DOE Offers $8.5 Billion to States, Territories for Home Energy Rebates

by Paul Ciampoli
APPA News Drector
July 31, 2023

The U.S. Department of Energy on July 27 announced that it is accepting applications for state and territory implementation of the two home energy rebate programs created by the Inflation Reduction Act.

These programs will provide $8.5 billion to states and territories to lower energy costs and increase efficiency in American homes “by making home energy upgrades more affordable, while ensuring all communities have access to affordable, reliable, clean electricity and helping deliver on the President’s ambitious clean energy and climate goals,” DOE said.

The published Administrative and Legal Requirements Document (ALRD) offers federal guidance and instructions for states and territories to apply for their allocation of the Home Energy Rebates programs.

Rebates will be available to consumers only after states and territories apply for and receive their funds from DOE and launch their state rebate program. 

The Home Efficiency Rebates Program will offer $4,300,000,000 in formula grants to state energy offices to reduce the upfront cost of whole-home energy efficiency upgrades in single-family and multi-family homes. The value of an eligible home’s rebate depends on the predicted energy savings attributable to the project. 

The Home Electrification and Appliance Rebates Program will offer $4,275,000,000 in formula grants to state energy offices to reduce the upfront cost of efficient electric technologies in single-family and multi-family homes. This program also provides $225,000,000 in grants to Indian tribes, however tribal guidance and application instructions are forthcoming through a separate, upcoming announcement. 

DOE has also asked states and territories to prioritize households that stand to benefit the most from these funds, including allocating at least half of the program funds to reach households with incomes at or below 80% of their area median income.

DOE is also asking states to prepare Community Benefits Plans for their home energy rebate programs “to assure funds are invested in good jobs and real economic opportunities.”

DOE will review submitted applications from states for the programs on a rolling basis.  

Once the application is approved, states may launch their program for consumers in eligible households to begin funding improvements.

In addition, many consumers can currently benefit from tax credits for clean energy and energy efficient home improvements also included in the Inflation Reduction Act. Information about consumer clean energy tax credit eligibility can be found here.  

Low-income households can also benefit from the DOE’s Weatherization Assistance Program, which offers free home efficiency upgrades for eligible households, and LIHEAP, DOE noted.

The home energy rebates will offer support and incentives for consumers to retrofit and electrify their homes, without banning or restricting the use of other technologies.

While tribal guidance and funding is not yet available, DOE said it is working to ensure that tribal programs will have maximized benefits for tribal communities, including through the program’s Tribal Consultation.

DOE and the U.S. Department of Treasury have found that the Home Energy Rebate programs will be treated as a reduction in the purchase price or cost of property for eligible upgrades and projects, and consumers receiving an Inflation Reduction Act rebate will not be required to report the value of the rebate as income.

Once the Home Energy Rebates are available, eligible rebate recipients may also claim a 25C tax credit for eligible products as applicable to the cost to the consumer after the rebate has been applied, if they have sufficient tax liability.

More information about Energy Efficient Home Improvement Tax Credits is available here.  

In the coming weeks, DOE will provide an array of assistance to states and territories as they determine their next steps in developing rebate programs and submitting applications. 

DOE’s efforts to support states and territories will include: 

• Example responses to applications questions, tailored to specific, optional rebate delivery mechanisms (e.g., weatherization programs, utility programs, other) 
• Sample frameworks to guide development of effective rebate processing systems 
• Technical assistance regarding use of DOE-centralized rebate initiation and tracking systems 
• Analytical support regarding rebate program design impact on reaching specific housing, climate, or economic objectives 
• Webinars, small group discussions, and one-on-one meetings on specific topics.  

EPA’s EnergyStar Program will be supporting states and territories by: 

• Producing complimentary rebate-focused outreach and education materials for use by states or their implementors.  
• Launching a new ENERGY STAR incentive-finder that will feature state-specific information on rebate-eligible products, authorized installers and will have the capability to connect customers to state rebate program fulfillment processes. 
• Helping consumers with buying guidance and savings calculators for key products, including heat pumps and heat pump water heaters. 
• Launching a new community-based initiative to educate low income households about available home upgrade resources and services. 

For more information, visit the Home Energy Rebate programs website.