Jim WylieWhat do the IIJA & IRA Mean For West Chester?
Updated: Nov 25
The Inflation Reduction Act (IRA) and the Infrastructure Investment and Jobs Act (IIJA) provide a long list of federal incentives (tax credits, grant funding, ec) that encourage a transition to electrification of transportation and heating for buildings and also supports distributed renewable energy generation (rooftop solar) as well as utility scale (wind and solar) and provides support for improving the energy efficiency of low and middle income homes and multi-family housing. All of these things align with the goals of the West Chester Area Clean Energy Future program.
Our community facing team can utilize these programs to respond to folks that say "I want to reduce my home or business' carbon footprint, but the sticker price is just too high." Let's give them the info and tools they need to compare their energy costs between the status quo (weekly fill ups or utility gas payments) vs making investments now in clean renewable energy sources.
These incentives cross the threshold for many to justify making the switch to EVs, Electric Heat Pumps and purchasing Solar Energy.
Critically, the IRA defines “greenhouse gas” in those provisions as “the air pollutants carbon dioxide, hydrofluorocarbons, methane, nitrous oxide, perfluorocarbons, and sulfur hexafluoride.” Expect the Supreme Court to revisit it's decision in West Virginia v EPA where it ruled that carbon dioxide was not covered as a pollutant by the Clean Air Act.
Highlights and Links To Resources
Following are some of the highlights of these acts with links to places where you can learn more about the details of how these incentives will work.
Tax Credits for New EV Purchases
Clean Vehicle Credit (plug-in & fuel cell)
Up to $7,500 tax credit: $3,750 for Critical Minerals + $3,750 for Battery Components
Restrictions for max MSRP, Vehicle final assembly, Income of buyer
Only new, financed and leased vehicles
No limit on # of vehicles per manufacturer
2 and 3 wheeled vehicles not included
Rules for Qualification
A % of critical minerals (lithium, nickel, cobalt, etc) must be extracted or processed in the US
A % of the battery components must be assembled or manufactured in North America (% increases each year)
Max $80,000 MSRP for vans, SUVs, pickup trucks
Max $55,000 MSRP for other vehicles
Final assembly must be in North America and no parts come from "areas of concern"
Consumers earn less than $300,000 (joint), $225,000 (head of household), $150,000 (single)
Tax credits can be transferred to the seller at Point of Purchase (useful for those that don't pay taxes)
What Vehicles Qualify?
Here's a list of what Electrek.co thinks the list of qualified EVs will be
Caveat - specific rules are still being sorted out
PA State Tax Rebates
The PA Dept. of Environmental Protection offers rebates (up to 1000 between 9/22 and 6/30/23) for working class Pennsylvanians up to $3K. Battery electric cars and trucks qualify for a $2K rebate (up from $750). A family of 2 with a maximum household income of $73,240 (Line 9 of the federal tax Form 1040) is eligible for a $2K rebate. Family of 2 with household income of $35K qualifies for a $3k rebate. According to a representative, rebates are still available as of 11-4-22.
Plug-in hybrid cars and trucks qualify for a $1.5K rebate.
All other alternative fuel vehicles, and electric motorcycles, qualify for a $500 Rebate
Only vehicles with a final purchase price of $50K or less, are eligible.
The Rebate amount is now the same for NEW and PRE-OWNED Vehicles
Rebates are considered taxable income and may result in the issuance of a 1099 form, if your rebate is greater than $600.
Tax Credits for Used EV Purchases
Plug-In America lists these metrics
Vehicle must be at least 2 years old
Max $25,000 and sold by a dealer
No sourcing requirements (critical minerals, etc)
Max income of consumer: $150,000 (joint), $112,500 (head of household), $75,000 (single)
Tax credit: 30% (up to max of $4,000)
Point of sale transfer available in 2024
Tax Credits for EV Chargers
Adds funding and clarity to the existing 30% tax credit for EV chargers
Tax credit extended through 2032
Residential tax credit: 30% of cost of the equipment (up to $1,000 per unit)
Corp tax credit: 6% of cost of equipment (up to $100,000 per unit)
Bidirectional chargers allowed
2 and 3 wheeled vehicles allowed
Must be located in low-income or non-urban area - see detailed explanation at JDSpura.com
Available for tax-exempt entities - see detailed explanation at JDSpura.com
What about the PA Drive PA Forward Program?
The 30% federal tax incentive is in addition to the PA incentives (VW program) for L2 Chargers for
Public use at government owned property
Public use at non-government owned property
Non-public use at work places
Non-public use at multi-unit dwellings
Watch the IRS IRC-30D page for latest and definitive info on tax credits for EVs and Chargers. And this Dept of Energy's page with a list of vehicles it considers "assembled in North America".
Incentives for Distributed Solar Energy
See summary details at Solar Investment Tax Credit: What Changed? (energy.gov). And the DOE's IIJA Fact Sheet.
