07 Dec 2011

Feeling the Chill? Find Rebates for More Efficient Furnaces and Water Heaters

photo credit: Studio Tempura

Think about this: Most of what we pay in our home energy costs goes to heating and hot water. For the average U.S. home, we fork over about $2,200 a year for energy bills, and the Department of Energy estimates heating and hot water make up more than 60 percent of those costs (depending on where you live, of course).

Yes, you can make a big difference in small ways by adding insulation, or caulking and sealing leaky doors and windows. But there are times when the best move is to replace your old furnace, boiler, or water heater with a new and more efficient system. Experts at EPA’s Energy Star program recommend replacing your heating system if it’s 10 to 15  years old (PDF). But most of us don’t make the switch till we’re forced to.

Case in point: For two years a repairman has been telling a fellow New Englander I know that her furnace was failing.  When it broke down beyond repair, she went out and bought an inexpensive replacement.   It’s a step up from her failed one — but still a guzzler compared to an  Energy Star model.  Alas, I only heard this after the fact.  When I told her about the rebates to defray the costs, she said even with those, she just didn’t have the extra money to invest in a high-efficiency model — ignoring the ever-mounting cost of heating her home six months of the year.

The moral? When it comes to costs, rebates and other credits will help reduce the premium for a better, more efficient model–one that will provide savings in the long run.

For instance, Iowa residents can get mail-in cash rebates from $150 to $500 on new heating and hot water systems. And anyone can take advantage of federal tax credits of $150 to $300 on this equipment–at least through December 31, when the current federal tax credits are set to expire.

Iowa requires a furnace that’s at least 75 percent efficient (meaning that only 75 percent of the energy the unit consumes actually gets delivered to your house as heat). Jim Dillon manages the energy efficiency program for Black Hills Energy, a utility company that serves about 900,000 customers in Kansas, Colorado, Nebraska and Iowa. Dillon says that the rebate program has successfully encouraged people to invest in more efficient heating systems than are required. “Over 95 percent of the furnaces installed in Iowa have an efficiency of over 90 percent.” By contrast, he says, “In a neighboring state that doesn’t offer any rebates, more than 90 percent of the furnaces installed have efficiency rates of less than 80 percent.”

Some programs even offer a small rebate towards the cost of annual maintenance checks on your system. But even without a rebate, taking care of your furnace helps your well-being as well as your wallet. “If we teach people to keep clean filters, it has a large impact on utility bills, but also on your health,” says Dillon. “It controls dust mites and allergies better. That’s money well spent.”

Never cleaned your filter? See NRDC Smarter Living’s how-to on cleaning your furnace filter in the CO2 Smackdown series. See also the U.S. Department of Energy useful overviews on energy-efficient heating systems and hot water systems.

Rebate and Savings Program Summary

  1. Some areas don’t require an energy audit for you to qualify for rebates. However, these free or low-cost examinations of your home provide an excellent way to get advice on how well your current equipment is working with unbiased technical support, and suggestions on improvements you might make.
  2. Not sure whether it makes sense to replace your old heating equipment? You can use Energy Star’s cost estimator on their furnace page to calculate how much you’d save over time by buying a more efficient unit.
  3. Check Energy Star’s rebate locator to find rebates and other financial incentives where you live. It will also direct you to the website of your local utility companies sponsoring these rebates, and the types of models that will qualify.
  4. Check with your utility company or local energy-efficiency program for advice on appropriate models that will qualify for rebates. Your heating or plumbing contractor can help you pick out a model that qualifies for a rebate.
  5. Be sure to get equipment that’s the right size for your house. A heater or boiler that’s too big for your space will cost more, use more fuel, and wear out more quickly. If your house is well insulated, for instance, you’ll need a smaller system than other houses the same size. Ask contractors if they are capable of factoring in your home’s efficiency to come up with appropriate system.
  6. Federal tax credits are set to expire on these items December 31; Energy Star offers details and information on how to get the credit.