Cash for Caulkers – The Definitive Guide To The Home Star Energy Retrofit Act of 2010

“Cash for Caulkers” is nearly here. Last month the House of
Representatives passed H.R. 5019 – also known as the Home Star Energy
Retrofit Act of 2010 or “Cash for Caulkers” – to kick-start
construction, create jobs and cut back carbon emissions. While the bill
still needs to clear the Senate, supporters predict it will pass this
summer.

This is great news for homeowners and contractors alike. The bill
provisions $6 billion for energy-efficient or “green” retrofits. It is
expected to fund renovations for 3 million families, create 168,000 new
jobs and save consumers $9.2 billion on energy bills over the next 10
years.

But in order to cash in on upcoming rebates, homeowners and
contractors will need to do their homework. There are 13 types of
retrofits eligible for funding. Each retrofit has unique eligibility
requirements and set rebate amounts. You can read the full text here.

We made it really easy to wade through the legalese. Below is a table
that breaks down the 13 retrofits of the bill, along with the
requirements and rebate amount for each. In addition to the requirements
we listed, each retrofit must comply with Building Performance
Institute (BPI) standards or other procedures to be approved by the
Secretary of Energy.

We also decided to combine these retrofits into three packages that
will help homeowners get the best bang for their buck. But first, let’s
review the program details.

Who is Eligible and How to Qualify?
The Home
Star bill offers two rebate programs, the “Silver Star” program and
“Gold Star” program. Here are details for each:

• Silver Star – Unless another amount is specified in
  the “Rebate Amount” column above, homeowners will receive a $1,000
  rebate for each retrofit listed in our table. The maximum amount of
  rebates paid out will be $3,000 or 50% of the total cost, whichever is
  lower. For example, if a homeowner spends a total of $4,000 on eligible
  retrofits, they will get $2,000 or 50% back as a rebate. If they spend
  $8,000 on eligible retrofits, they would only receive $3,000 in rebates
  instead of $4,000 (which would be 50% of the cost).
• Gold Star – To qualify for the Gold Star program,
  homeowners must reduce their total home energy consumption by 20%. A
  $3,000 rebate will be rewarded for this reduction. Homeowners can
  receive an additional $1,000 for each additional 5% reduction, up to a
  total rebate of $8,000 or 50% of the total retrofit cost. Rebates may be
  provided for any of the retrofits listed under the Silver Star program,
  or for any other energy-saving measure, including: home energy
  management systems, high-efficiency appliances, highly reflective
  roofing, awnings, canopies, and similar external fenestration (window)
  attachments, automatic boiler water temperature controllers,
  energy-efficient wood products, insulated vinyl siding, and mechanical
  air circulation and heat exchangers in a passive-solar home.

The Home Star bill also includes rebates for do-it-yourself (DIY)
homeowners that are confident in taking on the renovations themselves.
DIY’ers can get up to $250 in rebates for products purchased without
installation service. This rebate is limited to attic insulation, crawl
space insulation and/or air-sealing retrofits.

Seal Your House Envelope and Improve Insulation
Before carrying out any serious retrofit, homeowners need to weatherize
and seal their house “envelope.” The envelope includes outer walls,
windows, doors, floors and the ceiling. If the house is not properly
sealed and insulated, then subsequent HVAC retrofits won’t be as
effective.

Common Air Leaks

In some cases, savvy do-it-yourselfers may be able to handle these
projects themselves. There are plenty of books and great online
resources (e.g. ACEEE.org)
that provide instructions. However, you should seriously consider hiring
an auditor beforehand. Special diagnostics equipment will show where
air is escaping and to what extent. For example, thermal imaging devices
detect areas in walls that are poorly insulated and dispersing heat.
This information would be unavailable without such devices.

So how much does it cost to seal all the air leaks in a home? Prices
will obviously vary based on where you live, how big your property is
and the scope of the retrofit. But it will likely cost a few thousand
dollars to hire a contractor for this type of renovation. In this example
from the New York Times, the author spent $3,760 for insulating and
sealing the envelope of his 1,200 square foot home.

How much can homeowners expect to save? The Environmental Protection
Agency (EPA) estimates that homeowners can save 20% on heating and
cooling costs by sealing leaks and adding insulation. In New York – one
of the most expensive places to heat a home with an average annual cost
of $1,513 – this would be a yearly savings of $300 just for heating.

