Maanav Kyabarsi and Kyle Brauer
You really can save a lot on home upgrades
Today we're excited to share some new insights into rebate values across a whole host of different efficiency and electrification products. Homeowners can save hundreds or even thousands on upgrades, depending on where you are and what type of improvement you choose.
Top savings opportunities fall under heating and cooling, heat pump water heaters, and EV charging installations, including a cool $2,600+ average rebate value for geothermal heat pump units and $1,300 off battery systems. It's also usually possible to combine more than one incentive for a single project, increasing savings opportunities even further! 3 Given the expense of many heating/cooling and battery systems, higher rebate values are helpful in making the project more attainable for the average person.
Approach
There's a lot of incentives out there, and we've spent a lot of time looking at them trying to make sense of all the different confusing aspects of each program. Among the incentives in Pencil's database, we found that 414 total were usable for this analysis across 23 states, primarily in California (52.7%). These incentives are mostly administered by public and private utility companies, but some state and other local programs are included as well. While we could not reach healthy sample sizes for every category, we chose to reveal broad categories to give a sense of what is and isn't incentivized.
In this analysis we sought to find a comparable set of incentives to draw early conclusions on their design, value, and relative complexity. Generally speaking, we addressed program design by only looking at rebate programs. A rebate is an incentive awarded to an applicant for a specific measure taken. For the sake of simplicity, the subset of incentives only includes prescriptive rebates, or those that have a predefined amount for the measure in question. In addition, the data is a snapshot of what we’d collected as of mid-March, 2024. While some incentives may be out of date, the data is still illustrative of general trends in rebate values and requirements.
But is it worth my time and effort to apply?
While ultimately only you can make that choice, we tried to help inform by considering how many eligibility requirements are typical as a way to model the relative complexity of each incentive.
To do this, we examined the eligibility requirements that must be met for each, and in so doing, we present a view of the requirements observed by measure type. Further, we compare that to incentive values as a way to indicate which incentives may be more worthwhile from a relative reward compared to effort standpoint. In this case, we assume that the more requirements an incentive has, the more difficult it is to receive a rebate through that program, and we are defining value as getting the most amount of money back for each eligibility requirement present. 2
The data show wide ranging variation in requirements despite relatively consistent rebate values. Considering that the average requirements across the 414 incentives is 6.8, most of these higher-value programs are above that. Note how battery systems are something of an outlier here in a positive sense, implying that those programs may be simpler, however the sample size here is small (5).
From a consumer, owner, and service provider's perspective, we hope that these data will assist in considering how to navigate expensive home improvements. Overall, there is a clear distinction that indicates investing in some technologies is far more lucrative than investing in others. In addition, these programs are a crucial step in promoting sustainability and making households much more energy efficient. Nevertheless, there are still areas of these programs that can be reexamined to determine the relative time cost of each requirement, and we hope that this work can help improve program design in the future.
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Appendix
Notes
1 Regarding measure types - we chose not to overly consolidate measure types to preserve what we feel is a more accurate look of the specific actions required for incentive measures, but we realize that the fragmentation may create overlap. Certain categories, such as solar PV, air conditioners, and insulation are often calculated on a per-measurement basis, so we were usually not able to include them in this analysis.
2 Some eligibility criteria are trivial to compute while others can be onerous - i.e. your home is within the utility’s service area versus complying with hyper-specific performance specifications on allowable equipment - and we want to call this out as a limitation on the meaning of how many requirements typically appear on an incentive. That said, given that this is a first look at how we might present the information, we see it as an interesting way to better answer the question of what rebates are worthwhile.
3 Often rebates are awarded on a tiered basis or as bonuses for additional work done or measures taken. For example, some rebate programs are designed to award a certain amount, say $100, and then award a bonus, say $50, if the customer meets an additional set of requirements. Often we see bonuses for income-qualified customers, more energy efficient or lower CO2e equipment, or for additional required work to complete a project such as electrical panel upgrades to support a level 2 EV charger. In this analysis we only looked at the first ‘tier’, or the base incentive amount. So, these values should be taken as a general guideline of trends and relative rebate awards, not as a predictive amount of incentive for a given measure taken. In fact, these values may be systematically underestimated given the actual savings potential.
Summary Data of Top 10 Measure Types
Consolidated Measure Types | Average Rebate Value | Average Number of Requirements to Meet | Number of Rebates in Category |
|---|---|---|---|
Geothermal AC Units (Heat Pump) | $2,625 | 8.8 | 4 |
Batteries | $1,310 | 5.8 | 5 |
Electrical Panels and Electrical Infrastructure | $1,083 | 12.7 | 3 |
Water Heaters (Heat Pump) | $680 | 9.2 | 32 |
Air Conditioning Units (Central and Mini-Split) | $654 | 9 | 6 |
Air Conditioning Units (Heat Pump Mini-Split) | $641 | 9 | 9 |
Electric Vehicle Chargers (Level 2) | $626 | 9 | 22 |
Air Conditioning Units (Heat Pump) | $608 | 13.2 | 6 |
Electric Vehicle Charger (Unspecified Type) | $450 | 7 | 3 |
Induction Cooktops and Ranges | $307 | 7 | 7 |
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