Inflation Reduction Act

The Inflation Reduction Act of 2022 makes the single largest investment in climate and energy in American history, enabling America to tackle the climate crisis, advance environmental justice and put the United States on a pathway to achieving the Biden Administration’s climate goals, including a net-zero economy by 2050.

The Inflation Reduction Act offers incentives through various federal agency programs.

Funds from the Act will also provide additional state-level incentives and programs.

Federal Incentives

New Energy Efficient Homes Tax Credit

Provides tax credits up to $2,500 for new homes meeting Energy Star standards and up to $5,000 for certified zero energy ready homes.

Also provides tax credits for multi-family homes, with up to $500 per unit for meeting Energy Star standards and up to $1,000 per unit for zero energy ready homes.

Residential Clean Energy Credit (Including Solar)

Provides a 30 percent tax credit for the purchase of residential clean energy equipment, including rooftop solar, wind, geothermal and battery storage capacity of at least 3 kWh.

Related: DNREC Green Energy Program

Energy Efficient Home Improvement Credit

Provides a tax credit for energy efficiency improvements to residential homes. The base credit amount is 30 percent of the cost, with limits for each type of improvement and total per year.

The total annual credit is capped at $1,200, with an additional annual $2,000 cap for heat pumps and $150 credit for home energy audits.

Clean Vehicle Credit (Electric Vehicles)

Provides a tax credit up to a maximum $7,500 for purchase of a new qualifying clean vehicle, including battery electric, plug-in hybrid or fuel cell vehicles.

Previously Owned Clean Vehicle Credit

Provides a tax credit up to $4,000 for the purchase of used electric vehicles.

Related: DNREC Clean Vehicle Rebate Program

State-Supported Incentives in the Act

Home Energy Performance-Based, Whole-House Rebate Program (HOMES)

Delaware is to receive $33 million in one-time funding over a five-year period for program implementation. The program uses money provided to states to incentivize whole-house energy-saving retrofits for homeowners and the focus will be on low- to moderate-income and disadvantaged communities.

The U.S. Department of Energy is developing requirements for funding and making awards.

Funding Status: Early administrative funding application submitted to U.S. Department of Energy; full application will be submitted likely later this fall. Contractor and auditor grants to be submitted by January 2024. 

Learn more and sign up for program updates at the U.S. Department of Energy Home Energy Rebate Program webpage.

Related: DNREC Weatherization Assistance Program

High Efficiency Electric Home Rebate Program (HEEHRA)

Delaware may receive up to $29 million for program implementation.

The program will provide point-of-sale consumer discounts on the purchase of high-efficiency electric home appliances. Rebates are specifically targeted to low-income households. Rebates will range from $500 to $8,000 depending on the type of appliance or efficiency measure.

A timeline for funding has not yet been established by the U.S. Department of Energy.

Funding Status: U.S. Department of Energy application deadlines and guidance for states have not yet been released but are expected late summer or early fall of 2023. 

Learn more and sign up for program updates at the U.S. Department of Energy Home Energy Rebate Program webpage.

Greenhouse Gas Reduction Fund – Solar for All

Provides $100 million one-time funding over five-year period for rooftop solar, microgrids, capacity and Distributed Energy Resource (DER) interconnections and is focused on underserved communities and energy equity.

HOMES Contractor

$1.2 million one-time funding over five-year period to train, test and certify energy efficiency and electrification contractors.

HOMES Auditor

Funding amount to be determined for funding to train persons to conduct energy audits and surveys.

Climate Pollution Reduction Grant (CPRG)

DNREC is the recipient of a $3 million planning grant from the federal Environmental Protection Agency.  

This funding will be used to design an updated Climate Action Plan for 2025, in alignment with the Climate Change Solutions Act’s requirement to update the CAP every five years. Climate Action Plan updates will incorporate a variety of measures to reduce greenhouse gas emissions in six key sectors: renewable energy, industry, clean transportation, green buildings, waste management, and conserving natural and working lands.

DNREC must submit a “Comprehensive Climate Action Plan” to EPA by mid-2025.  

Existing DNREC Incentive Programs

Learn more about state programs currently available to assist businesses, and homeowners improve energy efficiency and transition to clean energy and transportation.