ESBD_404455_1749755256867_Exhibit 4 - DOEHER_ResS_ProgramRequirementsV2.1.pdf

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INFLATION REDUCTION ACT

HOME ENERGY REBATES

Home Efficiency Rebates Program (Sec. 50121)

Home Electrification and Appliance Rebates Program (Sec. 50122)

PROGRAM REQUIREMENTS & APPLICATION INSTRUCTIONS

Applications Due by January 31, 2025

VERSION 2.1

U.S. Department of Energy Office of State and Community Energy Programs 1000 Independence Avenue, SW Washington, DC 20585

July 27, 2023 (Version 1)

October 13, 2023 (Version 1.1)

June 13, 2024 (Version 2)

December 16, 2024 (Version 2.1) http://www.energy.gov/scep

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Modifications to this document are as follows and are highlighted in the text in yellow:

No. Description of Modification Location(s)

1 Inserts new language into footnote 16 and adds footnote 20. pp. 12, 13

Adds requirements for states that request DOE approval for low-income multifamily whole-building partial completion payments.

pp.18-20

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Table of Contents

1.0 Overview

1.1 Introduction

1.2 Document Contents and Structure

1.3 Scope

1.4 Legal Authority

1.5 Overarching Goals

2.0 Definitions and Acronyms

2.1 Definitions

2.2 Acronyms

3.0 Home Efficiency Rebate Programs (50121)

3.1 Use of Funds and Rebate Eligibility

3.1.1 Program Requirements: Use of Funds

3.1.2 Program Requirements: Rebate Conditions and Levels

3.1.3 Program Requirements: Low-Income Homes

3.1.4 Program Requirements: Community Benefits Plan

3.1.5 Program Requirements: Processing and Delivering Rebate Funds to Eligible Rebate Recipients

3.1.6 Program Requirements: Data Collection and Evaluation

3.1.7 Application Requirements: Use of Funds and Rebate Eligibility

3.2 Consumer Experience

3.2.1 Program Requirements: Education and Outreach

3.2.2 Program Requirements: Home Assessments

3.2.3 Program Requirements: Access to Residential Utility Data

3.2.4 Program Requirements: Project-Specific Energy Savings Calculations

3.2.5 Program Requirements: Consumer Protection through Quality Assurance

3.2.6 Program Requirements: Post-Installation Certificate

3.2.7 Application Requirements: Consumer Experience

3.3 Maximizing Rebate Impact

3.3.1 Program Requirements: Supporting the Clean Energy Economy Through Market Transformation

3.3.2 Program Requirements: Integrating with Other Programs

3.3.3 Program Requirements: Quick Starts

3.3.4 Application Requirements to Maximize Rebate Impact

4.0 Home Electrification and Appliance Rebates State Programs (50122)

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4.1 Use of Funds and Rebate Eligibility

