Last week, the U.S. Department of Energy (DOE) released its long-anticipated guidelines for state energy offices to implement the Inflation Reduction Act's residential rebate programs. Together, the (newly renamed) Home Efficiency Rebates Program (HOMES) and Home Electrification and Appliance Rebates Program (HEEHR) are expected to deliver $8.8 billion in rebates for residential energy efficiency improvements, mostly targeted to low-to-moderate income households. Read more in ACCA's member-exclusive IRA Resource Center.
With rebates up to $14,000 and 100% of improvement cost, these programs could greatly expand the home performance market. That's a huge opportunity for savvy contractors but will likely attract new competition. In fact, program documents explicitly list Home Depot, Ace, and Lowes as key implementation partners.
Technologies like heat pumps can be complex. Without attention to proper training and quality installation, ACCA is very concerned that inexperienced installers will undercut quality contractors and leave consumers with systems that raise their energy bills while making their homes less comfortable – a black eye for our industry. That's why ACCA has been working with its state and local Allied Contracting Organizations (ACOs), the National Association of State Energy Officials (NASEO), and the Air-Conditioning, Heating, and Refrigeration Institute (AHRI) to ensure that these programs prioritize quality installation and support contractor-led training efforts.
Now that the DOE has released its guidance, state energy offices have until January 2025 to submit their program designs. Some states – notably Florida – may choose not to participate, but most are expected to submit their programs within the next 60-90 days, making this a critical period for contractors and ACOs to weigh in on what these programs should look like.
ACCA has developed two documents to support quality program design:
Products Committee co-chair Eric Woerner from A1 Mechanical of Dayton and four members of the ACCA staff presented these resources at a July 11 meeting co-hosted by AHRI and NASEO and attended by about half the state energy offices.
As this battle shifts to the states, ACCA's state and local Allied Contracting Organizations will be critical allies in seeking contractor-friendly program design and giving quality contractors the inside scoop on implementation plans. In fact, the DOE guidelines say that "States are strongly encouraged to establish partnerships with and provide funding to" entities, including "contractor organizations." IRA experts Maddie Koehler of NASEO and Cynthia Adams of Pearl Certification briefed ACCA's ACOs at the ACCA 2023 Conference and we're working to schedule a virtual update now that guidelines have been released.
There is reason for hope that our message is getting through! The DOE guidelines require states to submit a "Consumer Protection Plan" that must "establish minimum quality installation standards" and establish "QA processes that allow the state to verify and document whether installation standards have been met."
We'll also need to work to fend off burdensome requirements. While the law itself makes no mention of union-backed prevailing wage rules for HOMES and HEEHR, the DOE guidelines require a Community Benefits Plan that "might include" provisions such as "paying at or above local prevailing wages."
ACCA will continue analyzing and developing materials regarding the new DOE Guidelines and the related contractor training grants announced by DOE a week earlier. In the meantime, it's important to remind your customers that even the most aggressive states will unlikely have programs available to consumers until 2024. ACCA's IRA Resource Center has information about the greatly enhanced 25C, 25D, 45L, and 179D federal tax incentives available today for residential and commercial customers at all income levels in all 50 states.