More states expected to roll out Inflation Reduction Act energy-efficiency rebates this summer

Finance

New York Gov. Kathy Hochul.
Lev Radin/Anadolu Agency via Getty Images

New York is launching a program offering homeowners up to $14,000 in total rebates for energy-efficiency upgrades to their property, and more states are expected to follow suit by summer’s end.

The rebate programs are part of the federal Inflation Reduction Act, the largest piece of climate legislation in U.S. history, which President Joe Biden signed in 2022.

The law earmarked $8.8 billion for consumers via two Home Energy Rebates programs.

The financial incentives help consumers reduce or fully offset the cost of upgrades to make their homes more energy-efficient, thereby reducing carbon emissions and cutting homeowners’ future energy bills, state and federal officials said.

Such projects might include installing air sealing, insulation, electric heat pumps and electric stoves, for example.

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New York launched part of its rebate program on May 30, making up to $14,000 of federal funds available to low-income households.

When combined with a fledgling state program called EmPower+ — which offers up to $10,000 per low-income household — consumers can access up to $24,000 in total rebates for making energy-efficiency upgrades, according to Doreen Harris, president and CEO of the New York State Energy Research and Development Authority.

‘Several’ states will roll out rebates by September

States, territories and tribes — which administer the programs — must apply for the federal funds.

Seventeen states had applied for Home Energy Rebates funding as of June 14, according to the U.S. Energy Department. New York was the first to roll out funding to consumers.

The Energy Department expects “several more states” to make the rebates available “between now and September,” it said. The agency has approved applications submitted by California and Hawaii, the final stage before rollout.

New York’s launch “is a milestone,” said Kara Saul Rinaldi, CEO and founder of AnnDyl Policy Group, a consulting firm focused on climate and energy policy. “Over the next year we’ll be seeing these programs roll out across America.”

How the rebate program works

The Inflation Reduction Act created two Home Energy Rebates programs: the Home Efficiency Rebates program and the Home Electrification and Appliance Rebates, or HEAR, program.

New York’s launch in May was just for part of the HEAR program. It will apply for the second at a later date.

Per federal law, the HEAR program is only available to low and middle-income homeowners.

New York was initially approved for federal funding to low-income, single-family (one- to four-unit) households. They must have an income of 80% or below their area’s median income to qualify.

The HEAR program carries a maximum dollar amount per project. For example, New York is paying the following maximum federal rebates:

  • Air sealing, insulation and ventilation: $1,600
  • Electrical service upgrade (panel box): $4,000
  • Electrical wiring upgrade: $2,500
  • Heat pump water heaters: $1,750
  • Heat pumps: $8,000

Low-income households are eligible to offset 100% of their project costs, up to $24,000 of combined federal and state funds.

These rebates are delivered via contractors, who will quote a project’s cost to consumers with rebates applied, according to Harris, of the New York State Energy Research and Development Authority. NYSERDA has a directory of qualified contractors who can make such upgrades.

New York aims to launch the second phase of the HEAR program in the fourth quarter of 2024, Harris said.

If approved by the Energy Department, the state would expand the rebate program in a few ways, she said: It would be available to moderate income residents, defined as being between 80% and 150% of area median income; to multifamily buildings; and to the purchase of electric appliances like ENERGY STAR-rated electric stoves and electric heat pump clothes dryers, which would be available at the point of sale from retailers.

Home Efficiency Rebates program

By contrast, the Home Efficiency Rebates program is technology-neutral. No state has yet launched such a program, though applications are pending with the Energy Department.

The value of the rebates are tied to how much overall energy a household saves via efficiency upgrades. The deeper the energy cuts, the larger the rebates, up to $8,000.

The program is available to all households, regardless of income

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