4.1.1 Program Requirements: Use of Funds

4.1.2 Program Requirements: Rebate Conditions and Levels

4.1.3 Program Requirements: Low-Income Households

4.1.4 Program Requirements: Community Benefits Plan

4.1.5 Program Requirements: Processing and Delivering Rebate Funds to Eligible Rebate Recipients

4.1.6 Program Requirements: Verify Income Eligibility

4.1.7 Program Requirements: Data Collection and Evaluation

4.1.8 Application Requirements: Use of Funds and Rebate Eligibility

4.2 Consumer Experience

4.2.1 Program Requirements: Education and Outreach

4.2.2 Program Requirements: Qualified Electrification Projects

4.2.3 Program Requirements: Installation Incentives

4.2.4 Program Requirements: Home Assessments

4.2.5 Program Requirements: Consumer Protection Through Quality Assurance

4.2.6 Application Requirements: Consumer Experience

4.3 Maximizing Rebate Impact

4.3.1 Program Requirements: Supporting the Clean Energy Economy Through Market Transformation

4.3.2 Program Requirements: Integrating with Other Programs

4.3.3 Program Requirements: Quick Starts

4.3.4 Application Requirements to Maximize Rebate Impact

5.0 Revisions and Guidance

5.1 Revisions

5.2 Guidance

6.0 Application Instructions

6.1 Overview

6.2 Application for Federal Assistance - Standard Form 424

6.3 Budget

6.3.1 Standard Form 424A

6.3.2 Budget Justification Workbook

6.3.3 Expenditure Prohibitions, Limitations, and Allowances

6.3.4 Rejection of Funds

6.4 Planned Activities

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6.5 Other Forms as Applicable

7.0 Appendix A: Required Allocations

8.0 Appendix B: Consumer Satisfaction Questions

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1.0 Overview

The Inflation Reduction Act (IRA), Pub. L. 117-169 (August 16, 2022), authorized the U.S.

Department of Energy (DOE) to carry out two Home Energy Rebate programs. Specifically, IRA Section 50121 established the Home Efficiency Rebates, and IRA Section 50122 established the IRA Home Electrification and Appliance Rebates (collectively, the Home Energy Rebates). The Home Energy Rebates together authorize $8.8 billion in funds for the benefit of U.S. households and home upgrades, to be distributed to households by State Energy Offices and Indian Tribes.1

Table 1. Home Energy Rebate Programs

IRA Provision Number

Home Energy Rebates

Authorized Funds

Authorized Recipients

Section 50121 Home Efficiency Rebates

$4,300,000,000.00 State Energy Offices

Section 50122

Home Electrification and Appliance Rebates

$4,275,000,000.00 State Energy Offices

Section 50122

Home Electrification and Appliance Rebates

$225,000,000.00 Indian Tribes

These funds will be made available to the authorized recipients through formula grants. DOE is responsible for providing oversight and guidance, and the states2 are responsible for the administration of rebate programs at the state level.

This document provides the program requirements, application requirements, and application instructions for both Home Energy Rebate programs available to State Energy Offices. To participate, states must submit applications describing state plans for their proposed rebate programs. States must follow the Administrative and Legal Requirements Document (ALRD) for their application submission. Each application requirements section is designed to assist applicants in ensuring that their applications fully address components required to demonstrate compliance with corresponding programmatic requirements. State applications will be reviewed and approved by the DOE based on compliance with these programmatic requirements.

State and territory funding allocations can be found in Appendix A of this document. Funding allocations for Indian Tribes is available through a separate ALRD with program requirements and application instructions based on feedback from consultations with the Tribes.

A state that chooses not to apply for this program and therefore refuses its allocated formula funding under IRA Section 50121 and/or Section 50122 must sign and send a letter for declining

1 DOE issued separate application instructions for eligible Indian Tribes when applying for formula grant financial assistance with appropriations provided by the IRA under Section 50122(a)(1)(B).

2 In this document “states” means “states and U.S. territories” unless otherwise indicated.

http://www.energy.gov/scep https://www.energy.gov/scep/home-energy-rebate-programs https://www.congress.gov/bill/117th-congress/house-bill/5376/text https://www.congress.gov/bill/117th-congress/house-bill/5376/text https://www.congress.gov/bill/117th-congress/house-bill/5376/text https://www.energy.gov/scep/articles/home-energy-rebate-administrative-and-legal-requirements-document https://www.energy.gov/scep/articles/home-energy-rebate-administrative-and-legal-requirements-document

Sign up for updates and learn more: 2 funds to its respective Project Officer indicating this decision to the DOE by the application due date of August 16, 2024. By signing this document, the State Energy Office signifies its understanding that its allocation will be redistributed to other State Energy Offices that applied for allocated funds. If the state does not sign the document or convey to the DOE Project Officer that it plans to submit an application by August 16, 2024,3 the state’s funding will be reallocated to other states.

