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.

Compliance With Federal Legislation and Initiatives

All federal grant opportunities provided through the Bipartisan Infrastructure Law (BIL) and Inflation Reduction Act (IRA), unless otherwise specified, are subject to compliance requirements under the Davis-Bacon Act (DBA) and the Build America, Buy America Act (BABA).

At the same time, applicants should consider the Justice40 Initiative (J40) which has a goal of ensuring that at least 40% of the benefits from federal grants flow to disadvantaged communities.

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

HOMES – Efficiency (Section 50121)

Award of $33.0M

The program will offer “whole house rebates” for energy efficiency improvements.

Rebate amounts will be determined based on the modeled energy saved. Rebate amounts will vary across single family and multifamily with versions for low-and-moderate income persons of each. Depending on the percent savings achieved, rebates will range from $2,000 to $8,250 per home or unit.

Funding Status: The early administrative portion of the funding application has been approved by USDOE. Funding has been received and is being used for program design work. The full application was submitted in August 2024, with program launch expected in the second quarter of 2025.

HOMES – Electrification (Section 50122)

Award of $33.0M

The program will offer rebates for electric appliances and other efficiency measures.

Rebates are specifically targeted to low-income households. Rebates will range from $500 to $8k depending on the type of appliance or efficiency measure.

Types of measures that will be incentivized include heat pump water heater; heat pump for space heating and cooling; electric stove, cooktop, range, or oven; heat pump clothes dryer; electrical load service center upgrade; and electric wiring.

Funding Status: The early administrative portion of the funding application has been approved by USDOE. Funding has been received and is being used for program design work. The full application was submitted in August 2024, with program launch expected in the second quarter of 2025.

Development and Deployment of Zero Energy Codes for New Construction Buildings (Section 50131)

$ – TBD – Awards for this subtopic are estimated to be up to $10M

This topic area aids states in adopting and implementing zero energy codes with combinations of strengthening and weakening amendments, custom zero codes, or stretch codes.

Application requests funding for:

• Training opportunities and certification courses for members of the construction sector, including builders, contractors, developers, and others in the industry, to ease the transition to our custom zero energy code modeled after the 2021 IECC Appendices RC and CC and promote implementation and compliance.
• The development of career paths in technical fields to generate experienced code officials and experts capable of completing the necessary code compliance testing.
• Completing routine compliance studies to determine the needs of our state and to update our training to improve implementation and enforcement.

Funding Status: Application to be submitted to USDOE by April 30, 2024

Development and Deployment of a Building Performance Standard Buildings (Section 50131)

$ – TBD – Awards for this subtopic are estimated to be up to $20M

This topic area aids states and units of local government that have the authority to adopt and implement innovative energy codes.

Application requests funding to be used to:

• Conduct a thorough review of BPS and building energy performance standards policies in other states and local jurisdictions.
• Create an implement a plan for developing a statewide BPS.
• Develop draft legislation and educational materials for lawmakers.
• Provide training, education, and outreach to impacted stakeholders.

Funding Status: Application to be submitted to USDOE by April 30, 2024

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 update the emissions component of Delaware’s Climate Action Plan and to create an interim “Priority Climate Action Plan” which will identify key short-term priorities for maximizing rapid emissions reduction.

Status: The completed Priority Climate Action Plan, which will be based on the 2021 Delaware Climate Action Plan, will also enable Delaware and interested municipalities to apply for a CPRG implementation grant in March 2024. For more information about the CPRG implementation grant program, refer to EPA’s CPRG implementation grant webpage and the Notice of Funding Opportunity for the most up-to-date information on the grants.

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.

Related Topics:  climate coastal energy, efficiency, energy, energy conservation, funding, incentives, net-zero economy