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Rebates and Incentives

HVAC upgrade rebates and incentives available to Ontario homeowners

3 sources of rebates:

In Ontario, there are essentially three sources of rebates available to homeowners as it relates to upgrading their HVAC equipment. The first, are straightforward promotional incentives provided by equipment manufacturers in return for purchasing their products. Typically, these rebates or discounts are simply furnished by the selling HVAC contractor on the purchase of the qualifying equipment. Because these types of discounts vary from manufacturer to manufacturer, from season to season and in amounts, we won’t focus on them in this article. The other two sources of rebate allowances, on the other hand, are available to all Ontario homeowners and are brand and manufacturer agnostic in their application, thus making them readily available to all Ontario homeowners as an incentive to make heating and cooling equipment efficiency upgrade decisions.

The Save On Energy Heating and Cooling Incentive program, furnished by the Independent Electricity System Operator, or IESO for short, is one such rebate. It pertains to household upgrades made by homeowners that reduce electricity usage. The second source, is that offered by the two Ontario gas distributors, Enbridge Gas Distribution and Union Gas Limited (now both owned by the same parent company Enbridge Inc.). This rebate pertains to household upgrades made by homeowners that reduce natural gas consumption.

The Save On Energy program:

The Save On Energy Heating and Cooling Incentive Program has been around in one form or another for several years now. It was first offered by what was then called the Ontario Power Authority, or OPA for short. On January 1st, 2015 the OPA was defunct and the Independent Electricity System Operator (IESO) formed to replace it. Many HVAC contractors still refer to the Save On Energy program as the “OPA rebates”, but this is technically incorrect.

The heating and cooling incentives offered by the program total up to $650 in the form of a cheque from the IESO sent directly to a homeowner that makes qualifying furnace and air conditioner upgrades. These upgrades include the replacement of an older central air conditioning system with an Energy Star qualified system and the replacement of an older furnace with a high-efficiency model equipped with an Electronically Commutated Motor, or ECM for short.

Save On Energy Incentive amounts:

There are currently three different cash incentives a homeowner can receive from the IESO for a max total of $650. Two of these incentives are targeted to cooling equipment upgrades and one to heating equipment upgrades.

When a homeowner purchases and installs a new Energy Star certified central air conditioning system that satisfies at least a 14.5 SEER rating, they become eligible for a $250 incentive. When a homeowner purchases and installs a new Energy Star certified central air conditioning system that satisfies at least a 15 SEER rating, they become eligible for a $400 incentive. In other words, the consumer has two qualifying upgrade choices, with additional incentive offered for making a higher efficiency choice. It should be noted that a homeowner will not qualify for any of these incentives if they are installing a central air conditioning system when previously they didn’t have air conditioning. Remember, the incentive is to promote electrical energy conservation and by adding air conditioning where none had previously existed, electricity consumption would go up, not down.

On the heating side, when a homeowner replaces their existing furnace with the purchase and installation of a new eligible high-efficiency furnace equipped with an Electronically Commutated Motor (ECM), they become eligible for a $250 incentive. This incentive has less to do with the efficiency rating of the furnace, but rather everything to do with the electrical efficiency of the blower motor. Again, the incentive is to promote electrical energy conservation.

The mechanics of the IESO program:

The beauty about the IESO incentive program is that the homeowner doesn’t need to perform any extra steps, outside of purchasing and having the new equipment installed, in order to receive the rebates. All they need to do is find a participating contractor and purchase from them. Contractors register with the IESO to participate in the program and become part of a qualifying contractor list in their database. It’s the contractor’s duty to then guide the homeowner to qualifying equipment purchases that are listed in the IESO’s database of approved appliances. Once the installation is complete, the contractor then enters the information of the replaced equipment and the new equipment into the IESO’s online system and an automated qualifying check is performed. Once the check is certified, a rebate payment from the IESO is mailed out to the homeowner.