1.1 Introduction

The DOE is establishing grant application instructions and management information for the Home Energy Rebates, including (1) ALRD, (2) Formula Allocations to States and Territories,4 (3) Application Checklist, (4) Home Energy Rebates Pre-Award Information Sheet, and (5) Home Energy Rebates Application Templates. Items 3, 4, and 5 can be found at the Home Energy Rebates Guidance Home Page.

The Home Energy Rebates will help American households save money on energy bills, upgrade to clean energy equipment, improve energy efficiency, improve their comfort, support a stable power grid, and reduce indoor and outdoor air pollution. Additionally, these rebates provide specific opportunities to increase the installations of efficient, clean energy equipment in underserved and underrepresented communities.

DOE has identified the following overarching outcomes for the Home Energy Rebate programs:

• Well-established exemplary and innovative efficiency and electrification programs.

• Widespread access and uptake for disadvantaged communities.

• Proven value streams and roles for sustained investments to continue market transformation.

• Reduced pollution from buildings in support of the clean energy economy.

These stated outcomes describe the overall intent of the Home Energy Rebates. States may take various approaches in developing their implementation plans to emphasize these outcomes.

In the development, submission, and review of grant applications, the provisions of Executive Order 12372 (Intergovernmental Review of Federal Programs) and the DOE Implementing Order (10 CFR 1005) remain unchanged.

Applications must be submitted through the Performance and Accountability for Grants in Energy (PAGE) online system to be considered for an award through IRA Section 50121 and Section 50122. If you have questions regarding the Application Instructions in PAGE, please refer to the Help Menu or contact the PAGE hotline at PAGE-Hotline@ee.doe.gov or 1-866-492-4546.

As allowable, states may use funds made available through the Home Energy Rebate Programs Early Administrative Funds ALRD to support application completion for this ALRD.

1.2 Document Contents and Structure

This document provides the program requirements as determined by the DOE to meet the statutory requirements of IRA Section 50121 and Section 50122. States must develop programs that comply with the programmatic requirements presented in this document.

3 Section 50121(a)(2)(B) and Section 50122 (a)(2)(C).

4 Located in Appendix A.

http://www.energy.gov/scep https://www.energy.gov/scep/articles/home-energy-rebate-administrative-and-legal-requirements-document https://www.energy.gov/scep/home-energy-rebate-programs-guidance https://www.energy.gov/scep/home-energy-rebate-programs-guidance https://www.archives.gov/federal-register/codification/executive-order/12372.html https://www.archives.gov/federal-register/codification/executive-order/12372.html https://www.ecfr.gov/current/title-10/chapter-X/part-1005

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States must address the application requirements specified in this document. All requirements must be addressed to receive federal funding and to launch state programs. However, DOE recognizes that the state may not be equipped to adequately respond to all requirements and plans within this document without program funds and support from program implementers and experts.

States are required to submit their responses to DOE through two documents:

1. State Application. States may submit a single package of responses for all application requirements.

2. State Implementation Blueprint. For specific requirements identified by DOE within this document, states may elect to defer submission of those responses to their State Implementation Blueprint.

A State Implementation Blueprint must be submitted after receipt of the award and a minimum of 60 days prior to planned program launch. DOE will provide the state feedback and approval to proceed. States must receive DOE approval on the State Implementation Blueprint before launching their program. In addition to specified requirements, a State Implementation Blueprint must include:

a. Community Benefits Plan

b. Education and Outreach Strategy

c. Consumer Protection Plan

d. Utility Data Access Plan (for Home Efficiency Rebates only)

e. Privacy and Security Risk Assessment for State Systems

f. Market Transformation Plan5

Requirements that can be deferred to the State Implementation Blueprint are marked with an “X” within the application requirements tables.

States may rely on existing programs and infrastructure that meet these programmatic requirements and may outline how challenges or modifications to existing programs will comply with these requirements. Accordingly, states may reference existing program materials in their applications to simplify their plan development. This document should be reviewed in conjunction with the ALRD for the Home Energy Rebates Funds and the Data & Tools Requirements Guide. The Data & Tools Requirements Guide provides detailed information regarding data collection and reporting requirements and the tools DOE will make available to states to facilitate various aspects of the Home Energy Rebate programs.

