June 21, 2024

States Seek IRA Rebate Funding

“We are thrilled to be one of the first states moving forward with a home energy rebates application.”

– Andrew McAllister

California Energy Commission

Nearly a year and a half after the Inflation Reduction Act (IRA) was passed by Congress and signed by President Joe Biden, its rebate programs for high-efficiency HVAC purchases are picking up a little steam.

The U.S. Department of Energy (DOE) announced January 17 that four states — New Mexico, Hawaii, California, and New York — were the first to apply for funding for High-Efficiency Electric Home Rebates (HEEHR), direct-to-homeowner payments for the purchase of qualifying high-efficiency HVAC appliances, including up to $8,000 for a heat pump. HEEHR also provides for rebates for the electrical work, such as panel upgrades, that some homes may need to accommodate such appliances.

“We are thrilled to be one of the first states moving forward with a home energy rebates application,” said Andrew McAllister of the California Energy Commission in a DOE press release. “This is an important step towards getting these federal dollars to Californians eager to update their homes and realize energy bill savings. Our close partnership with DOE is critical for accelerating markets for heat pumps and other clean, low-carbon technologies.”

HEEHR, which is for low- and moderate-income households, is one of two HVAC-related IRA rebate programs; the other, Home Owner Managing Energy Savings (HOMES), is for the installation of certain high-efficiency HVAC equipment but also for other home improvements, such as insulation, that offer demonstrated energy savings. HOMES will be open to homeowners at all income levels; the DOE said the four states will apply for HOMES rebate money at a later date.

The IRA sets aside roughly $8.8 billion for the two programs. Both programs are to be managed at the state level, with DOE oversight.

In addition, 23 states have received partial federal funding to administer rebate programs, and eight others, plus four U.S. territories and Washington, D.C., have applied for administrative funding, according to DOE.

However, consumers have seen no HEEHR or HOMES rebate money yet, and HVAC industry groups are monitoring the progress of the programs and working to make sure their members can take advantage of them, as they sell and install HVAC systems, once the money is available.

Chuck White, vice president of regulatory affairs at the Plumbing-Heating-Cooling Contractors–National Association, said the group “is working with other industry stakeholders to connect the industry to these programs such that a smooth rollout of the programs will occur and professionally installed systems will provide peak performance to qualifying consumers.”

But, White added, “I don’t know of any money flowing from the federal faucet to consumers.”

“Estimates vary, but we’ve heard, at the earliest, by the end of 2024 and more likely mid- to late 2025,” Chris Czarnecki, government relations director at ACCA, wrote in an email. “DOE optimistically believes funds will be made available in 2024 (we shall see).”

The DOE is now reviewing applications from the four states that have formally sought rebate funding to determine if they meet the department’s requirements, the DOE press release said. HEEHR rebate allocations for those states range from more than $290 million for California to just over $34 million for Hawaii.

For purposes of HEEHR rebates, a low-income household is one with an annual income of less than 80% of the area’s median income, and a moderate-income household is one with an income of between 80% and 150% of the area median.

Finney, the DOE spokeswoman, said the energy department is providing assistance to help other states complete applications for rebate money.

States and territories that have not yet applied for rebate funding have until August 16 of this year to provide notice of intent to do so.

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