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Rebates tied to home energy efficiency and created by the Inflation Reduction Act could begin flowing to many consumers within months.
The federal government will allocate $8.8 billion to Home Energy Rebates Funding must be applied for through programs implemented by states, territories and tribes.U.S. Department of Energy officially recognized On April 18, New York received its first application and received an initial grant of $158 million.
Karen Zelmar, DOE’s home energy rebate program manager, said the DOE hopes New York can open its program to consumers by early summer. The state has the fourth-largest total funding allocation, behind California, Texas and Florida.
The federal rebates — which can be worth up to $14,000 or more per home, depending on the state’s program design — are essentially discounts for homeowners and landlords who make certain efficiency upgrades to their properties.
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These rebates are designed to partially or fully offset the cost of efficiency projects such as installing electric heat pumps, insulation, electrical panels and Energy Star appliances.
Their value and eligibility vary based on factors such as household income, with more money going to low- and moderate-income earners.
Zelma said the Energy Department also estimates that these programs will save households $1 billion in energy costs annually due to greater efficiency.
eleven other states Also applied Funding: Arizona, California, Colorado, Georgia, Hawaii, Indiana, Minnesota, New Hampshire, New Mexico, Oregon, and Washington. Zelma said the application process is also going well in many other states.
“We would certainly like to see all programs launched by this time next year and hopefully much earlier than many states,” she said.
States must notify the Department of Energy by August 16, 2024, of their intention to participate.
These are the key details about rebates
The IRA allocated a total of $8.8 billion in rebate funds to two programs: the Home Energy Efficiency Rebate Program and the Home Electrification and Appliance Rebate Program.
The latter planning application in New York was approved. So far, only four states — Georgia, Oregon, Indiana and New Mexico — have applied for both.
“I hope by this time next year we’ll have rebate programs in all 50 states,” said Kara Saul Rinaldi, CEO and founder of AnnDyl Policy Group, which develops solutions involving energy and the environment.
Saul Rinaldi said that while their goals are the same — primarily reducing home energy use and greenhouse gas emissions — the two programs differ in their approach to home energy conservation.
Home Electrification and Appliances Rebate Scheme
Saul Rinaldi said the Home Electrification and Appliances Rebate Program pays consumers a maximum amount for purchasing specific technologies and services.
Here are some examples from the Department of Energy:
- energy Star Electric heat pump water heater – worth up to $1,750
- Energy Star Electric Heat Pumps for Space Heating and Cooling — Up to $8,000
- Energy Star Electric Heat Pump Dryer — Up to $840
- ENERGY STAR Electric Stove, Stove, Range or Oven—up to $840
- Electrical Load Service Center—up to $4,000
- Wiring—up to $2,500
- Insulation, air sealing and ventilation — up to $1,600
The program pays consumers up to $14,000. It only applies to low- and middle-income households, those with less than 150 percent of the median income. (These geographic income thresholds are Overview of the U.S. Department of Housing and Urban Development.)
Low-income earners (those with incomes at or below 80% of the area median) are eligible for 100% of project costs. Others are limited to half the project cost. (Both are subject to a $14,000 cap.)
Zelma said renters can also take advantage of the program, as long as they communicate with their landlords about purchasing appliances.
Home Efficiency Rebate Program
In contrast, the home energy efficiency rebate program is technology-neutral, Saul Rinaldi said.
Instead, the value of the rebate depends on the overall amount of energy a home saves through efficiency upgrades. Saul Rinaldi said those who cut more energy can get bigger rebates.
For example, the program is worth up to $8,000 for homes that reduce energy use by at least 35 percent. The value is up to $4,000 for those who experience at least a 20% reduction in energy.
The program is available to all families regardless of income. As with other rebate programs, low-income earners qualify for the most money.
With approval from the Department of Energy, states can choose to increase the maximum rebate for low-income earners above $8,000. In this way, the value of the home energy efficiency rebate could technically exceed that of home electrification and appliance rebate programs, Zelma said.
How consumers can get rebates
Consumers cannot double dip. For example, experts say consumers who receive rebates on the purchase of an electric heat pump often cannot use the energy savings from that heat pump to calculate whole-house rebates.
However, experts say consumers may be able to combine these rebates with existing programs offered by state and local utility companies.Consumers who want to upgrade before these rebate programs are implemented can take advantage of other Inflation Reduction Act funds, such as Tax credits are tied to home efficiency.
Rebates should also be offered at the point of sale. Zelma said this could be accomplished by the retailer through an upfront discount on the purchase price, or by the contractor offering a project cost discount to the consumer at the time of sale.
Experts say those details vary from state to state. States are required to develop and publish lists of approved contractors as part of their program design.
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