Home Energy Rebates from Inflation Reduction Act to Flow Soon

Rebates tied to home energy efficiency created by the Inflation Reduction Act may start flowing to many consumers within months.

The federal government is issuing $8.8 billion for Home Energy Rebates programs through states, territories, and tribes, which must apply for the funding. The U.S. Department of Energy approved the first application, for New York, on April 18, awarding it an initial $158 million.

The rebates — worth up to $14,000 or more per household, depending on a state’s program design — are basically discounts for homeowners and landlords who make certain efficiency upgrades to their property.

The rebates aim to partially or fully offset costs for efficiency projects like installing electric heat pumps, insulation, electrical panels, and Energy Star-rated appliances. Their value and eligibility vary according to factors like household income, with more money flowing to low and middle earners.

Eleven other states have also applied for funding: Arizona, California, Colorado, Georgia, Hawaii, Indiana, Minnesota, New Hampshire, New Mexico, Oregon, and Washington. Many other states are also far along in their application process.

States must notify the Energy Department they intend to participate by Aug. 16, 2024. Applications are due by Jan. 31, 2025.

The Inflation Reduction Act earmarked $369 billion in spending for policies to fight climate change, the biggest piece of climate legislation in U.S. history. President Biden signed the measure into law in August 2022.

The IRA splits $8.8 billion in total rebate funding between two programs: the Home Efficiency Rebates program and the Home Electrification and Appliance Rebates program.

So far, just four states — Georgia, Oregon, Indiana, and New Mexico — have applied for both.

The Home Electrification and Appliance Rebates program pays consumers a maximum amount of money for buying specific technologies and services, such as ENERGY STAR electric heat pumps, electric stoves, and insulation.

This program pays up to $14,000 to consumers and is only available to low- and moderate-income households, defined as being below 150% of an area’s median income.

Conversely, the Home Efficiency Rebates program is technology-neutral and instead pays rebates based on how much overall energy a household saves via efficiency upgrades.

This program is available to all households, regardless of income, but low earners can qualify for the most money.

Consumers can’t double-dip by combining rebates from both programs, but they may be able to use the rebates in conjunction with existing programs available through states and local utilities.

Rebates are meant to be delivered at the point of sale, either through an upfront discount on purchase price or from a contractor who gives consumers a rebated amount off the project cost.

These details will vary by state, and states must develop and publish an approved contractor list as part of their program design.

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