2024: The year of the IRA Home Energy Rebates

How states and utilities can collaborate to accomplish their goals

The past year has transformed the North American energy landscape, bringing seismic shifts, groundbreaking innovations, and industry-defining moments. As we enter 2024, DNV’s experts will write a series of blogs to dissect the major trends and developments from 2023 and provide insight on what we can expect in 2024.

Nearly USD 7 billion in rebates is flowing to states for home electrification and energy efficiency thanks to the Inflation Reduction Act (IRA). The IRA will undoubtedly change the energy landscape in the coming decades—from how energy is generated to how it is used—and the most effective way states and utilities can design programs that best serve their constituent households is through collaboration.

States must submit applications for this funding by January 2025, but planning, designing, and implementing programs that both meet the Department of Energy (DOE)’s requirements and meet their population’s needs is complex and challenging. Luckily, states do not need to start from scratch: they can look to utility demand side management (DSM) programs as a successful model from which to learn.

Collaboration benefits both states and utilities—in fact, the Home Energy Rebate Programs’ success hinges on such partnerships. The key is designing state programs that complement utility programs and avoid redundancies or competing priorities. Our IRA Program team can help states and utilities design collaborative plans that meet each state’s unique needs.

Where should states and utilities focus their coordination efforts for 2024? Here are the five main areas:

Comprehensive incentive stacking

The DOE strongly encourages maximizing the Home Energy Rebate funds’ impact through incentive stacking. In many states, existing utility DSM programs offer incentives for similar technologies and projects that are also eligible for incentives under the Home Energy Rebate Programs.

An ideal state program, designed in collaboration with the utility, considers the utility program incentives that already exist, ensuring households can combine rebates to achieve greater energy savings at minimal upfront cost. Communication between stakeholders, evaluation experts, and policymakers is key. Effective incentive stacking strategies include:

  • Alignment with state and utility program requirements
  • Clear and effective communications about eligible rebates to contractors and households
  • Systems that ensure the total rebate does not exceed the actual project cost

Enhanced data accessibility

Utility data will inform many aspects of the Home Energy Rebate Program design—from offering a measured savings approach in the Home Efficiency Rebate Program (HER) to calculating bill impacts in the Home Electrification and Appliance Rebate Program (HEAR). However, accessing this data requires coordination between the state and the utility as well as a clear understanding of the DOE Utility Data Access plan requirements. Data assessment discussions between the two entities are vital and should include:

  • Useability of utility data
  • Applicability to the Home Rebate Programs data requirements
  • Compliance with open-data standards like the Green Button
  • Availability of Advanced Metering Infrastructure (AMI) and interval data
  • Data security

Collaboration ensures states and utilities are aligned on utility data flow and data protection plans. As an added benefit, states may have access to customer data useful for targeting, like being able to identify households with high energy use relative to household size or households on bill assistance.

Strategic market transformation

Utilities have explored market transformation initiatives alongside their DSM programs for years and have insights and experience that can help states achieve their market transformation goals. This will ensure that investments made in 2024, such as installed equipment and workforce development, continue to yield dividends beyond the Home Energy Rebate Programs’ retirement.

By identifying issues and goals (such as grid infrastructure management) that are aligned between utility and states overall energy transition goals, state programs can build market transforming approaches to energy use through Home Rebate Program design. For example, using the HER measured savings approach to create a market for energy savings, further developing advanced energy management with virtual power plants from installed equipment, or relieving loads in capacity constraint areas with non-wires alternatives.

Commitment to energy equity

Equity is a crucial program design consideration, and more so in this case since HER and HEAR intend to ensure access to the energy transition for low- and moderate-income (LMI) households. Utilities have identified and found solutions for many of the challenges serving LMI households, and states can emulate and include these solutions in their program design. For example, many utilities have LMI programs that cover the cost of an entire project. In this case, a more effective approach for state programs is to identify and focus on geographic areas or measures not covered by utility programs, ensuring broader participation while benefiting a greater part of the state’s population.

Community group outreach and stakeholder engagement is a key element of energy equity and access for LMI households. Coordinating outreach efforts between the state and the utility will minimize the burden of collecting feedback while gathering vital information that will benefit all the programs in the area, whether they are run by the state or the utility.

A focus on customer experience

The first tenet of successful program design is a seamless and simple experience for households, contractors, and property owners, and the Home Energy Rebate programs are no exception. Utilities have invested a great deal of time and money building trust with their customers, creating systems and messaging that make understanding and accessing strategies and technologies that reduce energy use much easier. Creating a centralized hub with information, education, and links to complementary utility programs, all focused on an extraordinary customer experience, will ensure program success.

State and utility collaboration efforts in 2024 will drive a more energy-efficient and equitable future. Stay tuned for additional DNV insights and discussions on advancing the IRA Home Energy Rebate Programs initiatives.

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You can also schedule time with our dedicated IRA Program team to discuss program design strategies.

1/26/2024 3:00:00 PM

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