More than $8 billion earmarked for residential energy rebates in the Inflation Reduction Act is slowly flowing out of federal coffers, but Tennessee residents will likely have to wait until spring 2025 to claim their chunk of money.
Each state must develop its own plan for distributing the funds, which can give money back to households for energy efficiency upgrades under certain conditions. New York and Wisconsin became the first states to offer their citizens federally funded residential energy rebates in mid-August, two years after President Joe Biden signed the Inflation Reduction Act and its numerous energy-related subsidies into law.
Overall, the rebate funds are expected to benefit 1 to 2 percent of households across the country.
Tennessee submitted its application for the more than $167 million in state-specific funds to the U.S. Department of Energy (DOE) in mid-August. The timeline for launching the program in 2025 depends largely on how quickly the DOE approves the state’s applications and when Tennessee can secure a contract with the Tennessee Valley Authority – its chosen implementing company – to put the program into action.
Tennessee is one of 26 states and territories that have applied for full funding for the program as of Aug. 23 — a total of $3.6 billion so far. Fifty-one of 56 states and territories have indicated they are developing rebate programs, and nine have had at least some of their funding requests approved. South Dakota does not participate in the Home Energy Rebates program, according to the Department of Energy.
This is what Tennessee’s Home Energy Rebate program could look like
The program includes two types of rebates: household energy efficiency rebates based on whole-home energy savings through energy efficiency improvements, and rebates for electrification and the purchase of new, energy-efficient appliances for low-income households.
The U.S. Department of Energy has allocated just over $83 million for each program, reserving about $27 million for low-income single-family homes and another $7 million for low-income multifamily homes.
Under the Home Efficiency Rebate program, rebate amounts are based on the amount of energy savings a household achieves through upgrades and the household’s annual income.
A low-income single-family household with an expected energy savings of 35% or more can receive up to $8,000 or 80% of the project cost, whichever is less. Households earning more than 80% of a region’s median income can receive the lesser of 50% of the project cost or $4,000 for the same energy savings benchmark. Different requirements apply for multifamily housing.
To be eligible for the electrification and appliance rebates, home and building owners must replace a non-electric appliance, build new construction, or purchase a heat pump for primary heating and cooling for the first time. Eligible equipment may include heat pump water heaters, heat pumps for space heating and cooling, electrical load service center upgrades, electrical wiring and insulation, air sealing and ventilation.
Single-family households earning less than 80% of the area median income can receive up to 100% of the cost of a qualified project. Households earning between 80% and 150% of the area median income can receive up to 50%. The maximum rebate per building is $14,000.
Tennessee would partner with TVA
States are allowed to spend up to 20 percent of their funds on administrative costs, but Tennessee has chosen to cap its administrative reserve at 15 percent, leaving about $8 million more available for reimbursements.
To this end, Tennessee would contract TVA to implement the rebate programs, using the energy giant’s processes for existing rebate programs and its network of partner companies. TVA would bear the costs of implementing its program as well as the administrative costs of a third-party company to be contracted.
Home Energy Rebate projects would be performed exclusively by approximately 200 Tennessee contractors who are members of TVA’s Quality Contractor Network.
