More than $8 billion flagged for home energy rebates in the Inflation Reduction Act is beginning to trickle out of federal coffers, but Tennessee residents will likely have to wait until the spring of 2025 to start applying for their chunk of change.
Each state must shape its own plan to dole out the funding, which can put money residents spend on energy efficiency upgrades back into the households’ pockets if they meet certain requirements. New York and Wisconsin became the first states to begin offering federally funded home energy rebates to their residents in mid-August, two years after President Joe Biden signed the Inflation Reduction Act and its many energy-focused subsidies into law.
In total, the rebate funds are expected to impact between 1% to 2% of households across the nation.
Tennessee submitted its application to the U.S. Department of Energy (DOE) for the more than $167 million earmarked for the state in mid-August. Tennessee’s 2025 rollout timeline largely depends on how quickly the DOE approves the state’s applications and when Tennessee can execute a contract with the Tennessee Valley Authority — its chosen implementer — to put the program into action.
Tennessee is one of 26 states and U.S. territories to apply for full program funding — totaling a combined $3.6 billion so far — as of Aug. 23. Fifty-one out of 56 states and territories have indicated they are building rebate programs, and nine have had at least part of their funding request approved. South Dakota is not participating in the Home Energy Rebates program, according to the DOE.
What Tennessee’s Home Energy Rebate program could look like
The program features two types of rebates: Home Efficiency Rebates based on whole-house energy savings through efficiency upgrades, and Home Electrification and Appliance Rebates for the purchase of new, energy-efficient electric appliances for low-income households.
The U.S. DOE has set aside a little over $83 million for each program, requiring them to reserve around $27 million of for low-income, single-family households, and another $7 million for low-income, multifamily buildings.
For the Home Efficiency Rebate program, rebate amounts will be based on how much energy savings a household achieves through its upgrades, and the household’s yearly 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 their project’s cost, whichever is lower. Households that make more than 80% of an area’s median income can receive the lesser of 50% of the project cost or $4,000 for the same energy savings benchmark. Multifamily buildings have separate set of requirements.
To qualify for the Home Electrification and Appliance rebates, home and building owners must must replace a non-electric appliance, be part of new construction or be a first-time purchase of a heat pump for primary heating and cooling. Eligible appliances could 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 making less than 80% of area median income can receive up to 100% of the cost of a qualified project. Households making between 80% and 150% AMI can receive up to 50%. The maximum rebate per building is $14,000.
Tennessee would partner with TVA
States are allowed to use up to 20% of the funds they receive toward administration costs, but Tennessee has opted to limit their administrative reserve to 15%, making about $8 million more available for rebates.
To do this, Tennessee would contract with TVA to implement the rebate programs through the power giant’s processes for existing rebate programs and its network of partnering contractors. TVA would bear its program’s implementation costs and the administrative costs of a to-be-contracted third party implementer.
Home Energy Rebate projects would be completed exclusively by about 200 Tennessee contractors who are members of TVA’s Quality Contractor Network.