Section 1 of this document provides a brief overview of the appropriations and legal authorities.

Section 2 provides definitions and acronyms that will be used throughout the document. Section 3 provides the requirements specific to the Home Efficiency Rebates state program (Section 50121). Section 4 provides the requirements specific to the Home Electrification and Appliance Rebate state program (Section 50122). Each state rebate program will require a separate application. If a state cannot comply with a requirement because of a conflict with state law, contact the state’s Project Officer who will work with the cognizant contracting officer and the DOE legal team to address the issue.

5 Market Transformation Plan can be submitted up to one year after award date.

https://www.energy.gov/scep/articles/home-energy-rebate-administrative-and-legal-requirements-document https://www.energy.gov/scep/articles/ira-home-energy-rebates-data-and-tools-requirements-guide

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The design and implementation of these rebate programs will be complex. To support states, DOE will provide the following resources and support:

• Technical assistance to states in designing programs that fulfill these requirements.

• Templates that states can tailor to effectively describe their approach to each of the requirements.

• For rebate processing and tracking, a centralized system that states can use to facilitate these processes as well as reporting.

• Sample frameworks that states can provide to program implementers who can then tailor the information to reflect individual state programs and priorities.

Technical information, best practices, and implementation recommendations will be made available at https://www.energy.gov/scep/recommendations-program-administrators.

1.3 Scope

The application instructions are to be used by all states and territories when applying for formula grant financial assistance under DOE’s IRA Home Energy Rebates with appropriations provided by the IRA under Section 50121 and Section 50122. For the purposes of the Home Efficiency Rebates and the Home Electrification and Appliance Rebates, there are 56 entities eligible for state formula grants. These are the 50 states, the District of Columbia, and the following five U.S.

Territories: The Commonwealth of Puerto Rico, the U.S. Virgin Islands, American Samoa, Guam, and the Commonwealth of the Northern Mariana Islands. As stated, the funding for Indian Tribes will be made available through a separate ALRD with programmatic and application requirements designed based on feedback from consultations with the Tribes.

1.4 Legal Authority

The Home Efficiency Rebates are authorized under Section 50121 of the IRA, as signed into Public Law (PL 117-169) on August 16, 2022.6 The Home Electrification and Appliance Rebates are authorized under Section 50122 of the IRA.7 Together, both provisions provide home energy savings across a variety of households and income levels, and specifically enable energy improvements within underserved and underrepresented communities.

Grantees must comply with all applicable laws and regulations including, but not limited to, the DOE financial assistance regulations at 2 CFR Part 200 as amended by 2 CFR Part 910, and other regulations and procedures applicable to these funds, as DOE may, from time to time, prescribe for the administration of financial assistance. Any potential discrepancies between information contained in this document and DOE regulations shall be resolved in favor of DOE regulations.

1.5 Overarching Goals

The IRA Home Energy Rebates provide a once-in-a-generation opportunity to deliver innovative efficiency and electrification programs to households across the United States. The overarching goal of the Home Energy Rebate programs is to accelerate the transition to more affordable, efficient, resilient, and low carbon homes through the following long-term outcomes:

6 42 U.S.C. 18795.

7 42 U.S.C. 18795a.

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• Well-established exemplary and innovative efficiency and electrification programs.

The program will achieve this through increased awareness and effective marketing to homeowners, adoption of innovative tools that streamline program experience, an expanded and sustained workforce that meets consumer demand, and effective integration of existing programs.

• Lower energy burden for low-income households and disadvantaged communities.

State programs will evolve and expand to meet the needs of all homes across the United States, with significant use of rebates by low-income households and disadvantaged communities.

