How to Take Advantage of Upcoming Home Energy Rebates

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Homeowner Managing Energy Savings program (HOMES)

The Homeowner Managing Energy Savings (HOMES) program also comes from the 2022 IRA, and like HEEHRA, it allocates $4.3 billion dollars to individual states to disperse through their energy departments. Again, these allocations are intended to provide homeowners with rebates on projects related to energy efficiency.

HOMES offers rebates based on expected or actual home performance. These rebates are offered via two distinct models: modeled-performance and measured-performance rebates. Here's how each of these rebate types work.

Modeled-Performance Rebates

To receive modeled-performance rebates, first, your home’s historic energy consumption use must be calculated using BPI-2400-compliant energy modeling software. That same software can be used to propose a new target energy-consumption model — depending on the type of upgrades you've made — based on the updates you plan to make to your home.

So how much of a rebate can you expect from this model?

For low- and moderate-income homes:

• Retrofits that achieve energy system savings of at least 35% are eligible for the lesser of $8,000 or 80% of the project cost.

• Retrofits that achieve energy system savings of less than 35% but more than 20% are eligible for the lesser of $4,000 or 80% of the project cost.

For high-income homes:

• Retrofits that achieve energy system savings of at least 35% are eligible for the lesser of $4,000 or 50% of the project cost.

• Retrofits that achieve energy system savings of less than 35% but more than 20% are eligible for the lesser of $2,000 or 50% of the project cost.

Be aware, however, that projects resulting in energy savings of less than 20% are ineligible for rebates.

Measured-Performance Rebates

The other type of rebate available under HOMES are measured-performance rebates. These are calculated based on your actual energy usage. Requiring the use of an approved open-source measurement and verification (M&V) software to verify your home's energy efficiency, measured-performance rebates are similar to the model described above.

For low- and moderate-income homes:

• Retrofits that achieve energy system savings of at least 15% are eligible for a rebate paid based on the number of kilowatt hours saved. Rates will be set at the state level based on the energy usage of an “average home” in that state. Alternatively, rebates may be issued up to 80% of the project cost.

For high-income homes:

• Retrofits that achieve energy system savings of at least 15% are eligible for a rebate paid based on the number of kilowatt hours saved. Rates will be set at the state level based on the energy usage of an “average home” in that state, and will be lower than the rates for low- and moderate-income homes on a per kilowatt hour basis. Alternatively, rebates may be issued up to 50% of the project cost.

Like modeled-performance rebates, measured-performance rebates have a minimum threshold for activation, but be aware that this threshold is actually lower than their modeled-performance counterparts, meaning they're easier to qualify for. In this case, the threshold is 15%.

Note that while the bill doesn't specify whether or not homeowners looking for measured-performance rebates are given the lesser of the amounts described above, it may be safe to assume that that will be the case.

Again, like the rebates granted by HEEHRA, these are expected to be available later in 2023 and will remain available to homeowners until September 30, 2031.

Related Post: An Introduction to Home Energy Rebates and Tax Credits

How Can You Take Advantage of These Rebates?

By now, you know what home energy rebates are and what they cover, but how do you actually take advantage of them to save money on your home performance upgrades?

In the case of the HEEHRA rebates, there's really not much you'll need to do — at least in theory. As it stands, your rebate is supposed to be applied when you buy your equipment or appliances in a store or online. That means they'll be automatically deducted from your purchase price, so you'll be able to save up to 30% the moment you make the purchase.

In the case of the rebates available through HOMES, however, guidance isn't yet available, but it's likely you’ll have to work with your contractor or a rebates aggregator to provide some level of utility bill documentation so they can calculate your modeled or measured usage and savings. Industry experts anticipate that significant documentation will likely be required — the costs involved, when and where the work was performed, and the amount of energy saved or expected to be saved will likely be required come tax time.

It's also worth noting that it's possible for individual states to elect not to participate in these programs, even though the funding is already available. So do your research before you start buying and building! Check the website of your state's energy office before planning any purchases to ensure you don't undertake a project that ultimately won't be eligible for a refund.

An easier route is to use the Rebates Finder feature in Pearl’s free Green Door app. Rebates Finder gathers available federal, state, and utility rebates and tax credits based on your location, and is always updating, so you’ll know when new rebates come online through IRA.