Ekotrope Forecasts a $250 Million Drop in 45L Tax Credit Rebates for 2023

Ekotrope, developer of cutting-edge building software and data solutions that optimize home construction, forecasts a large drop in 45L Tax Credit rebates for 2023 homes. The market leader in home energy rating software has found that many participants have not yet adapted to the new compliance criteria to keep up with the 2022 compliance rate. The estimated rebate dollars awarded for the tax credit will drop $250 million from last year.

Ekotrope is the leading provider of 45L reports as well as Home Energy Rating System (HERS) software, putting its finger on the pulse of the new construction market.

The updated incentive amounts, ranging from $2,500-$5,000 per qualified home represents a huge opportunity for builders. Ekotrope reports that the tax credit has, in fact, had a positive impact on national ENERGY STAR (E.S.) 3.1 compliance rates as builders strive to earn those tax credits by building higher-performing homes using the latest technology.

Ekotrope points out that its findings do not represent an inherent issue with the 45L Tax Credit. Rather, it represents a learning curve that the industry needs to overcome.

The updated program criteria is more stringent than that of years passed. Moreover, the updated 45L Tax Credit requirements were released just a few months prior to the effective date, at a time when many builders and developers had already finalized their planning for homes to be built in 2023.

Ekotrope reports that, in order to close the compliance gap, builders will need to strategize around complying with E.S. 3.1 as well as the additional mandatory requirements. The company's HERS data from 2023 is promising. It shows that over 60% of HERS-rated homes submitted via its rating software meet the E.S. 3.1 requirements. An additional 16% of homes are within five percent of passing the criteria. 

For many homes, compliance is well within reach. Ekotrope suggests builders focus their efforts first on the home plans that already meet E.S. 3.1 and configure a plan to meet the mandatory requirements. Then, builders should look for the homes that are within five percent of passing E.S. 3.1 and determine ways to push those homes over the hump. 

CEO Ziv Rozenblum says, "Our mission is to empower people with technology and insights to drive informed decisions that move our built environment towards sustainability. I am very glad that our data and market leadership puts us in a position to make a positive impact."

Ekotrope has shared that there are opportunities for the new construction industry to close the gap and there are actions that builders can take immediately to boost their compliance rates. Ekotrope will shed light on some of these strategies in the company's upcoming presentation as part of its State of the Industry Update webinar series. Those interested can register for the session that will take place on Thursday, July 20, at 2 p.m. ET here.

Backed by a team of building science and software engineering experts, Ekotrope aims to solve the challenges associated with building energy-efficient housing by developing innovative software and data solutions that close the information gap between residential construction stakeholders. Ekotrope's goal is to empower people to make the best possible energy decisions that enable the construction of more energy-efficient and cost-effective housing.

To learn more about Ekotrope, visit ekotrope.com or contact info@ekotrope.com.

Source: Ekotrope

About Ekotrope

Ekotrope was founded in 2011 with the mission to make energy efficiency easier and more accessible to all. Since its inception, Ekotrope has developed the #1 HERS rating software in the country in addition to a suite of innovative software products for raters, builders, utilities, building product manufacturers, and lenders that are all aimed at empowering the construction of energy efficient homes.

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