Time for HVAC Contractors to Lobby Their State Energy Offices
Some IRA tax credits/rebates will be disbursed through state agencies
The HVAC industry is pretty excited about all the tax credits and rebates that are being offered in the federal Inflation Reduction Act (IRA). The measure includes $369 billion in spending on climate and energy policies that are designed to incentivize Americans — through tax credits and rebates — to improve the energy efficiency of their homes through the installation of high-efficiency heat pumps, better insulation, solar panels, etc.
The incentives are significant and will likely be very appealing to customers. For example, American homeowners who meet the income requirements may receive up to $14,000 for energy efficiency improvements — if their state chooses to participate in the program. That’s the kicker — it’s up to the states to decide if they want to accept money from the IRA, as well as set up programs to oversee the disbursement of funds. And that will all take time.
At the recently held Solar Forum, co-hosted by ACCA and Pearl Certification, ACCA CEO Bart James explained that the IRA was written in very broad terms and many details still need to be worked out with state and local agencies. In addition, the bill has to undergo the normal rulemaking process, which usually takes about two years.
“This is a really long game, but you have to be engaged and work to make sure you get what's there,” he said. “The states that are more progressive are also probably going to bring their own resources to the table to help incentivize it even further.”
So now is the time for HVAC contractors to lobby their state’s energy office to make sure that their state is applying for IRA money. States that do not apply for the money will see their share shifted to other states that are participating in the program.
Another reason to get involved is to ensure that the process is not too onerous for contractors. Several contractors attending the Forum expressed concern over whether they were going to be responsible for verifying their customers’ financial information to ensure they qualify for the tax credits and rebates — and whether they’d be on the hook for the rebates if the money ran out before the program’s end date. They were also wondering whether the rebates would be granted at the point of sale, meaning contractors would have to wait to be reimbursed from the state.
There are no answers to these questions yet, so there is time for contractors to help influence the implementation and distribution of any IRA programs.
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“The Department of Energy at the federal level is writing guidance at top speed, but they are really interested in stakeholder input,” said Robin LeBaron, president and co-founder of Pearl Certification. “They're working with the National Association of State Energy Officials, which is basically the trade group for all the energy officials, and they’re trying to figure out a set of model programs and guidelines with stakeholder input. So the right time to start sharing your thoughts and comments about this is now.”
Another contractor at the Forum expressed concern that the rebates would encourage less-reputable contractors to install high-efficiency heat pumps in lower-income homes that lack insulation and/or have poorly designed ductwork.
“What will the homeowners do then, when they have a $500 utility bill because their new heat pump can’t heat their inefficient home?” he asked. “We’re doing a disservice to these people if we don’t look at the bigger picture. We have to do something to make sure that heat pump is going to be a good choice for a lower-income family.”
LeBaron agreed with the contractor, noting that this is a weakness in the electrification movement, as rebates are often given in piecemeal fashion, rather than for the whole home.
“There's $1,600 available for weatherization as part of that rebate package, but there's no requirement that the contractor do it,” he said. “There are definitely states that see these challenges and will be interested in solving them. Getting them to think about that proactively is good. There are a bunch of issues beyond just installing a box that are going to need to be addressed and I think that ends up playing out at the state level.”
Which is why it is important for HVAC contractors to start talking to their state energy officials now to ensure they have a plan for effectively handling the money being handed out by the federal government for energy-efficient upgrades.
