IRA Rebates Guidance: Top Three Takeaways

Just a few weeks ago, we were celebrating the one-year mark of the passage of the IRA. Now, it‘s time to start implementing two of its biggest investments - the Home Owner Managing Energy Savings (HOMES) and the High Efficiency Electric Home Rebate Act (HEEHRA). Combined, HOMES and HEEHRA will result in over $8 billion dollars in investment in efficiency and electrification in homes across the country. 

Top Takeaways 

U.S. DOE released the Program Requirements and Application Instructions for both HEEHRA and HOMES on July 27. These programs represent both a huge opportunity and a lot of work for state energy offices, as the initial guidance provides over 200 pages on how states can design and implement them. Below are the top three takeaways NEEP is excited to see in the guidance.  

• Programs are encouraged to braid and stack funds. Braiding and stacking of funds is important both for program longevity and equity. To upgrade a low-income single- or multifamily home, programs will need to address the efficiency of the home and appliances within it, as well as health and safety issues, wiring, and other building issues that may appear. Programs that are not able to tackle these additional barriers will have difficulty completing projects and could face a high deferral rate. Additionally, the cost to upgrade to an efficient electric appliance, such as a heat pump, can exceed the rebate amounts for HEEHRA. Allowing states to leverage both programs to insulate and electrify can address initial upfront costs because states can split efficiency and electrification measures between the two programs. Stacking also encourages adoption of efficiency plus electrification, which can lower long-term costs for by ensuring homes are well-sealed and HVAC systems are sized properly. Additionally, braiding of IRA funds will allow current utility programs to lay the groundwork for continued collaboration between utilities and the state in the future.

1. Programs will be required to incorporate equity in every level of the decision. Implementing equitable programs requires action at every step of program implementation. It is clear that U.S. DOE is taking equity seriously and intends to embed it throughout program design and implementation. For example, the guidance includes mandates for renter protections, alleviates barriers for income verification by allowing categorical verification, and requires programs to set aside funding to serve both singe and multifamily homes, with at least 10 percent set aside specifically for multifamily. 
2. Programs are designed to encompass more than just rebates. Alongside the application for funds, states must also submit a State Implementation Blueprint. States have from six months to one year to submit blueprint components. U.S. DOE hopes that this additional time will allow for planning and alignment of priorities across programs and will help ensure the sustainability of these programs beyond the IRA era. Below is a breakdown of the five plans required by the blueprint:
   1. Community Benefits Plan: The Community Benefits Plan requires engagement of local community groups, labor, and other key stakeholders to lay the groundwork for partnerships and support implementation of rebate programs. For this plan, states must host one public input session and incorporate the input into the design of the rebate programs, as well as identify how it will continue to incorporate community feedback throughout the implementation process. 
   2. Education and Outreach Strategy: The Education and Outreach Strategy will lay out how states will conduct outreach and education to eligible residents and contractors in the state.
   3. Consumer Protection Plan: The Consumer Protection Plan will create protections and procedures for customers who participate in the programs. For this plan, states must submit a description of the training, credentials, and qualifications required of contractors in the program. States will also have to create a qualified contractor list and installation standards for contractors to follow. States are also required to highlight how this plan aligns with the States Contractor Training Grants Program.
   4. Utility Data Access Plan: The Utility Data Access Plan ensures that any data transferred or maintained as part of the programs is done safely and securely. Additionally, this plan will require states to determine the processes to gather data, establish consumer consent, and ensure that all program implementers have secure data protection and protocols. States are also encouraged to use this to build partnerships with utilities to help in standardizing access to data.
   5. Market Transformation Plan: The Market Transformation Plan is meant to identify key players and a pathway for continued investments in efficiency and electrification programs. This plan is due one year after the application so that states have time to consider long-term goals and future impacts of programs. For this plan states must tackle: 
      1. How to enable the housing market to recognize the value of homes that have been upgraded, especially at time of sale/rent through tools such as a Home Energy Label.
      2. How states will develop a sustainable business model for home energy contractors, such as the Total Energy Pathways (TEP) program in Vermont. 
      3. How states will utilize programs to enable new utility business models to monetize grid benefits through demand management and virtual power plants.  

Conclusion 

The Northeast already has a number of successful energy efficiency programs, but now is the time to leverage IRA funds to innovate in this space. The region has a golden opportunity to shift the framework from energy savings to greenhouse gas reduction and to work together to implement successful, equitable climate-focused programs that invest in communities. States can and should leverage this opportunity to explore new initiatives and identify pathways for long-term market transformation.  

Please reach out to Erin Cosgrove if you have any questions about the funding and how NEEP could assist states.