• Proven value streams and roles for sustained investments to continue market transformation. A successful program will prove the business case and catalyze a sustained increase in supplier participation and consumer demand for energy efficient and efficient electrification upgrades, including ongoing access to upgrades for low-income households and disadvantaged communities, while showcasing how a combination of federal, utility, private, and public funds provide value to households and local communities during the transition to a clean energy economy.

• Reduced pollution from buildings and support for the clean energy economy. The program will reduce pollution from building energy use, including harmful indoor air pollution, and support the clean energy economy through energy efficiency.

States are encouraged to develop their own additional goals, outcomes, and objectives for their programs based on each state’s priorities, climate zone, utility costs, etc.

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2.0 Definitions and Acronyms

2.1 Definitions

• 80% and 150% Area Median Income (AMI). Values calculated by household size of the median income of the area in which the individual or family resides, as reported by the Department of Housing and Urban Development.8

• Administrative costs. Costs related to planning, administration, and technical assistance of Home Energy Rebate programs. Allowable costs include the following types of activities:

o Program planning and design o State program staff o Development of tools and systems, including websites, applications, rebate processing, and reporting o Program evaluation and consumer satisfaction surveys o Program monitoring and audits o Consumer protection functions including resolution procedures, data review, contractor management, installation standards, continuous improvement o Marketing, education, and outreach, including the funding of local governments and place-based organizations to assist with these activities o Implementation contract costs not including rebates and costs for activities directly related to delivery of rebates o Contractor training o Activities to improve access to rebates, facilitating leverage of private funds and financing mechanisms (e.g., loan loss reserves, interest rate reductions) where beneficial to efficiency and/or electrification projects o Technical assistance

• Aggregator. An entity that engages with multiple single-family homes and/or multifamily buildings for the purpose of combining or streamlining projects as allowed by the state.

• Baseline energy consumption. The whole-home energy usage in a kWh or kWh equivalent prior to the upgrade.

• BPI-2400. BPI-2400-S-2015 (or a subsequent version approved by DOE for use in 50121) is the standard of Building Performance Institute (BPI) that specifies the requirements and process for the calculation of standardized predicted energy savings for a building.9

• Building. The structure where the rebated improvements will be made including single and multifamily buildings. For multifamily buildings, building refers to the entire building and not an individual dwelling unit within that building.

8 HUD publishes income limit information annually at https://www.huduser.gov/portal/datasets/il.html#2023_faq.

DOE intends to make the data table available electronically for state reference via an application programming interface (API).

9 BPI 2400 Standard: Standard Practice for Standardized Qualification of Whole-House Energy Savings Predictions by Calibration to Energy Use History.

http://www.energy.gov/scep https://www.huduser.gov/portal/datasets/il.html#2023_faq https://www.bpi.org/sites/default/files/BPI-2400-S-2015%20%28The%20Delta%20Standard%29%202015-12-07.pdf https://www.bpi.org/sites/default/files/BPI-2400-S-2015%20%28The%20Delta%20Standard%29%202015-12-07.pdf

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• Categorical eligibility. The determination that a household meets income requirements by verifying household participation in another state or federal program that (1) includes income qualification thresholds at least as stringent as the relevant Home Energy Rebates threshold and (2) updates participant lists through income verification at least every two years.

• Claimant. The entity requesting a Home Energy Rebate for a home upgrade.

• Contractor. An entity hired to perform assessments and install upgrades as allowed by the state.

• Disadvantaged community. A group of households characterized by the state. By default, the definition of a disadvantaged community for the Home Energy Rebates is a low-income household located within an area identified by the Climate and Economic Justice Screening Tool (CEJST).10

• Dwelling unit. A building structure wherein a single household resides. Examples of a dwelling unit may include a single-family home, an apartment, or condominium unit in a multifamily building.

• Eligible entity. For 50122, a low-income household (less than 80% AMI), a moderate-income household (80%-150% AMI), or an individual or entity that owns a multifamily building not less than 50% of the residents of which are low- or moderate-income (LMI).