Gas distributor rebates:

The Enbridge Gas and Union Gas retrofit incentives available to homeowners are both broader in scope and intricacy than the IESO incentives. As a result, there are also more dollars available to homeowners under these programs. The incentives are offered for taking steps that help reduce a household’s consumption of natural gas, oil, propane or wood as a heating fuel. A list of qualifying household upgrade steps is offered by both gas companies and includes things like upgrades to insulation, air sealing, window replacements, high-efficiency heating system upgrades, high-efficiency water heating upgrades and drain water heat recovery system installations. If a homeowner takes enough of these steps and/or achieves set minimum whole house efficiency gains, they could qualify for up to $2,100 in rebates from Enbridge and up to $5,000 in rebates from Union Gas.

The mechanics of the gas distributor programs:

For the gas company incentives, let’s start with the mechanics of the program since these are common between the two distributors. Where they differ is on how the incentives are dispersed and in what amounts.

The first step is for the homeowner to commission and pay for a pre-retrofit energy audit. This step must be completed before any upgrades are actually made. The energy audit itself is an assessment of the home’s current energy use. It must be performed by a Certified Energy Auditor and moreover, it must be performed by an auditor from an approved list posted on each of the gas company’s websites. This audit will cost the homeowner $350 plus HST and upon completion, the gas company will issue an immediate $150 rebate to help offset this cost.

The second step is for the homeowner to now implement at least 2 qualified energy upgrades to their home. The qualifying upgrades are as follows: 1) attic insulation upgrade, 2) basement wall insulation upgrade, 3) wall insulation upgrade, 4) exposed floor insulation, 5) air sealing, 6) window replacements, 7) high-efficiency space heating system installation, 8) high-efficiency water heating system installation, 9) drain water heat recovery system installation, and 10) install an air source heat pump.

The final step occurs once all of the efficiency upgrades have been finished. In this step the homeowner must contact the energy auditor that performed the initial pre-retrofit audit and ask them to complete a post-retrofit energy audit. At the conclusion of the audit, the auditor will be able to compare the new energy rating against the energy rating the home was given prior to making retrofits. The auditor will then submit, or ask the homeowner to submit, the report to the gas company for release of the incentives. This post-audit will cost the homeowner an additional $150 plus HST and the gas company will include $350 in the incentive the homeowner receives to offset these audit charges.

Gas distributor incentive amounts:

The two gas distributors, Enbridge and Union Gas, differ in both the amount and how incentives are distributed. Let’s start with the Enbridge model. Under this model, incentives are based on the overall percentage energy consumption savings attained by the household upgrades as measured by the difference between the pre- and post-retrofit energy audits. For achieving 15% to 24% in fuel savings, a homeowner would qualify for $1,000 in rebates. For achieving 25% to 49% in fuel savings, a homeowner would qualify for $1,600 in rebates. For achieving 50% or above in fuel savings, a homeowner would qualify for the full $2,100 in rebates (this total already includes the $500 in incentives for the energy audits).

The Union Gas model differs slightly in that it provides a rebate dollar amount for each specific upgrade that the homeowner makes. The payouts are again assessed using the difference between the pre- and post-retrofit energy audits. An example of the rebate structure might be something like this: $750 for adding at least R12 to 100% of the basement, $1,000 for replacing a 94% or less AFUE natural gas furnace with a 95% or higher AFUE condensing natural gas furnace, $500 for replacing the water heater with a 0.82 EF or higher tankless natural gas water heater and $80 for each window or skylight replaced. Upgrades like this can be added up to receive up to a total of $5,000 in rebates. A complete list of all the different payout amounts can be found on the Union Gas website. Like the Enbridge program, $500 of the incentives relate to the rebate for the energy audits.

Both companies also offer an additional $100 rebate for upgrading to a qualifying Wi-Fi enabled thermostat. Lists of the eligible thermostats can be found on each of the gas distributor’s websites.

As with any of these energy efficiency driven rebates, they are subject to the availability of funds. Every year the programs are assessed and a grade given to their effectiveness in driving consumer uptake. Based on these results, the subsequent year can either be the same, higher, lower or even discontinued in terms of funding.

Are you looking to upgrade your furnace or air conditioner? Want to find out if you might qualify for some of the rebates we've just spoken about? Contact HSE Home Comfort to find out.