by Sabine Rogers, Flex Coalition Director
President Biden signed the Inflation Reduction Act (IRA) into law one year ago today on August 16, 2022. With an estimated $370 billion in support of clean energy and energy efficiency, the IRA marked a turning point for the U.S. transitioning to a carbon-neutral economy. The Flex Coalition is celebrating the landmark law with a look back at how far we’ve come over the past year and what’s next with implementation of the most significant climate investment in U.S. history.
What’s been accomplished in the first year of the IRA
So far, there are early signs that the IRA is making a positive impact. A recent paper published in Science estimates the IRA will put the U.S. on track to reduce economy-wide emissions between 43-48% below 2005 levels by 2035. The private sector is also gearing up to take advantage of significant clean energy incentives. For example, the Department of Energy (DOE) in August reported that U.S. companies built more new solar generation than natural gas in the first half of 2023. Meanwhile, the Flex Coalition has worked to spotlight industry interest in the forthcoming IRA Home Energy Rebate Programs (HOMES and HEEHR) and the opportunity for the measured savings approach to promote market innovation for demand flexibility.
What’s next for IRA implementation
With the release of DOE guidance for the Home Energy Rebate Programs in July, the one-year anniversary of the IRA also marks the beginning of the next phase of implementation for the HOMES Rebate Program and the measured savings approach.
State energy offices will be responsible for implementing the IRA Home Energy Rebate Programs and are taking initial steps to develop plans and apply for the funds. The Nevada Governor’s Office of Energy and the Oklahoma Department of Commerce are two recent examples of states who released Requests for Information (RFIs) to inform that process. States have until January 31, 2025, to apply for funds, and awards will begin as early as this year. These awards will run up to 8 years, through September 2031.
2 things states can do to unlock private sector investment with the HOMES Rebate Program
- Develop a comprehensive Utility Data Access Plan
Per DOE guidance, States are required to develop and submit a Utility Data Access Plan with their application for the HOMES Rebate Program. Developing a comprehensive plan that ensures third-party program implementers and aggregators can securely and efficiently access customer utility data is critical for the success of the HOMES Rebate and for creating fertile ground for data-driven demand flexibility solutions.
- Implement the Measured Savings program path
The measured savings program path is a key opportunity to drive market transformation and private capital investment. Under the measured approach, aggregators will provide or finance upfront incentives for home energy retrofits and support the growth of skilled local contractors who have a direct financial incentive to deliver high-quality, comprehensive projects. The flexibility of this performance-based approach, where higher delivered energy savings result in higher dollar incentive amounts, will support innovative business approaches, a market for skilled workers, and unlock greater capital investment in the residential energy sector.
The Flex Coalition stands ready to support states in addressing these two key opportunities and we look forward to the next year of IRA implementation!