• Eligible entity representative. A governmental, commercial, or nonprofit entity carrying out a qualified electrification project on behalf of an eligible entity for 50122.

• Eligible rebate recipient.

1. 50121: Homeowner, aggregator, or multifamily building owner.

2. 50122: For each dwelling unit or multifamily building, either an eligible entity or an eligible entity representative.

• Energy savings. Post-retrofit energy consumption subtracted from the baseline energy consumption.

• Generation technologies. Onsite solar photovoltaic, combined heat and power, or other renewable energy system.

• Household. The occupant(s) living in a dwelling unit.

• Implementer. A state-selected entity that works on behalf of the state to provide efficiency and/or electrification programs.

• KWh equivalent. A metric that reflects the energy savings of all fuels in the project using the energy conversion of non-electric fuels to kWh on a BTU-equivalent basis as defined in Section 4.3.2 of BPI 2400-2015.

• Low-income household. A household below 80% AMI.11

10 Available at https://screeningtool.geoplatform.gov/en/#3/33.47/-97.5.

11 Section 50121 of the IRA defines ‘‘low- or moderate-income household’’ to mean an individual or family the total annual income of which is less than 80% of the AMI. 42 U.S.C. 18795(d)(3). Section 50122 of the IRA defines ‘‘low- or moderate-income household’’ to mean an individual or family the total annual income of which is less than 150% of the AMI. 42 U.S.C. 18795a(d)(4). For clarity and consistency, DOE is using the terminology and definitions provided in Section 2.1 throughout the document.

https://screeningtool.geoplatform.gov/en/#3/33.47/-97.5

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• Moderate-income household. A household between 80% and 150% AMI.

• Low-income multifamily building. A building with at least 50% of households with incomes less than 80% AMI (<80%).

• Major upgrade. Energy usage, equipment, technologies, and services related to heating and cooling, envelope, and water heating end uses.

• Moderate-income multifamily building. A building with at least 50% of households with incomes less than 150% AMI (<150%).

• Multifamily building. A single building containing at least two dwelling units used for residential purposes. Commercial uses that are not eligible include but are not limited to hotels/motels, dormitories, assisted living facilities that include hospital amenities, and correctional facilities. For mixed-use buildings, a state may elect to treat the residential portion of the building as a multifamily building.

• Open-Source. A source code that is made freely available for possible modification and redistribution, for use by the community at large.

• Payment rate. For the Section 50121 measured path, the method for calculating the amount of rebate as described in Section 3.1.2.

• Point of sale. The provision of a Section 50122 rebate as an instant discount when the recipient of the rebate pays (or authorizes an entity to access a rebate on their behalf) for the qualified upgrade, improvement, and/or service (e.g., when purchasing in-store, through a distributor, at wholesale onsite, or online, or when invoiced by a contractor for services rendered).

• Post-retrofit energy consumption. The whole-home energy usage in a kWh or kWh equivalent after the upgrade is complete.

• Portfolio of Homes. A group of two or more homes considered collectively for purposes of the 50121 measured program path.

• Program participants. Aggregators, claimants, contractors, eligible rebate recipients, and implementers.

• Qualified electrification project. A project funded by an IRA Section 50122 rebate that meets the requirements of Section 4.2.2 of this document.

• Rebate funds. Federal dollars used for:

1. Reimbursement or providing a cost discount for eligible upgrades based on a) energy savings, b) pre-determined qualified upgrade amounts, or c) total project costs.

2. Activities directly related to delivery of rebates to eligible rebate recipients including:

- Equipment, tools, models, and procedures used to assess a home and estimate energy savings

- Equipment, tools, models, and procedures used to verify installations and perform quality control (QC) including inspections and reporting

- Customer service support

- Consumer protection functions including consumer feedback, project verification and inspections

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- Income eligibility

- Disadvantage community delivery, including targeted marketing and outreach

- Disadvantaged community incentives (see Sections 3.1.4 and 4.1.4)

- Integration with existing programs, home energy assessments, and project scoping.

