By Bradford White Corporation
The Inflation Reduction Act (IRA) is a piece of federal legislation that was signed into law by President Joe Biden over two years ago. While not necessarily indicated by its name, the IRA is touted by its supporters as the largest investment in clean energy in American history.
As it relates to home appliances, one main program in the IRA that contractors and installers should know about is the High Efficiency Electric Home Rebate (HEEHR) program. While much of the funding for this program comes from the federal government, it is state and tribal governments who are entrusted with organizing how the rebates will ultimately be distributed. However, this is anything but a free-for-all for states, as the IRA includes guardrails that state and tribal programs must generally follow. These include:
- Income requirements for households qualifying for the rebates
- Rebated products being, at a minimum, ENERGY STAR® certified
- A $14,000 per household cap on awarded rebates
- A $1,750 cap on the purchase of a heat pump water heater product
To qualify for the funding allotted in the IRA, state governments must propose their rebate program plans to the United States Department of Energy (DOE). Once in hand, DOE must review and approve the state plans before federal funds can be dispersed. So far 25 states have sent applications to DOE for approval, with 13 states being approved, and four with active programs. Only one state (South Dakota) has indicated to DOE that they will not be participating in the program. For an up-to-date status of these rebate programs from state-to-state, visit the DOE website.
The income requirements discussed above are important as it relates to these rebates. Only households with incomes below 150-percent of the median area income where they reside can qualify for these rebates (how “median area income” is defined is up to individual states). If a household’s income is between 80-percent and 150-percent of the median area income, the household can qualify for up to half of the rebate amounts stated above. Only households with incomes below 80-percent of the median area income can qualify for the full amount. Who verifies household income, and how, is ultimately up to the states as well.
It is additionally worth noting that the HEEHR program also provides rebates for labor that is associated with the installation of a heat pump water heater. Specifically, the program allows up to $4,000 in rebates for needed electrical panel upgrades and up to $2,500 for any required electrical wire installation. States will decide whether the rebates will apply only to installations in existing buildings, or both new and existing construction.
Nearly all the states that have had their programs approved by DOE at this point are planning to have their HEEHR programs up and running in the coming weeks. As such, we fully anticipate that this program is something contractors and installers will continue to hear more about as the word gets out and consumers look to take advantage.
If you have any questions about the information in this column, or any other issues related to legislative and regulatory measures impacting our industry, BWC’s Government and Regulatory Affairs team is here to help. Also, if you know of any legislative or regulatory activity in your community or state that would impact our industry, please do not hesitate to contact us at BWCGovReg@bradfordwhite.com.
