DOE Releases Guidance on Home Energy Rebates

The Department of Energy has released extensive guidance for states to implement the two Home Energy Rebates created by the Inflation Reduction Act. This guidance is necessary for states to put together the programs. With the release of this guidance states can now apply to receive funds to implement the programs, however we expect four states to reject the funds based on their rejection of other IRA funding: Florida, Iowa, Kentucky, and South Dakota. HARDI expects states that do apply for the funding to roll out the programs in 2024, however for states with existing programs similar to the Home Energy Rebates DOE did give a “quick start” option to make funds available in 2023.

Home Energy Rebates are two programs created by the Inflation Reduction Act:

• Home Efficiency Rebate: whole home rebate program based on modeled or measured increases in home energy efficiency

• Home Electrification and Appliance Rebate (HEAR): electrification rebate for homeowners and tenants to receive reduced prices for the installation of efficient electric appliances including heat pumps for space heating and cooling, heat pump water heaters, and electric stoves/ranges/cooktops/ovens.

Some key pieces of information that came with the release include:

• DOE confirmed there will not be any retroactive rebates for product sold after IRA was passed. For the HEAR program the rebate is point of sale and not available until the state rolls out the program.

• DOE has released workflows for states that work with implementers to oversee the program. These workflows include moving income verification away from contractors and into the hands of implementor programs that would create a “coupon” for the contractor to reduce the price of the installation of the equipment.

• DOE expects states to focus the funding for both programs on low-income households and will require a significant portion to be targeted to low-income households and multifamily housing that are majority low-income.

• DOE has designed the programs to prefer non-emergency replacement to allow for home assessments, financing contracts, and other requirements that are hard to meet in emergency replacement scenarios, the guidance does not prohibit use of the funds for emergency replacement, however the program requirements would slow an emergency changeout.

HARDI is working through the guidance to develop a larger IRA toolkit that will have more in-depth details on the programs and how we expect states to implement them.