Once again energy conscious homeowners may get credits for installing efficient air conditioners and heat pumps; gas or oil furnaces and furnace fans; and gas, oil, or electric heat pump water heaters in new or existing homes thanks to the Energy Policy Act of 2005. The Energy Policy Act of 2005 (EPAct 2005) is the first effort of the United States government to address U.S. energy policy since the Energy Policy Act of 1992. The law provides new tax incentives for a number of solar and energy efficiency measures.
The most immediate opportunities for sheet metal contractors are in the existing residential market where homeowners receive tax credits for investing in energy efficiency and solar energy.
Those expenditures include 10 percent of the costs of certain energy efficient improvements up to a maximum of $500. For example, $300 may be used for energy efficient building property such as:
- an electric air source heat pump with a heating seasonal performance factor of at least 9
- a seasonal energy efficiency ratio of at least 15, and an energy efficiency ratio of at least 13;
- a geothermal heat pump with an EER of 14.1, 15, and 16.2 and coefficients of performance of 3.3, 3.5, and 3.6, for closed loop, direct expansion, and open loop, respectively;
- a central air conditioner that is listed by the Consortium for Energy Efficiency as in effect on Jan. 1, 2006;
- and a metal roof with pigmented coatings that meets the Energy Star program requirements.
In addition, $150 may be used for a natural gas, propane, or oil furnace or hot water boiler that achieves an annual fuel utilization efficiency of not less than 95 and $50 may be used to purchase an advanced air circulating fan such as a fan used in a natural gas, propane, or oil equipment.
This provision offers tax credits to individuals for residential solar energy systems. For solar hot water systems, the allowable tax credit is 30 percent of the qualified solar system expenditures up to a maximum tax credit limitation of $2,000. For solar photovoltaic (PV) systems, the allowable tax credit is 30 percent of the qualified PV system expenditures up to a maximum tax credit limitation of $2,000.
To be eligible for the solar hot water system tax credit, the system must be certified by the Solar Rating and Certification Corporation (SRCC) and produce 50 percent or more of the hot water needed by the residence. There is no qualification provided for PV systems. Individuals may claim tax credits for either or both types of solar systems.
The incentives apply to equipment placed in service during 2006 to 2007.
The complete 1724-page conference bill for the Energy Policy Act (EPAct 2005) may be downloaded at www.fsec.ucf.edu/en/media/enews/2005/pdf/072705confrpt.pdf.
The energy efficiency provisions are found in Title XIII, Subtitle C, beginning on page 1332 through page 1390 of the act. A summary of EPAct 2005 is available at www.fsec.ucf.edu/en/media/enews/2005/2005-03_EPAct2005.htm.