|Credit Available ||30% of total cost materials & labor)
$1,500 maximum for all improvements combined
|Timeline||Must be "placed in service" (ready and available for use)
Jan. 1, 2009 – Dec. 31, 2010
|Biomass Stoves||Stoves that burn biomass fuel for heat or hot water
"Biomass fuel" means any renewable or recurring plant-derived fuel, including agricultural crops, trees, wood and wood waste (including pellets), plants, grasses, residues, and fibers."
Thermal efficiency rating of at least 75% as measured using a lower heating value. Does not currently apply to inserts. (Revised: September 2009) Treatment of fireplace inserts has been clarified. According to the Hearth, Patio & Barbecue Association, fireplace inserts qualify for tax credits if they meet all requirements, including a minimum 75% efficiency rating certified by the manufacturer. Click here for more information.
"Lower heating value" refers to the amount of heat released when the fuel is burned, minus the energy used to vaporize any water in the fuel. As of May 31, 2009, the IRS had not yet specified testing guidelines for efficiency." (Revised: July 9, 2009) The manufacturer of the stove must provide certification that the product tests for at least a 75% efficiency rating using the lower heating value, i.e., the heat value of a combustion process assuming that none of the water vapor resulting from the process is condensed out, so that its latent heat is not available. More legislative updates here.
|See summary chart: Stimulus at a Glance|
Wood looks good when other heat sources are costly, particularly when it burns cleanly and smokelessly and makes rooms remarkably toasty, as does the current generation of stoves that burn “biomass” materials (most commonly, wood and recycled sawdust pellets). Last year’s spike in fuel prices sent shipments of wood stoves and inserts soaring 81%, to $168 million, and pellet stoves and inserts up a whopping 161%, to $190 million, forcing manufacturers to rush to meet demand in the Northeast and other cold climates, according to industry trade group the Hearth, Patio & Barbecue Association (HPBA).
Three provisions of the American Recovery and Reinvestment Act are expected to propel demand:
1. The tax credit increases from $300 to 30% of the total cost, up to $1,500. Considering that the stoves typically cost about $3,500 to $4,000 installed, “that’s a huge chunk of the cost,” says Leslie Wheeler, director of communications at HPBA.
2. The credit extends to purchases made in 2009 and 2010.
3. The efficiency of qualifying stoves (at least 75%) is based on “a lower heating value.” This refers to the amount of heat released when the fuel is burned, minus the energy used to vaporize any water in the fuel, explains Alison Davis of the Office of Air, U.S. Environmental Protection Agency http://www.epa.gov/woodstoves/index.html. As of May 31, 2009 the IRS had not issued guidelines specifying how efficiency will be tested, among other things, but the bottom line is that more stoves will qualify for the credit.
Other unknowns could also affect demand. As written, for instance, the credits do not extend to stove inserts, which give existing wood-burning fireplaces the same qualities as freestanding stoves — “a great remodeling job,” says Wheeler, noting that installers should be certified by the National Fireplace Institute. HPBA has requested that inserts be included but has not received clarification.
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Critical questions also remain about pellet stoves. Since 1992, wood stoves have required EPA certification. Pellet stoves have not required EPA certification (pellets have less moisture than cord wood and burn very efficiently), but the industry anticipates that the IRS may enact this requirement. If so, manufacturers will have to scramble to get their products certified, Wheeler says.
Many states and jurisdictions have further financial incentives for biomass stoves. In Ohio, Pennsylvania, and California, for instance, local “changeout programs” give homeowners rebates or other incentives for replacing older wood-burning stoves (typically, pre-1992). Vermont, among others, has a sales tax exemption for renewable energy systems such as biomass stoves.
Until the IRS rules on stove efficiency, it is impossible to be certain which stoves will qualify for the credits, Wheeler says. In the meantime, some manufacturers are confident that their products will qualify, and they anticipate a busy fall. —Leah Thayer, senior editor, REMODELING.