Being an eco-conscious consumer includes building good habits through recycling, mindfulness in purchases, and supporting organic and ethical suppliers. When it comes to making an even larger, more widespread difference in protecting the environment, however, renewable energy is a force that must be reckoned with.
While wind and hydroelectric power are technically the most-used sources of renewable energy in the U.S., solar energy is quickly becoming a popular option, especially in residential areas. Other forms of renewable energy, both in mass production and for residential use, include:
Residential Energy Credits 5695
Most notably, relying on renewable energy sources helps to reduce the overall amount of greenhouse gas emissions caused by more traditional forms of energy production. It also allows for more diversity in energy supply and suppliers, creates jobs, and is all-around more sustainable than other traditional sources of energy.
For people who want to be more involved in relying on renewable energy, but who may not have the local infrastructure already in place to do so, there are myriad options when it comes to installing, maintaining, and reaping the benefits of renewable energy. When it comes to residential installation of solar panels, more renewable energy options are becoming accessible to homeowners interested in learning more.
There have been myriad efforts to reduce pollution on smaller scales since the Industrial Revolution — including the Air Pollution Control Act of 1955, meant to study the effects of overall pollution, and the Clean Air Act of 1963, which provided funds for combating air pollution. The first widespread federal legislation in the U.S. came in the form of the Clean Air Act of 1970, which specifically regulated excess pollution in the form of emissions limitations and other wide-reaching changes.
Subsequently, the Energy Policy Act of 1992 aimed “to reduce U.S. dependence on petroleum and improve air quality by addressing all aspects of energy supply and demand, including alternative fuels, renewable energy, and energy efficiency.” The same policy was expanded in 2005 to include guidance around federal vehicles and establish means of providing grants and tax incentives for clean energy.
Meanwhile, the Energy Tax Act of 1978 was enacted initially for solar and wind power, and then became a permanent staple in green tax incentives through the 1992 Energy Policy Act.
Green loans are relatively self-explanatory, but at the same time, encompass more environmentally friendly opportunities than many people may realize.
“Green loans” encompass any loan, private, personal, or government-sponsored, that is applied to environmentally friendly initiatives. These initiatives may be for a business or a private individual, and generally have to follow certain guidelines put in place by the financial institution funding the loan.
Installing a solar panel on the roof of a customer
For example, according to The World Bank, “Green loans and green bonds also follow different but consistent principles: The Green Loan Principles and the Green Bond Principles (GBP) of the International Capital Market Association (ICMA). Both instruments specify that 100% of the proceeds should be used only for green eligible activities.”
Some of these green eligible principles include:
While these standards may paint a picture of complicated bureaucracy, they exist simply to dissuade people from taking advantage of such loans in bad faith. But even smaller, individual projects, such as merely installing solar panels in a private home, can potentially qualify for these loans.
After doing your research, even if your project doesn’t specifically qualify for a green loan, that doesn’t mean there aren’t other financial incentives to look into. Other options may include solar tax incentives or other private loans from local investment groups, banks, humanitarian groups, and more. Further, merely taking advantage of renewable energy sources, such as solar panels, can lead to saved costs over time, meaning even if you are unable to procure a loan, the renewable energy source may pay itself off after a certain amount of time has passed.
While a green loan may benefit several projects, for the most part, they are most valuable to initiatives with a larger reach, higher costs, and more hands-on involvement.
For individuals who are more interested in installing environmentally friendly energy sources for personal use, or even just to offset their current energy costs, relying instead on tax credits and incentives while working with local installation experts may be a more viable option. Luckily, there are several different tax incentives for myriad forms of renewable energy.
Residential Solar Panel Installations
Residential solar energy is most recognized as panels installed either on a roof or other platform around the home, but there is more than one type of solar power that qualifies for green initiative tax credits in the U.S. These two types include:
These tax credits apply to approximately 25% of the cost of purchase and installation for setups that occurred from 2020 to 2022; starting in 2023, a 22% tax credit was available until at least 2024.
Other tax-qualifying forms of solar energy include solar water heaters, which utilize processes similar to solar power to provide hot water for a home. Homeowners can take advantage of tax incentives for solar water heaters similar to those that apply to standard solar panels and storage devices, and there is no limit to how much can be claimed.
It’s important to note that while solar panels may currently be one of the most popular and most accessible forms of residential renewable energy, there are myriad additional considerations when it comes to installation, including general qualifications of the home and location. As such, interested buyers should perform thorough research into their home, local area, local solar panel installation options, and any geographical considerations that could change their approach to solar panel installation.
Wind energy might seem slightly less accessible than solar, especially for those living in urban and suburban areas, but turbines and other types of wind energy converters are becoming more residential-friendly as technology improves.
With that said, there are general limitations to installing wind turbines in residential areas. These potential limitations include city codes concerning towers or other tall structures in a residential area, the amount of space needed for the turbine’s foundation, and potential homeowners association issues. Many of these potential concerns should be addressed early, and may also include:
Wind farm with ground mount solar installed nearby
Wind turbines fall under similar tax incentive breakdowns as those involving solar energy — specifically, tax credits apply to up to 25% of the cost of installation and total purchasing price.
Geothermal energy relies on the relatively consistent temperature of the earth to create a heat source that doesn’t rely on the combustion of fossil fuels. While these devices weren’t particularly popular compared to the more well-known solar panels and turbines in terms of residential use, in the past decade they have seen increased growth in residential installation.
