion in future sessions. If legislators vote to reduce rates, those who already have systems or install them soon will likely be grandfathered in for higher reimbursement rates for a period of time. Interested parties should check the net metering guidelines of their electricity provider.

Lee County Electric Cooperative (LCEC) Guidelines Florida Power & Light (FPL) Guidelines

Clean Electricity Investment Tax Credit (ITC) & Clean Electricity Production Tax Credit (PTC) *◊ Businesses and other entities, such as tax-exempt organizations, have options when it comes to renewable energy generation. Starting in 2023, the Clean Electricity Investment Tax Credit (ITC) covers a base 6% of costs for a variety of clean energy systems, which increases to 30% if wage and labor requirements are met. These percentages apply until 2032 and then will ramp down.

Alternatively, the Production Tax Credit (PTC) provides credit for renewable energy produced during the first 10 years of operation and may provide more return in the case of larger energy systems. One or the other may be claimed, but not both for the same project.

There are bonuses for using domestically produced steel and iron, and for siting projects in energy communities for both the ITC and PTC. A bonus for projects installed in low-income communities is also available for the ITC. Tax-exempt entities will have the option to take the incentive as a direct payment. The ITC also applies to — and may be an excellent option for — community-based renewable energy projects. The Department of Energy has created a webpage with thorough information about requirements and comparisons between the two options as they apply to solar, though more types of renewable energy systems are covered by the incentives.

To Claim ITC: Fill out IRS Form 3468 To Claim PTC: Fill out IRS Form 8835 SCCF — Rebuilding for Resilience: A Guide to Incentives

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Rural Energy for America Program (REAP) Renewable Energy Systems & Energy Efficiency Improvement Guaranteed Loans & Grants This incentive from the U.S. Department of Agriculture is meant for agricultural producers and rural small businesses. Rural areas are defined as those with populations of 50,000 or less, and eligible business addresses can be confirmed here (parts of Sanibel, Captiva, and less populous areas in Southwest Florida may be eligible). Loans or grants cover renewable energy systems, including wind and solar, and the purchase, installation, and construction of energy-efficient property improvements. Loans are available for up to 75% of eligible project costs, while grants are available for up to 40% of total costs. The upcoming application deadline is March 31, 2023, with future dates to be announced. More information can be found here.

Solar United Neighbors Guide for Applying to the REAP Program Check Property Eligibility

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ENERGY EFFICIENCY Energy Efficiency Home Improvement Tax Credit This is a pre-existing program with advantages that have been amplified through the Inflation Reduction Act of 2022. The former version awarded a tax credit up to 10% of project and installation costs for home improvements. The current version awards 30% from 2023 through 2032. The credit allows a maximum amount to be claimed that differs across multiple categories, such as the installation of new energy-efficient windows, doors, and air conditioners. The total annual limit is $1,200 except for one category that changes that maximum to $2,000 for the purchase and installation of heat pumps, heat pump water heaters, and biomass stoves and boilers. This credit also includes home energy audits. The IRS has created an FAQ that provides further guidance about this incentive.

To Claim Credit: Fill out IRS Form 5695

Energy Efficient Commercial Buildings Property Deduction *◊ This program has existed since 2005, but new changes through the Inflation Reduction Act apply in 2023. The Section 179D deduction previously applied to commercial building owners or designers of buildings owned by federal, state, and local government entities. It has been expanded to now also include designers of commercial buildings owned by tax-exempt organizations, including schools and

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nonprofits. Building designers that can make a building 25% more efficient compared to reference standards produced by the American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE) will be eligible for a deduction of $.50 per square foot.

Each percentage increase in efficiency above 25% comes with a $.02 increased deduction per square foot, capped at $1. If prevailing wage and labor apprenticeship requirements are followed, the deduction for 25% efficiency will be bumped up to $2.50 per square foot, with each percentage point improvement resulting in a $.10 per square foot increase up to $5 total. The revamped program also includes provisions for retrofitting commercial buildings. This deduction resets every three to four years based on the type of building and can be reclaimed in the event of future energy improvements.

To Claim Deduction: A qualified third party must test the energy expenditure of the building once renovations are finished, using IRSapproved software and procedures to measure energy performance.

Utility-Offered Programs Some of the utility companies operating across Florida offer incentives that lead to cost savings on your bill. For instance, Florida Power & Light, which services much of the southern half of the state, offers energy-saving programs including rebates available for insulation and air conditioning upgrades when installed by a participating independent contractor.

Rural Energy for America Program Renewable Energy Systems (REAP) & Energy Efficiency Improvement Guaranteed Loans & Grants This incentive from the U.S. Department of Agriculture is meant for agricultural producers and rural small businesses. Rural areas are defined as those with populations of 50,000 or less, and eligible business addresses can be confirmed here (parts of Sanibel, Captiva, and less populous areas in Southwest Florida may be eligible). Loans or grants cover renewable energy systems, including wind and solar, and the purchase, installation, and construction of energy-efficient property improvements. Loans are available for up to 75% of eligible project costs, while grants are available for up to 40% of total costs. The upcoming application deadline is March 31, 2023, with future dates to be announced. More information can be found here.

Solar United Neighbors Guide for Applying to the REAP Program Check Property Eligibility

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REBATE INCENTIVES The following programs are for rebates. This means the organization or entity offering the rebate will pay a previously defined amount after the installation or purchase of the item or service that the rebate applies to, along with satisfying any additional requirements. Both the HEEHRA and HOMES Rebate programs go into effect in 2023, but the state of Florida must sign on to participate. If the state does participate, the programs would likely be administered through Florida’s Department of Energy, but it is not clear whether the rebates will be made available at the point of sale or through later reimbursement. Also, homeowners will not be able to claim both rebates for the same home upgrade.

