Empowering Communities: How the Inflation Reduction Act Reshapes Energy Landscapes

The Inflation Reduction Act of 2022 (IRA) includes $370 billion in climate change mitigation and energy security investments delivered by federal agencies through hundreds of grants, tax credits, and programs. Together, this effort is the single largest climate investment in history and aims to reduce U.S. carbon pollution 40% below 2005 levels by 2030.

In addition, following the Justice 40 Initiative, at least 40% of program benefits are to be delivered to historically marginalized communities, including over $60 billion to environmental justice communities.

The IRA is a transformational opportunity to change how our nation uses energy, and the Homeowner Managing Energy Savings (HOMES) and High-Efficiency Electric Home Rebate Allocations (HEEHRA) programs are an important piece to bringing the clean energy transition to all communities. Applications are now open for states to apply to receive their funds and the programs will run through 2031.

Two of the most important programs funded by the IRA are the DOE’s two home energy rebate programs: the $4.3 billion HOMES program, and the $4.5 billion HEEHRA program.

HOMES provides performance-based direct rebates for whole-house retrofits and is the first national residential energy efficiency program to offer a measured reduction-based incentive pathway (a modeled pathway is also available).

• Modeled Pathway: Rebates for homes predicted to achieve at least 20% energy savings
  • SF & MF: $2,000 max rebates are doubled for 35% or greater savings and doubled for LMI households to $8,000 max/home (MF also has $200K cap/building, $400k for LMI)
• Measured Pathway: Rebates for homes measured to achieve at least 15% energy savings
  • SF & MF: kWh payment rate equal to $2,000 for a 20% reduction of energy use for avg. home in state, double for AMI

HEEHRA offers point-of-sale rebates for low- and moderate-income households to install high efficiency electric appliances, such as heat pumps, stoves, and clothes dryers, as well as any needed insulation and wiring. HEEHRA also includes installer incentives to encourage contractors to learn to install this new equipment and serve LMI households.

Newly released guidance encourages States to leverage other funding sources, existing programs, and existing program infrastructure to speed up program roll out, maximize the available customer incentives, and maximize the benefits the program funding can provide.

Non-federal funding, such as other utility program rebates, are encouraged to be combined with these programs to provide a greater incentive so long as the total rebate does not exceed project costs.

In addition, States may apply 25% of their funds to a Quick Start program, and leverage an existing program, in order to immediately begin program delivery.

The guidance has also provided lists of other federal programs that meet the income thresholds and can be used to verify customer eligibility, in order to ease eligibility checks. Programs including Medicaid, SNAP, Head Start, LIHEAP, and WAP as well as public housing and Section 8 MF buildings are all included as providing categorical eligibility for the AMI rebates and incentive levels.

It has now been one year since this historic legislation passed. The Biden administration, the US congress, and multiple federal agencies have each done their part to make these program funds available. Now it is up to each State to make the most of this opportunity and transform how we all use and save energy in our homes. 

At Resource Innovations, we are excited to share our program delivery excellence, market and technical expertise, and decades of clean energy experience to help States deliver on this promise to not only reduce energy costs and GHG emissions, but to do so equitably while ensuring no communities are left behind. For more information on how we’re helping utilities create meaningful client engagements that promote energy efficiency and other behavioral changes while maintaining regulatory integrity and cost-effectiveness, visit our Utility Services page: https://www.resource-innovations.com/utility-services.