Residential wood heat incentives trending

In New York and Massachusetts, residential wood heating incentives
are on a role, and the industry is beginning to see trends, according to
John Ackerly, president of the Alliance for Green Heat.

Residential wood heat has risen dramatically in recent years, Ackerly
said during an Aug. 6 Biomass Thermal Energy Council webinar,
especially in Northeast and Great Lakes states. “In some cases, by 100
percent… incentive programs are guiding consumer purchasing and steering
people to cleaner and more efficient appliances.”

And it’s finally being recognized that wood heat is a real
opportunity for incentives that help reduce fossil fuel use.
“Historically, all of that money and attention has gone into solar and
geothermal, and now wood is starting to be included,” Ackerly said.

During an overview of federal and state level incentives available
for residential wood heating, Ackerly discussed different programs and
their purposes. The federal tax credit, which began in 2009 at $1,500,
was reduced to $300 for next few years and is now unavailable, wasn’t
hugely successful, he said. “Congress didn’t give much guidance, and the
IRS didn’t issue anything specific, so as a result, everything became
eligible.”

As a result of lessons learned from the federal tax credit, states
aren’t using this as a model. Rather, they are crafting their own
incentives, which achieve different goals according to state. “Some help
launch technology that is not cost-competitive on its own,” Ackerly
said, giving the example of automated wood pellet boilers, which
Northeastern states are leaning toward. Other incentives in Montana,
Arizona and New York reduce pollution by replacing existing, uncertified
devices, and others focus on steering customers to the cleanest and
most efficient models, such as in Oregon and New York, or reduce fossil
fuel use.

Western states have the most experience with incentivizing wood
stoves and pellet stoves, and only during the last few years have New
England states stepped up. “Maine, New York, Vermont, Massachusetts and
New York have come onto the scene,” Ackerly said. “But they are very
different programs, mainly focused on promoting automated pellet
appliances.”

Nationwide, Alabama, Arizona, Idaho, Maine, Maryland, Montana, New
York and Oregon have ongoing, statewide wood stove incentive programs,
all of which have different motivations, Ackerly pointed out, adding
that Alabama’s 100 percent tax deduction is a “head scratcher. I called
retailers down there, and they didn’t even know their state had a tax
deduction for stoves to replace electricity, propane or gas.”

Arizona has a $500 tax credit focused on placing fireplaces out of
commission, and Idaho, the only state that doesn’t offer a solar
incentive, has one of the most generous, longstanding programs in the
country, a 400 percent tax deduction for every wood stove on the market,
according to Ackerly.

In Maine, there is a small rebate, but it entails quite a few
requirements and is not very robust. “They might have to increase rebate
size if they want people to take advantage,” he said.  

Maryland has a new program that’s been very successful, with about
750 rebates given so far, and it only applies to people who don’t have
access to natural gas.

In Montana, replacing an old stove qualifies for a $500 tax credit.

Ackerly described Oregon’s program as being “very complicated, and
the only state that uses an efficiency measure to determine the tax
credit level. If you get a stove that has a real efficiency number, not a
default number, you’ll get a much higher tax credit—up to $1,000.”

New York’s newly announced program http://www.biomassmagazine.com/articles/10717/n-y-announces-biomass-thermal-incentives-rps-solicitation focuses on low-income homeowners, providing residential incentives of
$1,000, or up to $1,500, to income-qualified homeowners for the
installation of wood pellet stoves.

And though the list is shorter, several states—New Hampshire, Maine,
Massachusetts, New York and Vermont— also have residential and
commercial boiler incentives. “The rebate amounts are quite high, and
they’re all very new programs with the goal of getting technology off
the ground—a business model where trucks delivery pellets in bulk.”

Ackerly touched on some problems with incentive programs, which
includes “free riders,” or people who would make the purchase anyway,
too many people using the incentive, a budget that rubs out quickly,
excessive administration burdens, people finding loopholes, and finding
ways to make programs relevant to low-income populations. “The good news
is that there is a trend toward including wood and pellet stoves in
state renewable incentive programs,” Ackerly continued. “I think this
trend is more interest in technology neutrality, not just picking and
choosing, and finding a way to measure the impact of each one and giving
it an appropriate-level incentive. This is what’s happening with state
RPS programs, at least in New Hampshire and Massachusetts.”  

Ackerly added that he sees programs requiring professional installations and home energy audits as additional new trends.

Also speaking during the webinar was Adam Sherman, executive director
of the Biomass Energy Resource Center, who discussed commercial wood
appliance incentives, legislative and financial policies, and Ryan Moore
of NYSERDA, who detailed the state’s new renewable heat initiative
incentives.