Residential and For-Profit On-Site Solar
30% tax credit on systems placed into service between Jan 1, 2022 and Dec 31, 2032 (then phases down to 26% for 1 year, then 22% for one year)
Installer must satisfy prevailing wage and apprenticeship requirements during construction
Includes energy storage equipment, solar electric, solar water heating, fuel cell, and small wind energy, and geothermal heat pumps
Additional tax credit (10%) for: domestic manufacture; brownfield site; in an area with significant employment in the fossil fuel industry; near a recently close coal mine or coal-fired power plant; located in a low-income community or building project or tribal land;
Taxable entities may elect to receive "direct pay" - transferring the credit to another party.
More info at Federal Solar Tax Credit Resources | Department of Energy
Non-tax Paying Entities
Tax exempt, government and tribal entities can elect to receive “direct pay” for tax credits
Site must be placed into service after Dec 31, 2022
Can be a partial transfer of tax credit
Must be paid in cash and are not deductible or considered income
More info at Solar for nonprofits - Solar United Neighbors
Building Electrification - Heat Pumps, Geothermal HVAC
Tax Credits for Air Source Heat Pumps
$300 for split systems (HSPF >= 8.5, EER >= 12.5, SEER >= 15)
$300 for package systems (HSPF >= 8, EER >= 12, SEER >= 14)
Tax Credits for Ground Source (Geothermal) Heat Pumps
30% tax credit on systems placed into service between Jan 1, 2022 and Dec 31, 2032 (then phases down to 26% for 1 year, then 22% for one year)
Installer must satisfy prevailing wage and apprenticeship requirements during construction
Income Qualified Assistance
The High Efficiency Electric Home Rebate Act (HEEHRA), includes direct rebates for low- and moderate-income households that install new, efficient electric appliances
A resident below 80% of Median Area Income can receive $62,000 (for single occupant) and increasing to $103,000 (for six occupants of the home).
Find more at Rewiring America IRA Explainer
Building Energy Efficiency
Affordable Housing
Improving Energy Efficiency and Water Efficiency or Climate Resilience in Affordable Housing has grants and loans for retrofit projects that advance building electrification, improve energy and water efficiency, and more in affordable housing
Find more at Rewiring America IRA Explainer
Environmental Education
The Environmental Education Grants Program, established by the Environmental Education Act of 1993, mandates that five percent of all pollution fines and penalties collected annually by the Department of Environmental Protection be set aside for environmental education.
Funding is available for Non-formal education (projects outside of the formal, PreK-12 school/higher education setting) or Formal education (projects integrated into the formal, PreK-12 school/higher education curriculums). Government entities are generally excluded, but EACs or climate/energy committees could partner with a local school or aligned non-profit entity to apply for funding to promote community action to reduce carbon emissions.
Program priorities are:
Water
Education programs promoting effective ways to reduce non-point source and source water pollution to improve water quality.
Climate Change
Education projects that promote practical solutions for reducing greenhouse gas emissions and the negative impacts of climate change including floods, changes to groundwater, pests, disease, agricultural disruptions, and potential threats to human health.
Environmental Justice
Education programs designed to engage audiences (youth and/or adults) living and/or working within Environmental Justice (EJ) areas. Use the DEP Environmental Justice Area Viewer to verify an audience is located within an Environmental Justice area.
Bonus Rebates from PECO
PECO just announced "bonus rebates" - additional rebates on top of their existing incentives for EnergyStar heat pumps, home efficiency improvements (insulation, air sealing), water heaters and refrigerators - for projects that address multiple items at the same time. From $200 to $770.
Learn more at PECO Bonus Rebates
The IRA in Pennsylvania
A big chunk of the IRA spending will be given to states to determine exactly how it will be spent to support "clean energy". In PA, that looks like this:
TBD
How will Pennsylvania allocate these funds? Will PA revive the PA Sunshine Program to further support distributed solar? Will we see increased support for EV chargers (L2 & Fast) in the Driving PA Forward Program (the VW settlement)? Will we see increases in the Home Energy Efficiency program?
Or will we see new programs that support community outreach and education entities, like EACs, that are trying to encourage constituents to make informed, long-term decisions related to energy?
Things We Don't Know Yet
While the goals and overall numbers are described in the IRA and IIJA legislation is known, the actual language and rules are yet to be set by the US Internal Revenue Service (IRS). Look for announcements and analysis on how to apply tax credits, what products and who qualifies for these incentives towards the end of 2022.
Examples Of How WCA CEF Can Use IRA Info
Look for tools and analysis articles about total-cost-of-ownership (TOC) for vehicles, heat pumps and on-site solar. Sometimes the best we can do is point to a case study, because there are so many variables: miles driven per year, cost of electricity or gas, price of gasoline at the pump. And predicting the future is always tough. Look for tools that factor in tax credits or "instant discounts".
Here are some that I found that are not associated with a particular merchant:
Alternative Fuels Data Center (DoE) - assumes a 5 yr loan. Need to adjust sticker price for rebates. Compare several cars.
Keemut - compare one EV with one gas vehicle. Let's you predict the future price of gas and electricity.
Pacific Gas & Electric EV Comparison - California-centric. Nice visual comparisons. Includes federal incentives.
Solar Project Builder - from Midwest Renewable Energy Association (MREA), with support from the US Department of Energy Sunshot Initiative.
Efficiency Maine - compare home heating costs using different technologies