Analyzing Tax Credits for Residential Energy Efficiency Using Energy Modeling

From roughly 2013 to 2016, ten building product categories related to residential energy efficiency were eligible for United States ENERGY STAR Federal Tax Credits. In general, the objective of residential energy-efficiency tax credits is to encourage individuals to increase residential energy-efficiency investments and invest in properties that generate renewable energy. This research analyses eight of the available tax credit categories for four climatic zones and recommends packages based on low Life Cycle Cost and low First Cost for the eligible ENERGY STAR products. An experiment was conducted using energy modeling software for different tax credits and costs combinations, to explore potential variability in economic impact of the federal program. Analysis used Building America B10 Benchmark as a reference, and the energy computations were completed using Building Energy Optimization (BEopt) software. Results suggest that ENERGY STAR product packages that include PV systems generally have the lowest (best) Life Cycle Costs and packages that include Geothermal Heat Pumps generally have the highest (worst) Life Cycle Costs. However, there are tradeoffs between cost savings and energy source savings, and the particular economics of tax incentives for ENERGY STAR products depend on project specifics as well as owner priorities.