More than a year has passed since the U.S. took the biggest step in its history to radically transform America’s energy system. The Inflation Reduction Act (IRA), passed into law in August 2022, made nearly $9 billion available for home energy rebates. Such a large amount of money has the potential to accelerate the adoption of heat pumps and other energy-saving technologies.
Across the country, households and contractors are excited to access the Home Energy Rebate Programs. And quick, decisive action on the state level can help these historic rebates to stop energy waste roll out this year.
To help states quickly set up their Home Efficiency Rebates Program, Sealed and Recurve, in coordination with Pearl Certification released this sample application to provide a template on how to implement measured and modeled together.
States can now apply for IRA rebate money
Although the money for the IRA Home Energy Rebate Programs is administered by the U.S. Department of Energy (DOE), it’s ultimately up to the states to apply for rebates and distribute them to households.
In July 2023, the DOE provided detailed guidance to states on the program rules and how to apply for IRA rebates, and the DOE revised that guidance in October 2023. The DOE also released a number of tools to support states in administering these rebates, and continues to update a list of common questions and answers and release other resources on the home energy rebates.
Most recently, the DOE released sample applications for the Home Electrification and Appliance Rebates and Home Efficiency Rebates that states can use as a model for their own applications. (Sealed, Recurve, and Pearl Certification have also provided states with a sample application to detail how states can implement the Home Efficiency Rebates Program’s modeled and measured pathway together).
All of this is to say that states can now apply for rebate funding.
With quick, decisive action, states can launch their programs this year
In fact, four states (shout out to New Mexico, New York, California, and Hawaii!) have already submitted an application for one of the rebate programs, the Home Electrification and Appliance Rebate, although many other states have applied for and received administrative funding to begin hiring the staff required to administer the rebates. (You can track state application status here).
But even if all states sent in applications today, it could still take a long time for these rebates to become available. Why the slow rollout of rebates?
The boring truth is that each state has a series of procurement steps they are typically required to go through whenever new programs are introduced.
New program rollouts often include the following:
- Gather public input: Public and stakeholder input needs to be solicited, which often happens through public workshops and requests for information (RFIs).
- Hire implementers: Requests for proposals (RFPs) have to be published in order to enter into contract with implementation vendor(s) who will help states design and implement the programs.
- Select vendors: After a vendor is selected, states will have to work with their legal and procurement teams to finalize any contractors.
- Plan and prepare for the program: Vendors must design the rebate programs and establish systems to track and provide rebates. Then they recruit contractors, aggregators, and other program stakeholders to join the rebate program.
- Get DOE approval: The DOE has to approve state applications and plans.
Put this all together, and it might take anywhere from six to nine months (and sometimes longer) to finally get a new rebate program implemented. That means that states that don’t begin preparing in early 2024 will likely not launch their own rebate programs until 2025.
States can deploy strategies to accelerate rebate program launches
The good news is that most states have the tools to accelerate procurement and program design processes. And fortunately, many of these steps required to launch the IRA rebate programs can be pursued at the same time. So what can states do to accelerate launching their programs?
Right now is the time, for instance, to identify any legal requirements for hiring and procuring implementation vendors — and to find out if the governor’s office or other state agencies can accelerate the process. States can also draft and release RFPs that ask potential implementation vendors to describe how they can execute a program that complies with DOE guidance.
Where possible, states should rely on existing vendors that have already completed the legal and procurement steps to expedite the process. In Wisconsin, for example, the state is working with the same implementer that runs the state’s existing clean energy programs.
What else? States can draft and release RFIs that include any state-specific considerations to help facilitate public engagement.
For example, Oklahoma released an RFI in August to solicit public feedback while Washington, New Jersey, and Wisconsin have held stakeholder input sessions. And many states have already released RFPs for a program planner and/or implementer, including Connecticut, Georgia, Indiana, Michigan, Minnesota, Nevada, Ohio, and Oklahoma.
As soon as possible, states should submit their initial applications to the DOE, leveraging the templates that the federal government and market actors have provided to make filling out those forms simpler. Upon approval of these initial applications, the DOE will award states an initial 25% of the program funding.
If states have any existing energy efficiency programs, it’s worth exploring possibly leveraging some or all of the program implementation infrastructure that already exists. While that’s happening, states can begin working with implementers to complete the other necessary planning to be prepared to submit their full application.
We have a once-in-a-generation opportunity to stop energy waste and help Americans make clean energy upgrades to their homes. And the two-year anniversary of the passage of the IRA on August 16, 2024, will be a key milestone — measuring how well states have responded to the challenge of reducing carbon emissions by helping to make homes more energy efficient.
If states take concrete steps today, we’ll look back at 2024 as the year that Americans started getting rebates to improve the comfort and energy efficiency of their homes.