Continuing with the example from the New York Times, the Silver Star
program would provide $1,880 (50%) in rebates for their retrofit. At an
annual savings rate of $300, the renovation would pay for itself in six
years (or less if you include cost savings from reduced air conditioning
bills).

Repair and Replace Leaky Ducts
Ducts are
notoriously leaky and inefficient. They are one of the usual suspects in
a crime of high utility bills, or when rooms are difficult to heat and
cool. The EPA calculates that 20% of air moving through ductwork is lost
due to leaks, holes and poor connections. Other sources put estimates
closer to 40%. So while suffering from “leaky ducts” may sound
innocuous, it can have a big impact on the efficiency and costs of
heating and cooling your home.

Fortunately, duct replacement and sealing is eligible for funding
under the Home Star bill. Many homeowners will want to outsource this
project to a qualified HVAC contractor. Contractors have equipment to
detect leaks that otherwise may not be immediately visible. They also
have methods to seal ducts that are inaccessible. For example, by
spraying an adhesive or sealant through the duct work.

Replacing and sealing ducts can also be a DIY project, especially
when ducts can be easily accessed in an attic or basement. Leaks should
be sealed with mastic sealant or metal tape (not duct tape), then
insulated to reduce heat loss and to further improve efficiency. The
Lawrence Berkeley National Laboratory has an excellent guide on how to seal and insulate
ducts.

Upgrade Your Furnace and Water Heater
Heating is
the largest energy expense in homes, according to the American Council
for an Energy-Efficient Economy (ACEEE). In colder parts of the country,
it makes up 30 to 50% of annual energy bills. So improving the heating
efficiency of your home will have the biggest impact on lowering your
energy costs. Sealing air leaks is a good start, but replacing your
heating system could provide real leverage towards cost savings.

If your furnace or boiler was purchased before 1990, then it is time
to consider an upgrade. Modern furnaces are much more efficient than
those that are older than 20 years. You can use rebates from the Home
Star bill to replace your furnace, but you will need to meet their
guidelines:

Water heaters are typically the second largest energy users after
home heating and cooling systems. Replacing convention oil-fired water
heaters with high-efficiency gas or electric heaters can save homeowners
thousands of dollars over a 10 to 15 year period. The Home Star bill
includes a variety of replacement options eligible for rebates.

Ground Source Heat Pump

An alternative to furnaces and boilers are ground source heat pumps
(GSHPs). Also known as geothermal heat pumps, GSHPs are one of the most
efficient systems for heating and cooling buildings. According to the
International Ground Source Heat Pump Association, GSHPs are 50 to 70%
more efficient than other heating systems, and 20 to 40% more efficient
than traditional air conditioners. They can also be used as an
alternative water-heating system and save up to 50% on water-heating
bills.

Ground source heat pumps are more economical than using oil or
air-source heat pumps, but there is still a lot of debate over GSHPs
versus natural gas. Homeowners will need carry out their own due
diligence beforehand. For starters, here is an academic report that
compares the two options.

Year over year, a ground source heat pump is more cost effective than
natural gas. It’s the initial cost that really drives down the return
on investment (ROI) and makes natural gas a more attractive option.
However, there are several rebates and tax credits available that help
subsidize the upfront cost.

Additional Financing Resources
With other
legislation in the queue, it might take weeks or months to hear the
Senate’s final decision on the Home Star bill. In the meantime,
homeowners can receive funding from other sources to pay for green
renovations. The federal government, state governments, local
municipalities and even utility companies offer several options.

For example, homeowners can still receive a federal tax credit for
30% of the cost of energy-efficient products (up to a total credit of
$1,500). This includes the purchase of central air conditioning systems
(both the product and installation), electric heat pumps, furnaces and
boilers, and whole-house ventilation fans. Visit the US Department of
Energy Energy Savers website for
more information.

Another great resource is the Database of State Incentives for
Renewables and Efficiency or “DSIRE” website.
This allows you to view rebates, loan and grant programs, financing
options and tax credits offered in your region.

Finally, new home buyers should consider an energy-efficient mortgage
or energy improvement mortgage. These mortgages allow consumers to
count savings from energy bills as additional income, ultimately giving
them more buying power. Home Energy Magazine has a helpful article here.  Written by Houston Neal, see more of his work here: Software Advice.