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1 1 (August 2, 2023)

handle is hein.crs/govemju0001 and id is 1 raw text is: I ~ or nin &on I flesedrch Service Iera I ave IeIa~ 'e 914 0 Updated August 2, 2023 The Inflation Reduction Act: Financial Incentives for Residential Energy Efficiency and Electrification Projects introduction P.L. 117-169, commonly known as the Inflation Reduction Act of 2022 (IRA), includes a number of provisions affecting energy use in the buildings sector. The IRA appropriates $9 billion for residential energy efficiency and electrification financial assistance programs. These include consumer rebates and funds for technical training. The IRA includes $4.3 billion to award grants to state energy offices (SEOs, defined in § 124(a) of the Energy Policy Act of 2005 (P.L. 109-58)) to develop and implement Home Energy Performance-Based, Whole- House Rebates, also known as a HOMES (Home Owner Managing Energy Savings) rebate program. In addition, the IRA provides $4.275 billion to SEOs and $225 million to Indian tribes to implement High-Efficiency Electric Home Rebate programs. A further $200 million is appropriated for SEOs to provide training and education to contractors involved in these rebate programs. The energy efficiency rebates are determined by energy savings of the whole house. The electrification rebate supports a menu of projects, including replacing appliances, adding insulation, and upgrading the in-home electrical delivery system itself. The two rebate programs have unique means-testing provisions and cost recovery rates and caps, as explained further below. To receive the funds, the SEOs apply for grants from the U.S. Department of Energy (DOE). The statute specifies that DOE determine the amount of funds for each state using DOE's allocation formula in effect on January 1, 2022. This In Focus provides highlights of the statutory programs but does not describe all the details, some of which will be determined by the SEOs. The programs exemplify two main trends in home energy efficiency programs. In the first, during the 1980s and 1990s, energy efficiency programs focused on single appliances or systems (e.g., windows), complemented by appliance efficiency standards, information campaigns, and other policies. The second trend, which evolved later, includes initiatives aimed at whole-house energy performance. The rebates based on whole-house improvements necessitated the development of measurement methods and computer modeling platforms for simulation of energy consumption in the home. Whoie-H ouse Rebates (H OM ES) Section 50121 of the IRA offers HOMES rebates for energy efficiency upgrades that improve the overall energy performance of a single-family home (SFH) or multi-family building (MFB). As building stock can be in place for many years, the materials and practices at the time of construction may not perform as well as today's materials and practices. While the IRA does not specify what retrofits would satisfy its requirements, these might include efficient windows, doors, and insulation materials. Applicants can demonstrate savings by comparing energy consumption before and after the retrofits, either through use of building energy models that estimate the energy performance of the whole house, or by measured performance. The energy savings requirements and the rebate calculation differ for the two methods. For modeled performance, the rebate is awarded at two different levels depending on the how much energy savings is achieved. As shown in Table 1, for retrofits of SFHs that achieve a 20% energy savings, an owner or aggregator is eligible for rebates of 50% of project cost, with rebates capped at $2,000; for low- or moderate-income (LMI) households, rebates increase to 80% of project cost, up to a cap of $4,000. For SFHs achieving at least a 35% reduction, the caps are doubled. The IRA defines LMI households as those with income below 80% of area median income (AMI); these income thresholds are estimated at https://www.huduser.gov/portal/datasets/il.html, but there are a number of methods for determining income itself. Table I. HOMES Rebates Based on Modeled Energy Savings for Single-Family Homes Rebate Rebate Cap at least 20% energy savings, but less than 35% if LMI household 80% of cost $4,000 all other households 50% of cost $2,000 at least 35% energy savings if LMI household 80% of cost $8,000 all other households 50% of cost $4,000 Source: §50121(c) of Inflation Reduction Act of 2022 (P.L. 117-169). Notes: IRA defines LMI households to have income below 80% of the area median income for purposes of HOMES rebates. For MFBs, the projects are eligible for a rebate of $2,000 per dwelling unit, provided they achieve a reduction of 20%-35%. The total of all rebates in one MFB cannot exceed $200,000. For at least a 35% reduction, the rebate per dwelling unit and the cap per building are doubled.

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