Leyton is an international consulting firm that helps businesses leverage financial incentives to accelerate their growth and achieve long-lasting performance.
With the passing of theInflation Reduction Act of 2022, the 45L tax credit requires Energy Star or Zero Energy Ready Home certification for eligibility. Zero Energy Ready Homes transitioned to Version 2 for its single-family home program at the start of 2024. Energy Star will likewise be moving from version 3.1 to version 3.2 starting in 2025. Since Energy Star v3.2 will be required starting on January 1st, 2025, to receive the 45L tax credit for single family homes, it’s best to start thinking about how to meet the new program requirements now. Let’s review the program changes to get a better understanding of the criteria and how to capitalize on the credit. If you have any questions for our experts, schedule a call!
Sampling is Sunset
Energy Star version 3.1 referenced 2012 International Energy Conservation Code (IECC) for builds improve energy efficiency by 10%. Likewise, Energy Star version 3.2 uses 2021 IECC, requiring a 10% improvement in efficiency. 2021 IECC has significantly higher standards for envelope insulation compared to 2012 IECC, and depending on which climate zone the build is in, it can change how buildings are insulated.
While we dig into what some of those changes are, its important to remember that these changes are to the reference home your building’s energy model will be compared to. You aren’t required to build the same as the reference house and can use different energy efficient materials or designs to meet the program requirements.
Increased Insulation
While there are some changes for Climate Zones (CZ) 1-3, like increasing attic insulation from R-38 to R-49 and installing R-20 in CZ 3 walls, the most significant changes are in climate zones 4 and above. In CZ 4-8 attic insulation is increased to R-60 and walls would have to be R-30, R-20 + R-5 Continuous Insulation (CI), R-13 with R-10 CI or R-20 CI. To meet these requirements for standard 2X4 or 2×6 framed walls, it will require either high density spray foam or foam board, which can be more expensive than other insulation materials.
Higher HVAC Standards
The reference home will have similar requirements as version 3.1 for gas powered appliances, but it will increase the efficiency of air source heat pumps to 9.2 HSPF and 16 SEER. Similarly, A/Cs will be modeled at 16 SEER in CZ 1-4 and 14 SEER in CZ 4-8. The reference home no longer allows for oil burning appliances.
Other Changes
Version 3.2 of Energy Star will greatly increase the expected efficiency of gas-fired hot water heaters in the reference home, with an expected efficiency of 0.90 UEF or .89 EF. Electric hot water heaters will only have their efficiency increased slightly to 2.2 UEF or .96 EF. All climate zones will be modeled at 3 ACH50, as to before where CZ 1 and 2 were modeled at 4 ACH50. Lastly, the Climate Zone Map has changed. The climate zone map in 2021 has updated county locations to a different climate zone in Version 3.2 than they were for Version 3.1.
Final Thoughts
Version 3.2 significantly increases efficiency requirements compared to Version 3.1, with the Energy Rating Index range going from mid-60’s to mid-50’s to pass Version 3.1 to it taking an ERI in the mid-50’s to mid-40s to meet Version 3.2. While the new reference home in Version 3.2 involves more expensive building materials, in another article we will dig into some cost-effective alternatives to meet Energy Star Version 3.2 ERI requirements.
If you would like to discuss these program changes, their relation to your Energy Efficient projects, and the ability to capture the 45L Tax Credit, connect with Leyton today.
