Energy Efficiency Incentives Beyond 45L

Recent legislative shifts have left the future of federal energy efficiency incentives, like the 45L tax credit, in limbo. Builders, developers, architects and engineers wonder whether the push to build sustainably will continue to be incentivized by local, state and federal government. 

As of today, the 45L tax credit and other Inflation Reduction Act tax incentives are hanging on by a thread.

The current One Big Beautiful Bill proposes an end to the 45L tax credit by June 30, 2026.

This means that projects completed, leased, or sold by June 30, 2026 will still be eligible to claim.

At this time of uncertainty, it is important to shift focus to incentives that are not under threat.

More specifically, states, cities and local utility providers offer incentives for building efficiently all over the United States.

If you are a builder or developer looking to maximize your incentives by building energy efficient homes, whether it’s to meet local building codes, increase home values, or have access to green financing, educating your project team on the available incentives could reduce some of the financial and economic strain of development.

Massachusetts: A leader in Energy Efficiency Incentives Buildings

In my home state of Massachusetts, the MassSave program helps builders and developers capture rebates and incentives for constructing energy efficient homes for both single family and multifamily projects.

MassSave offers 3 tiers of incentives for new construction projects based on performance. The current tiers include: Base, Energy Star and Passive House.

To qualify for the base level incentive, dwellings must include all electric heating, cooking and clothes drying, while demonstrating a Home Energy Rating System (HERS) score less than or equal to 45.

The Energy Star tier requires Energy Star Multifamily New Construction v1.2 certification or Energy Star NextGen, if single family.

Lastly, the Passive House tier requires that the dwelling is passive house certified through the Passive House Institute or PHIUS. For example, the MassSave multi-family tiered incentives are:

1stTier : Base

2nd Tier : Energy Star

3rd Tier : Passive House

Rhode Island: Pathways to Energy Efficiency Incentives

Rhode Island Energy offers incentives for building new energy efficient homes in the Ocean State. The incentive program offers two pathways.

Path to Energy Efficiency

This pathway requires HERS ratings to be completed on the homes, while offering three separate tiers of incentive amounts.

The incentive amounts are based on the unit count and overall percentage of savings determined by the project design, energy modeling, and HERS rater performed testing and verification.

Path to Zero Net Energy

This pathway is a bonus incentive which provides two options for eligibility. To qualify, all-electric new construction projects must be certified through the Department of Energy’s (DOE) Zero Energy Ready Homes (ZERH) program, the Rhode Island Stretch Code, or be Passive House certified.

This incentive program creates a wide array of possibilities for earning money back on your project investments. Whether or not you meet the more rigorous certification requirements, your project will likely be eligible to claim due to the tiered options.

Connecticut: All–electric home incentives

Connecticut’s EnergizeCT program offers similar rebates for both significant rehabilitations of existing properties and new construction of all-electric homes. EnergizeCT offers a three-tiered rebate program, depending on the design and performance of the project.

Multifamily all-electric projects can receive up to $3,500/unit, while single-family homes can receive up to $12,500/home.

Additional bonus adders are available to projects which are certified under Passive House, ZERH, or Energy Star. Certification bonus adders are shown in the table below:

New Jersey: Savings and size matter

Recently the New Jersey Clean Energy Program (NJCEP) unveiled a rebate program which incentivizes constructing and certifying energy efficient single family and multifamily projects under the Energy Star, Zero Energy Ready Homes and Phius/Passive House programs.

The NJCEP incentive program is especially unique as it offers a dollar per square foot for the certified project. NJCEP offers:

NJCEP offers an additional bonus incentive for the tons of greenhouse gas that is offset by the project.

The bonus incentive amount ranges from $0.25/ft² – $1.50/ ft².

The greenhouse gas amount is rewarded for offsetting 0.7 tons – 3.0 or more tons of carbon dioxide per 1000 square feet of the project. 

Colorado: Striving for Zero

Colorado aims to be net zero in greenhouse gas emissions by 2050.

In alignment with this ambitious goal, Xcel Energy, is providing large rebates for homes that meet certain building requirements and get green certifications.

Xcel Energy provides electricity and natural gas for some of Colorado’s largest cities and towns, including Denver, Boulder and Grand Junction. Customers who meet the specifications below are eligible for increased rebate amounts for projects that receive permit before December 31^st 2025.

Pennsylvania: Saving pays

Of Pennsylvania’s 11 electric distribution companies, six of them offer rebates for energy efficient new homes. The way the program works is very simple.

Builders get $0.30 or $0.20 per kilowatt-hour (depending on the utility) saved compared to Pennsylvania’s baseline code, which is 2018 IECC.

To qualify, builders need to meet at least 10% or 15% in kilowatt-hour savings to be eligible for the incentive.

Homes that are Energy Star certified get an extra $0.05 per KHW saved. The total incentive amount is capped, with the cap being determined by the type of construction and by utility program.

The incentive caps can range from $1000 per unit to $4500 per unit.

Since the latest version of Energy Star is based on 2021 IECC, which is about 10-15% more efficient than 2018 IECC, those homes should automatically qualify for the incentive with the $0.05 bonus.

While federal incentives’ longevity is being cut short, opportunities to build sustainably and profitably are still available at the state and local levels.

If you are interested in maximizing your energy efficiency incentives for your upcoming projects, book a meeting with us to explore your options!