Utility efficiency rebates for households increase in 2024

Minnesota’s 2023 legislative session resulted in several fundamental changes to energy policy. It is now a state goal to reach a net-zero emissions economy by 2050, and utilities must transition to generating 100 percent carbon free electricity by 2040.

Major changes will have to take place at the utility scale and in our own households to achieve these outcomes. We can support these changes in our own lives by moving away from fossil fuel powered home appliances and focusing on our home’s energy efficiency. We recognize substantial costs come along with these upgrades and that costs will be a barrier for many households in the state. Financial incentives can help address cost concerns at a household level.

Recent changes to state law have prompted utilities to provide larger and more wide-ranging rebates and incentives to encourage energy efficiency and decarbonization upgrades. Many utility consumers will see noticeably more generous rebates went into effect January 1, 2024.  

For some background, in 2021, the Minnesota legislature passed the Energy Conservation and Optimization (ECO) Act to modernize the efficiency initiatives administered by utility companies in the state. The ECO Act built on prior legislation to establish increased energy savings goals and expand the type of programs and measures available to customers. In a win for Minnesota consumers, utilities are now allowed to incentivize and encourage “efficient fuel switching:” replacing technologies in the home that rely on fossil fuels like natural gas or fuel oil with electric options. Every three years, utilities file “Triennial Plans” that outline their energy savings programs. Several of the most recent plans that went into effect at the start of 2024 include fuel switching incentives.

Before ECO, utility conservation programs were focused heavily on increasing the efficiency of equipment that relied on the same heating or cooling fuel already present in the home. “Efficient fuel switching” now allows utilities to encourage households to move towards fuel sources that will result in reduced energy usage and reduced emissions. Encouraging households to switch fuel sources will help us reach Minnesota’s climate goals while reducing individual carbon footprints.

The ECO Act has encouraged utilities to provide larger rebates to incentivize electrification and energy efficiency upgrades. Rebates for insulation, air sealing, heating and cooling equipment, and appliances are common across utilities. Minnesota utilities offer incentives both with and without income restrictions. Some examples of rebates available to all customers (regardless of income) include:

• For CenterPoint customers, up to $2800 in rebates for attic insulation, wall insulation, and air sealing. Previously CenterPoint offered $1000 for this combination of measures.
• Otter Tail Power electric heat customers can receive up to $2800 in rebates in attic insulation, wall insulation, and air sealing.
• For Xcel customers, up to $2000 rebate for Cold Climate Air Source Heat Pumps, an electric and energy efficient option to heat and cool your home.
• Minnesota Power customers can receive a $300 rebate on an air source heat pump water heater.
• Minnesota Energy Resources (MERC) customers can receive up to $650 in rebates for attic insulation with air sealing, and up to $750 in side wall insulation where none currently exists.  

These utilities also offer a variety of income-qualified efficiency programs that often provide free or deeper cost savings to income-qualified households and rental properties. Stay tuned for additional information on these new programs that will be coming out soon.

It’s important to note that, as with all rebate offerings, you should ensure that the model you install or the contractor you work with is rebate-eligible. You don’t want to spend thousands of dollars to improve your home only to find out you won’t qualify for a rebate. Contact your utility directly to confirm what requirements must be met.

Upgrading your home to be more energy efficient, or even carbon neutral, can be a timely and costly process. Consider stacking these utility rebates with existing Inflation Reduction Act federal tax credits and upcoming federal and state rebates to save the most money while upgrading your home. Federal rebates available to households making less than 150% Area Median Income are expected to be rolled out in late 2024. Timing for the state rebates has yet to be determined. As with utility rebates, it will be important to understand eligibility requirements for these other incentives. We encourage you to also check with your local government about potential incentives they may offer for energy efficiency improvements. 

If you have more questions about the ECO Act, or if you are looking for ideas on where to start with your home electrification journey, reach out to us at info@cubminnesota.org or call us at 651-300-4701.