High Efficiency Electric Home Rebate Act (HEEHRA) The HEEHRA program covers multiple energy-efficient home upgrades including insulation and wiring and the addition of heat pump HVACs, water heaters, and dryers. The rebate will cover 100% of project and installation costs for low-income households, and 50% for moderate-income household costs. Low-income households are defined as having an income that is less than 80% of the area median income (AMI), while moderate refers to income that is 80-150% of AMI. Fannie Mae’s Area Median Income Lookup Tool can be used to check the AMI that applies to your address. The maximum rebate varies according to the type of project, and cannot exceed a total of $14,000 across all projects.

Check Property Eligibility

Home Owner Managing Energy Savings (HOMES) Rebate This program focuses on the energy-saving performance of home energy upgrade projects. Energy savings will need to either be measured directly or modeled using software.

Modeling that shows energy savings (i.e., improvements) in the range of 20-34% will be eligible for a $2,000 rebate.

Modeled energy savings of 35% and above will qualify for $4,000. The improvement thresholds will be set slightly lower if measuring actual energy use improvement rather than modeling it. These rebate amounts are set to be doubled for low- and moderate-income households and can cover up to 80% of total project costs.

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T R A N S P O R TAT I O N Clean Vehicle Credit This incentive extends a pre-existing program until 2032 while adding new restrictions. The previous version only covered electric vehicles, while this expanded coverage also includes hybrid and hydrogen fuel cell cars. For new vehicles, a $7,500 credit applies to sedans with sale prices below $55,000 and trucks and SUVs below $80,000. A credit of 30% of the sale price up to $4,000 can be applied to used cars, but only if they are $25,000 or less. Both options also have income caps for potential buyers. (New cars: $150,000 for single filers, $225,000 for heads of household, and $300,00 for joint filers. Used cars: $75,000 for single filers, $112,500 for heads of household, and $150,000 for joint filers). Clean vehicles must have final assembly in North America, as well as a percentage of battery and critical mineral components also sourced from North America (40% of critical mineral components in 2023, ramping up to 80% by 2029, and 50% of battery components in 2023, ramping up to 100% by 2029). Buyers may still qualify for half the credit if either the battery or critical mineral component requirement is met. The IRS has released an FAQ sheet which includes information on qualifying models of vehicles.

To Claim Credit: Fill out IRS Form 8936

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Commercial Clean Vehicle Credit Introduced through the Inflation Reduction Act, this new program is a counterpart to the consumer version. As of 2023, commercial vehicles can qualify for a tax credit that covers whichever is less: either 15% of base vehicle cost (which increases to 30% if the vehicle is “not powered by a gasoline or diesel internal combustion engine”) or the difference in cost between the clean vehicle purchased as compared to a gaspowered model similar in size and use. The credit has a maximum value of $7,500 for vehicles weighing less than 14,000 pounds, and up to $40,000 for vehicles over 14,000 pounds. This credit program will not be subject to the same requirements of U.S. sourcing of battery and critical mineral components as the non-commercial version. Much like the clean energy investment tax credit, this program will have a directpay option for tax-exempt organizations. The IRS has released an FAQ sheet on the program but has not yet finalized a form to file for claiming the credit. This article contains some additional details.

Alternative Fuel Vehicle Refueling Property Credit *◊ Also referred to as the “Alternative Fuel Infrastructure Tax Credit,” this credit is meant to provide fueling support for clean vehicles. Like many of the other programs on this list, the current version extends through 2032. While this credit applies to chargers for electric vehicles, it can also be used for some other forms of infrastructure for clean-burning fuel. If claiming as a business credit, infrastructure must be installed on “qualified clean-fuel vehicle refueling property.” At least 6% of each charger’s cost may be covered, but this increases to 30% (or $30,000, whichever is lower) if that infrastructure is built within low-income or non-urban census tracts based on 2020 U.S. Census data and also satisfies IRS wage and labor requirements. For those installing clean-fuel infrastructure at home (or on a non-qualifying property), a credit can be claimed for up to 30% of the total costs or $1,000 — whichever is lower.

This program will complement other government plans to construct a national charging network by 2030.

To Claim Credit: Fill out IRS Form 8911

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HURRICANE-PROOFING My Safe Florida Home (MSFH) Program Funded through Florida legislation passed in 2022, this program primarily focuses on hurricane-associated wind damage. There are two incentives offered for homeowners. The first is a free home inspection to identify which part of a residence can be strengthened against further wind damage. Secondly, mitigation grants are available to cover partial costs of subsequent home upgrades. Homeowners can only apply for grant monies after receiving an inspection. Covered upgrades include structural and roof improvements and upgraded windows and doors. The grants provide $2 for every $1 that the homeowner spends, maxing out at $10,000 of grant funds. Eligible residences must be insured for under $500,000, have been permitted for building before 2008, and be in a wind-borne debris region of the state. More details on the program can be found here.

Apply for Free Home Inspection IMPORTANT NOTE: Some of these incentives lack a single standardized name and can be referred to in a variety of ways by different government agencies and across resources explaining how the incentives work.

Please seek outside guidance as needed to clarify requirements and eligibility.

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If you have questions or would like more information, please email info@sccf.org. www.SCCF.org | 239-472-2329