Impact of Energy Policy Act of 2005 Section 206 Rebates on Consumers and Renewable Energy Consumption, With Projections to 2010
February 1, 2006
Summary of Results
Section 206 of the Energy Policy Act of 2005 (EPACT 2005) provides for the establishment of a rebate program for expenditures made to install renewable energy systems in connection with a dwelling unit or small business. The amount of the rebate is 25 percent of the expenditures for qualifying equipment made by the consumer or $3,000, whichever is less. An analysis of the impact conducted by the Energy Information Administration (EIA) indicates the following results:
- Section 206 rebates would increase 2006 renewable residential energy consumption between 1 and 3 trillion British thermal units (Btu) above EIA Reference Case levels. By 2010, the estimated increase ranges from 7 to 14 trillion Btu. By comparison, EIA estimates total delivered residential energy consumption in its Annual Energy Outlook 2006 Reference Case to be about 12 thousand trillion Btu from 2006 through 2010.
- Geothermal heat pumps (GHPs) account for the largest share of the increase. Annual sales in 2006 are expected to increase between two- and five-fold over Reference Case levels due to Section 206 rebates. By 2010, GHP annual sales are projected at three to four times Reference Case levels.
- Residential wood stoves are estimated to be a distant second to GHPs in providing additional renewable energy as a result of the Section 206 rebate program. Solar technologies provide only minimal additional energy. Residential wind turbines, geothermal direct use, and other forms of biomass (notably pellet fuel stoves) are not examined due to insufficient data.
Background
The Energy Policy Act 2005 (EPACT 2005) Sec. 206 provides for the establishment of a rebate program for expenditures made to install renewable energy systems in connection with a dwelling unit or small business. The amount of the rebate is set at 25 percent of the expenditures made by the consumer or $3,000, whichever is less. Annual funding to carry out this program was authorized in the law, starting with $150 million for Fiscal Year (FY) 2006 and ending with $250 million for FY 2010. However, Congress has not appropriated these funds to date.
According to this legislation, renewable energy sources include energy derived from solar, geothermal, biomass1 , and wind for nonbusiness residential purposes. In addition, it includes any other form of renewable energy which the Secretary of Energy specifies by regulation for the purpose of heating or cooling a dwelling or providing hot water or electricity for use within a dwelling.