By: Nate Kinsey
In the coming days, the US Department of Energy (DOE) is expected to release highly-anticipated guidance governing two of the Inflation Reduction Act’s cornerstone programs: the HOMES rebate program and the HEEHRA rebate program.
These Home Energy Rebate Programs have a combined budget of approximately $9 billion and are central to achieving President Biden’s climate, economic, and equity goals. Via funding distributed to state governments, they will provide financial incentives to invest in electrifying homes and making them more energy efficient.
How the programs will be structured and administered can make a big difference in their ultimate impact. Here are three things I’m looking for in the forthcoming guidance:
1. How will DOE quantify energy savings?
For the HOMES program, there are two ways DOE can direct states to quantify energy savings and provide rebates: modeled and measured.
Theoretically, the modeled approach can be simpler to administer and may be the preferred option for some states. This path only requires a one-time upfront energy savings model to estimate the energy savings potential and the associated program rebate value. However, past studies on modeled savings programs show that models can overestimate energy savings from 10% to 50%. The inconsistency of energy savings models is core to why home energy upgrades have had challenges scaling and unlocking the private sector investments needed to achieve our climate goals.
The measured approach may initially be more complicated to administer, but over the long term, it is more accurate and scalable. The measured pathway requires an upfront energy savings model to estimate the energy savings potential and ongoing monitoring to validate those savings. If the savings don’t materialize, the company supporting the project is not paid the rebate. This pay-for-performance approach helped scale the residential solar industry and can help scale home energy upgrades by creating a market for energy savings (i.e., $/kWh).
2. Will DOE embrace data?
In the last decade, data has transformed everything – well, everything except for rebate programs. But it doesn’t have to be this way. DOE can use the forthcoming guidance to encourage states to support the necessary data infrastructure to ensure households have a seamless and primarily digital rebate program experience.
In many states, customer energy data is often unavailable and inaccessible in a standardized digital format, making the process of collecting it time-consuming and expensive. With this guidance, DOE can encourage states to invest in the data access solutions necessary to create a single location where homeowners, contractors, and others can simply and securely request a digital copy of the data they need. The Smart Meter Texas platform is an example of what this could look like in practice.
Also, DOE and states shouldn’t stop at utility data access. They should explore new approaches to program elements like reporting, which should be automated using APIs, and rebate signatures, which should be digital whenever possible. These data investments will empower more households to participate and help states accelerate the rollout of these funds.
3. When will the rebates be available?
Finally, the big question on everyone’s mind: When will the rebates be available?
Unfortunately for the Biden Administration, rebate availability is not entirely in their control. Once DOE releases the guidance, states must review it and submit a funding application (if the state governors allow it). Once DOE receives a state’s application, they have to review, approve, and administer the funds to states, which then have to create a new program for issuing rebates.
Needless to say, the entire process takes time, but there are actions DOE can include in the guidance to expedite everything. These include office hours, like those available for the EECBG program, technical assistance for essential program components, like income verification, and a commitment to review and decide on state funding applications within 30 business days.
With the forthcoming Home Energy Rebate Program guidance, the administration will take another step forward in its whole-of-government approach to tackling climate change and advancing environmental justice. These programs represent a much-needed investment in the essential changes required to reduce the climate impact of our homes and represent another opportunity to implement President Biden’s Justice 40 initiative. I look forward to reviewing DOE’s final guidance and working with states, industry partners, and communities across the United States to realize the president’s vision.