How Coloradans can find home electrification rebates and save big

If you’ve been putting off the well-meaning projects of cleaning up your home’s climate-changing emissions and saving money through energy efficiency, 2023 is the year to get going. 

Some rules for rebates and tax credits will not become clear until later this year, and Colorado contractors are just starting to learn their roles in helping consumers find free government money. But money is in fact just sitting there, for electric appliances that create less fossil fuel emissions than natural gas home gear. 

You will have to be persistent. Not all the information is in one place. You may very well know more about electrification rebates than the salesperson or receptionist you are speaking with. That’s why we’re including plenty of links for your research, and for the file folder you will no doubt be carrying around to appliance stores. 

These tips were compiled after consulting with the Colorado Energy Office, Xcel Energy, RMI (formerly the Rocky Mountain Institute), CoPIRG, Southwest Energy Efficiency Project and the Denver Office of Climate Action, Sustainability and Resiliency. 

What money can I get for in-home energy use? 

The majority of your current elected leaders want you to use electric appliances in your home rather than furnaces, hot water heaters or stoves fired with natural gas or propane. More and more of Colorado’s electrical grid is supplied by clean renewable energy like solar panels or wind turbines, and switching away from natural gas will speed up greenhouse gas reductions. 

The biggest emitters in a home are furnaces. Heat pump technology is much more efficient, cheaper to buy and designed for cold climates than even a few years ago. You can also get rebates and tax credits for switching your older gas-fired hot water heater to a heat pump water heater or a tankless, on-demand system that has been common in Europe for a long time. (See accompanying story by Mark Jaffe on how heat pump technology works.) 

And yes, they are “coming for your stove” if by that you mean, “they’re offering you money to get a new one.” Home electrification advocates had been pushing induction ranges run by electricity, long before Fox News got hold of the idea. The ranges, which some chefs swear by, eliminate both fossil fuel emissions and potentially harmful indoor combustion pollution. 

Other rebates and credits exist for both buying electric vehicles and wiring your garage or parking spot for faster chargers, but here we’ll stick to in-the-home appliances. 

How much money can I get? 

The federal Inflation Reduction Act passed last year includes billions of dollars in new rebates and credits for consumers and homebuilders electrifying their appliances. The act includes a host of new, confusing acronyms, but here are the highlights: 

• For all buyers, the lower of up to $2,000 or 30% of the price for a heat pump or heat pump water heater. 
• For low- to moderate-income households, up to $8,000 for a heat pump, $1,750 for a water heater, and $840 for an induction range/oven. Depending on income, consumers can get between 50% and 100% of that cost as a rebate. 
• For those doing whole-home retrofits of all systems at once: If you show the renovation will achieve 20% to 35% energy savings across the whole house, you can receive up to $4,000, or for low-income households up to $8,000 or a percentage of the cost. 
• Other federal aid is in the form of tax credits for 2023, which will be applied when consumers file their taxes in early 2024. If you use an accounting service, make sure you tell them about 2023 purchases that might qualify. 

Colorado’s Energy Office will be administering most of these federal rebates as the rules are written later this year, officials said. 

Colorado does exempt heat pumps and heat pump water heaters from state sales tax under a law passed in the 2022 legislature. RMI points out that Colorado also offers low-cost financing for home energy upgrades through the Colorado RENU Loan program. 

More Colorado incentives are likely to be passed in the 2023 legislature as part of Gov. Jared Polis’ budget proposal, which includes expanded state rebates or credits for EVs, e-bikes and electric-powered lawn equipment such as mowers and leaf blowers.

Your local government may also offer rebates that are “stackable,” meaning you can use them in addition to any federal or utility rebates and credits. So far, Denver’s Office of Climate Action, Sustainability and Resiliency is the leader here, drawing on $40 million-plus in annual revenue from a climate tax approved by city voters in 2020. 

Denver offers the following standard rebates, with up to 100% of the actual cost available to income-qualified residents: 

• $1,500 for a standard heat pump
• $3,500 for a cold-climate heat pump (more expensive, experts debate whether they are necessary in Colorado)
• $3,500 for ground source heat pump 
• $1,000 for heat pump water heater
• $300 for a standard electric bike, $500 for a cargo e-bike, and up to $1,200 for income-qualified buyers. 

The City of Boulder has low-interest financing for some home electrification projects, RMI also notes. 

Xcel, Colorado’s dominant utility, and other utility companies are offering rebates as well, and they are stackable, too. More utilities will add rebates as they are required to file their Clean Heat Plans under 2021 legislation, so check with your local utility’s link provided below. 

Xcel’s rebates now include: 

• $1,500 for an efficient air-source heat pump
• $2,000 for a cold-climate heat pump
• $600 for a heat pump water heater or $800 for a “smart” version
• $1,300 for home wiring for a Level 2 electric vehicle charging station

Like many entities offering rebates or credits, Xcel notes that its rebates can only be applied to appliance models on an approved efficiency list, and supplied through qualified contractors. Remember that another advantage of using officially approved contractors or stores is that they often will handle rebate paperwork for you, and take the discount off the top rather than make you wait for a rebate check. 

Where do I go to get the money? 

This is where your busy work gets extra busy. Big metro area heating and plumbing contractors say they are just starting to learn about rebate rules and how to help customers take advantage. They say Xcel is offering contractor training to speed the effort. The federal Inflation Reduction Act includes training money for contractors as well, RMI says.

Go to your local utility first. Here are some links provided by the Colorado Energy Office: 

Federal rebates administered by the Colorado state government will be advertised later in 2023 as rules are finalized. Go to the state’s rebate page to keep up on the latest developments. 

Federal tax credits for buying electric vehicles may prove equally confusing this year, but they are quite lucrative and consumers should be persistent. The auto dealer for your vehicle of choice has the most incentive to land you the right rebates, so make sure you ask. 

Denver electrification rebates

RMI’s guide to how the IRA will transform U.S. homes and construction