Planning and designing utility demand side management (DSM) programs is incredibly satisfying—there are positive impacts that you can quantify by tallying up the project-level impacts enabled by the program, allowing you to see how much energy was saved and how the broader market for energy efficient technologies was shifted. For most DSM programs, all of this is happening at the utility level, and the impacts are limited primarily to the utility’s territory. However, the Home Energy Rebate programs the Inflation Reduction Act (IRA) enabled have the potential to go beyond that—it’s a huge undertaking and incredibly complex, but it also is an opportunity to creatively find ways to mitigate climate change and promote economic development at the national level.
Energy transition for everyone
This is the first time we have federal climate policy at this scale, and the programs that will be launched with the funds from the IRA will enable many people to take action at the household level to improve the way their homes use energy. All of these smaller actions will add up and have the potential to make a much larger impact, building on the work that utility DSM programs have done. The IRA makes it possible for individuals to make changes to their homes and, by doing so, transform residential building stock.
The IRA Home Rebate programs also allow everyone to participate in the energy transition –they are specifically designed to bring benefits to historically underserved sectors of the population like tribal communities, multifamily homes, or areas with low air quality. Each state will approach these communities differently, in ways that reflect local needs and attitudes. The resulting programs will enable households to experience the positive impacts from energy efficiency upgrades, such as increased comfort and lower energy bills.
Overcoming the cost to participate is a main focus of the program. Low- and moderate-income (LMI) households are often unable to participate in energy efficiency programs because the cost of energy efficient technologies is beyond their budget, even with incentives and rebates. The Department of Energy (DOE) directs states to designate a specific amount of rebate funding for these households, and DOE’s distribution of funding to states will depend on states’ showing they have met these minimum spend requirements. DOE has also allowed for generous rebate levels for LMI households: the amount of money they will receive is enough to significantly reduce or completely eliminate the costs of these technologies, eliminating a significant barrier to participation for many households.
The first step on a long road
State Energy Offices (SEO) will receive tens of millions of dollars to run large rebate programs that have not traditionally run at the state level. Some states may need support to design and manage these programs. At the same time, states with well-established programs also face challenges—they need to deploy this large and temporary influx of funding in a way that will create lasting market transformation with persistent economic benefits. Fortunately, there are companies, like DNV, that can bring the expertise gained in the utility DSM world and help states build effective and efficient programs.
A full transformation to a clean energy economy will require a lot of work and we have a long road ahead of us. The IRA is a good first step. However, we do need to go further, and the IRA’s incentives will ensure that people have a positive experience as they adopt these new technologies. Transforming to a clean energy economy will require much broader buy-in from stakeholders who have focused on different energy priorities, and these programs will build momentum and markets for new technologies and approaches. Establishing a coalition of support behind clean energy technologies and programs will pave the way for later actions that are even more ambitious.
A measurable impact
Of course, the most important thing that needs to happen is knowing that these programs are having the expected impact. Energy savings and greenhouse gas (GHG) reductions are relatively easy to measure, but how these programs benefit households—the non-energy benefits—is equally important. These benefits—energy affordability, health, comfort—while a little squishy, truly make the largest difference in the quality of life for individuals.
The energy transition is filled with challenges—but I’m excited to tackle them. The opportunities afforded by the IRA can make a large, measurable impact for everyone in the U.S. and beyond, but we only have one chance to get it right and the work DNV is doing will help us get there.
Contact us