In addition to heating and cooling the inside of a house, geothermal heat pumps can be used in place of traditional water heaters. They are also considered to be more cost-effective and overall more efficient than standard water heaters, however, they come with additional limitations in regards to how well they work in colder months of the year.
Similar to wind and solar power, heat pumps and other forms of geothermal energy benefit from renewable energy tax credits.
If installation opportunities are limited by space available or other roadblocks, there are additional ways for homeowners to take advantage of environmentally friendly tools while also benefiting from tax incentives.
For example, the Energy Efficient Mortgage Program (EEM) provides financing for energy-efficient appliances within the home. After becoming a nationally implemented program in 1995, it acted as insurance on mortgages for homes that qualified for energy-efficient appliances and renovations.
Additionally, the Nonbusiness Energy Property Credit is a tax incentive homeowners can claim if they take advantage of energy-efficient appliances and other renovations. Specifically, the IRS states, “The residential energy efficient property credit allows for a credit equal to the applicable percentage of the cost of qualified property,” including solar electricity and water heaters, geothermal pumps, and residential wind turbines.
While there are a number of federal initiatives to help improve green energy in residential homes, there are even more incentives amongst individual states, and even down to individual counties. Many of these revolve around specific needs of the area, including incentives particular to an area’s geographic location, while others reflect federal regulations with more stringent requirements or allowances.
Wind farm with ground mount solar installed nearby
Washington’s Clean Energy Transformation Act of 2019 is said to be the “strongest clean electricity standard in the nation.” While they are technically the fourth state in the U.S. to enact such a policy, theirs is considered the most aggressive in terms of goals. Specifically, they strive to “transition to 100% clean electricity over the next 25 years.”
Combined with the efforts of the Clean Energy Fund, these initiatives include sustainable phasing out of carbon-based energy, and introduce more renewable options like solar to Washington, for both businesses and residential areas alike. The state plans to make clean energy options more accessible through grants and appealing tax incentives.
The Oregon Department of Energy (ODOE) was first established in 1975 to provide resources to businesses, individuals, and other groups in improving overall energy efficiency. In 2007, they introduced the Renewable Portfolio Standard, according to which, “Fifty percent of electricity sold by an electric company to retail electric customers must qualify as renewable by 2040.” In 2008, ODOE also became the first certified Earth WISE agency in Oregon.
Further, in 2002, a nonprofit called Energy Trust was created with the goal of making renewable energy more accessible to Oregon residents. Working with energy suppliers between both Oregon and Washington, Energy Trust helps to reduce the cost of utilities while also providing resources for installing more renewable energy sources in Oregon, such as solar panels in more residential and commercial areas.
Home to the Hoover Dam, one of the most famous hydroelectric dams in the world, Arizona is known for its expansive use of hydroelectric power across the state. According to the state’s current renewable standards portfolio adopted in 2006, by 2025, their goal is to rely on 15% renewable energy sources for utilities.
While Arizona is mainly known for its hydroelectric power, solar power — including power plants and solar power across Arizona in general — is quickly rising in popularity due to the regularly sunny weather found there. The Grand Canyon State is reportedly on track to replace hydroelectric power as its main source of renewable energy; additionally, Arizona “installed more solar electric capacity than any other state in 2013.”
Additionally, the Energy Conservation for Ohioans (ECO-Link) program helps to finance residential improvement and renovation projects that take advantage of renewable energy sources as well as energy-efficient appliances. Specifically, “Eligible borrowers can receive up to a 3% interest rate reduction on new or existing home improvement loans up to $50,000.”
Ohio also participates in the Solar Renewable Energy Credits (SREC) program, which requires utility retailers to source at least 25% of their energy through alternative sources by 2025, 12.5% of which must be solar, specifically.
Meanwhile, renewable energy sources installed in Idaho, such as solar, wind, and geothermal can qualify for a tax deduction of up to 40% of the overall cost.
Idaho also has several electricity-retailer-based rebate programs, as well as a Vehicle Replacement Program which “…provides incentives for the replacement of diesel vehicles with new diesel ones or alternate fueled ones.”
In 2008, Kentucky implemented legislation requiring utility and power companies to “offer net metering to consumers with capacity up to 30 kW.” Meanwhile, the South Kentucky Community Assistance Resources for Energy Savings (CARES) program provides funds to help improve residential weatherization and renewable energy installation. Renovations like solar panel installation on Kentucky homes can qualify for up to $2,000 per household.
Texas is well known for its high potential with wind energy, and as such, has implemented a number of policies emphasizing the value of utilizing wind as an alternative energy source. These standards include its Renewable Portfolio Standard, first established in 1999, and then in 2001 when it specifically established clearer building efficiency standards to better comply with the U.S. Clean Air Act of 1970.
Meanwhile, the Texas Renewable Energy Industries Alliance (TREIA) is a nonprofit organization focused on improving renewable energy resources in Texas, with a goal of achieving 50% renewable energy consumption statewide by 2030. Naturally, these renewable energy goals include the utilization of wind power, but also other forms of renewable energy such as geothermal appliances and solar panels installed in Texas.
Tax incentives, loans, and related financial credits are all accessible ways for many people to get involved with environmentally friendly initiatives. However, for those who are unable to take advantage of homeowner-based incentives, there are myriad other means of implementing green initiatives or getting involved with environmental nonprofits and organizations. Other hubs for such green initiatives include: