Incentives for energy management systems

Energy management provides a window into how, where, and when you use energy while giving you the tools to more easily control your usage. With an energy management system, you’ll be able to reduce your electricity bills and get the most out of your solar–and storage–installation.

Energy management systems, offered by companies including Span, Lumin, Schneider, and Generac, can take multiple forms including smart electrical panels and sub panels – typically, they allow you to monitor and control your electricity at the circuit breaker level. We’ll discuss some key incentives that can help you more affordably upgrade your electrical panel with an energy management system.

Before we get into incentives, let's cover some reasons why you might be interested in installing an energy management system:

• Lower energy bills: by replacing or updating old electrical panels with an energy management system, you can save up to $500 yearly on energy bills. Load management capabilities will enable you to easily and remotely monitor and control your energy usage, leading to these significant savings.

• Long-term savings: energy management systems are smart and can often alert you when your loads are consuming more or less energy than usual – this can help you proactively repair and replace your appliances, potentially leading to long-term savings.

• Cleaner air quality: with an energy management system, you’ll be able to more easily electrify your home appliances, which can improve air quality – for example, replacing traditional gas stoves and furnaces with electric versions can improve the indoor air quality of your house and reduce long-term health-related risks and costs.

On August 16, 2022, President Biden signed the Inflation Reduction Act (IRA) into law in support of achieving his administration’s goals of increasing domestic energy production, while reducing carbon emissions by 40% by 2030. When it comes to purchasing an energy management system, there are three main incentives offered under the IRA that lower the cost: the High-Efficiency Electric Home Rebate Act (HEEHRA), the Energy Efficient Home Improvement Credit, and the Residential Clean Energy Credit.

High-Efficiency Electric Home Rebate Act

This incentive, formerly known as the Zero-Emission Homes Act (ZEHA) is a 10-year rebate program that enables low- and moderate-income (LMI) households in the U.S. to save when electrifying their homes. HEEHRA includes up to $14,000 in point-of-sale rebates per household for “qualified electrification projects.” When it comes to installing an energy management system, you could receive up to $6,500 in HEEHRA rebates: $4,000 towards upgrading your electrical panel and $2,500 towards electrical wiring.

Not everyone will qualify for these rebates – they’re reserved for LMI households. If you’re a low-income household (meaning you make less than 80% of your area’s median family income), you’ll receive 100% of the rebates. If your household is considered moderate-income (meaning your income is 80 to 150% of your area’s median family income), you’ll receive 50% of the rebates. If you don’t fall into one of these two categories, you won’t receive the rebates. It’s also important to know that these rebates will be distributed by State Energy Offices, and there’s still some uncertainty about when the program will start.

Energy Efficient Home Credit

The Energy Efficient Home Credit offers up to $1,200 in annual tax credits for homeowners to make their properties more energy efficient. In 2023, it replaced the former Nonbusiness Energy Property Credit, which provided a one-time credit up to $300. With the Energy Efficient Home Credit, you can receive a tax credit up to $600 for your energy management system (or 30% of the total system costs, whichever is lesser) if it’s an upgrade of your electrical panel.

Residential Clean Energy Credit

The Residential Clean Energy Credit, or the investment tax credit, provides a 30% tax credit for residential solar and storage installations. If you upgrade your electrical panel with an energy management system as part of your solar or storage installation, you may be able to apply this credit toward your new panel. This tax credit will remain at 30% until 2033 when it will drop down to 26%.

Some states and cities have their own incentives and rebates available for residents in addition to the federal incentives discussed above. Check with your local government or utility company to see if there are any incentives available where you live – here are some examples:

Pasadena’s Electric Panel Upgrade Rebate

If you live in the city of Pasadena, California you’re eligible to receive a $1,000 rebate when you upgrade your existing electric panel to a new electric panel (including smart electrical panels that serve as energy management systems) that is 200 amps or higher – however, with your electrical panel upgrade, you must also install a Level 2 EV charger or an electric water heater to qualify. You may also be able to receive an additional $500 if you’re enrolled in the Pasadena Department of Water and Power’s income-qualified bill assistance program.

Reading’s Electrical Panel Upgrade Rebate Program

As a resident of Reading, Massachusetts you could earn up to $1,500 in rebates or up to 50% of the purchase and installation cost of an upgraded electrical panel. Under this program, you can receive $1,000 for a 200-amp standard or smart electrical panel or $,1500 for a 400-amp panel every four years. However, it’s important to note that this rebate doesn’t apply to sub-panels.

Denver's Climate Action Rebate program

In Denver, Colorado, you can receive up to $2,000 for an electrical panel upgrade when you pair it with another rebate, including those for EV chargers, heat pumps, solar, or battery storage. The rebate applies to the panel itself as well as any necessary wiring. If you’re income-qualified, you may also be eligible for incentives that cover up to 100% of your project costs.

For federal rebates, you can apply through the loan program office (LPO). Pre-application consultations will help you understand your project and eligibility and direct you to the two-part application process to evaluate your project’s eligibility before you receive the stamp of approval. If you’re looking for a federal tax credit, you can include the project when you file your federal taxes – here’s a guide to claiming the ITC. Local- and state-based incentives application processes will vary but you can often consult your local department websites to find the information you need.

Updating your electrical panel with an energy management system is just one way to improve your energy efficiency at home. You can also reduce your dependency on the grid and increase your energy security by investing in solar panels – check out the EnergySage Marketplace to compare several quotes from our network of pre-screened installers to find a solar energy system that fits your needs and budget. With a new energy management system, you’ll be able to easily integrate your solar energy system into your home’s electrical system.