New Tax Credit Limits Window Choices

The good news is that there’s a new 30% tax credit for residential window replacements (part of the American Recovery and Reinvestment Act of 2009). The bad news is that along with establishing a maximum U-factor of 0.30, it also sets a maximum solar heat gain coefficient (SHGC) of 0.30. The SHGC requirement fails to recognize the benefits of windows for passive solar heating. EBN sought to uncover how these criteria came about and understand the implications.

The Energy Policy Act of 2005 (EPAct 2005) offered a $200 tax credit for window replacement. The performance requirements for that tax credit (that windows meet standard energy codes) were widely panned for being too lax, with nearly all windows meeting the requirement. Well over half of the taxpayer money spent on the EPAct 2005 tax credits went toward window replacements—even with the $200 limit. Given the popularity of the window replacement tax credit under EPAct, policymakers were concerned about its cost under the Recovery Act—because the cap for the tax credit was raised from $200 to $1,500.

There was thus an effort with the Recovery Act to make the criteria tougher. According to Lowell Ungar, the director of policy at the Alliance to Save Energy (ASE), a Washington-based energy policy organization, this task fell to the Joint Committee on Taxation, a quasi-independent committee of Congress that oversees the costs of legislation. “They wanted to set more stringent criteria so that only the best windows would qualify,” Ungar told EBN.

It remains unclear exactly where the specific U-factor and SHGC recommendations originated, but various experts who spoke with EBN suggested that the recommendations came from policymakers rather than energy experts. “It was beyond their expertise,” said Ungar.

Many people involved with window energy performance, including Nils Petermann at ASE, who manages the Efficient Windows Collaborative, and John Carmody at the University of Minnesota’s Center for Sustainable Building Research, are unhappy with the approach. “I don’t think it’s a good idea to have the same criteria for the whole country,” Petermann told EBN. “It is probably flawed,” agreed Carmody.

Stephen Thwaites of Thermotech Fiberglass Fenestration in Ottawa is a little less reserved in his observations: “This approach pretty much confirms that passive solar is the Rodney Dangerfield of energy solutions. After the indignity of the Energy Star program saying that any SHGC is okay for the north for years and years, this tax credit scheme just put salt in the wounds of the low-energy housing community.”

Of concern is the fact that windows not only reduce energy costs by blocking heat loss but also by allowing beneficial solar heat gain. This is important on south-facing walls, particularly in northern climates. To function well for passive solar heating, windows should have a high SHGC—over 0.50, if not higher. Even in warmer climates, where the goal is to reduce unwanted solar heat gain, it can still make sense to provide for significant solar gain on the south side of a building. This can be achieved by “tuning” glazings by orientation—installing high-SHGC windows on the south and low-SHGC windows on the east and west, where unwanted solar heat gain is the biggest problem.

– Alex Wilson

For more information:

Alliance to Save Energy
Washington, D.C.
202-857-0666
www.ase.org

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