• Rebate program launch. The point at which the state begins accepting rebate claims.

• Single-family home. A detached one-family dwelling or multiple single-family dwellings (townhouses) that have independent mechanical systems (e.g., heating, cooling, water heating, and ventilation) for each dwelling unit. Buildings with two or more units are considered multifamily. States may request DOE approval to apply different designations if the state’s jurisdiction has a significant number of buildings with unique characteristics.

• State. For the purposes of this document, means, collectively or individually, the 50 states, the District of Columbia, the Commonwealth of Puerto Rico, the U.S. Virgin Islands, American Samoa, Guam, and the Commonwealth of the Northern Mariana Islands.

• Tenant. Individual or household residing in a rental unit.

• Third party. An organization conducting work on behalf of a State’s Home Energy Rebates program that has no financial or professional conflict of interest.

• Total grant funding. The total amount of funds allocated to a state over the duration of the program.

• Total project cost. The total cost of all upgrades within a completed project invoice inclusive of any rebated amount.

• Upgrade. A single energy improvement to a dwelling unit or multifamily building that is a distinct and separable part of the overall scope of work of a home efficiency or electrification project.

2.2 Acronyms

• ALRD. Administrative and Legal Requirements Document

• AMI. Area Median Income

• CFR. Code of Federal Regulations

• CEJST. Climate and Economic Justice Screening Tool

• DOE. U.S. Department of Energy

• FARC. Financial Assistance Reporting Checklist

• FERC. Federal Energy Regulatory Commission

• FPL. Federal Poverty Level

• GHG. Greenhouse Gas

• HUD. U.S. Department of Housing and Urban Development

• IRA. Inflation Reduction Act

• IRS. U.S. Internal Revenue Service

• LIHEAP. Low Income Home Energy Assistance Program

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• LIHTC. Low-Income Housing Tax Credit

• LMI. Low- or Moderate-Income

• M&V. Measurement and Verification

• OMB. U.S. Office of Management and Budget

• PAGE. Performance and Accountability for Grants in Energy

• QA. Quality Assurance

• QC. Quality Control

• QEP. Qualified Electrification Project

• QPL. Qualified Products List

• RFI. Request for Information

• SMI. State Median Income

• SNAP. Supplemental Nutrition Assistance Program

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3.0 Home Efficiency Rebate Programs (50121)

This section of the document provides program requirements for the Home Efficiency Rebates (IRA Section 50121).

3.1 Use of Funds and Rebate Eligibility

3.1.1 Program Requirements: Use of Funds

Administrative funds12 as defined in Section 2.1 must not exceed 20% of the total grant funding over the total duration of the program, which will end when all funds are expended by the state or September 30, 2031, whichever occurs sooner.13

Administering and implementing whole-home efficiency projects is complex, high-touch, and often involves overhead costs greater than 20% of a program budget. These are costs directly related to a project that are 1) not generally recognized as administrative and 2) also not included in the rebate to recipients. For example, these could include costs for home assessments and energy audits, modeling, verifying income eligibility, project quality assurance (QA), and project-related reporting conducted by the contractor.14

States may request to use a portion of rebate funds for these project-related costs; however, additional funds for project-related costs should only be requested after all other opportunities to reduce costs or apply alternative funding sources have been applied; DOE cannot approve use of funds for administrative costs above the 20% statutory cap. For example, utilities, third-party organizations, or agencies may provide funding for home energy audits. DOE will provide assistance to states specifically in support of identifying program implementation cost reductions.

States must provide an additional detailed description and justification for these costs within the budget justification workbook, including how states have worked to minimize this amount. This will be evaluated by DOE and a determination of allowability will be given as part of the award.

States must budget for, track, and report quarterly to DOE on expenditures across administrative and rebate funds as part of award monitoring. See ALRD, Part V.

3.1.2 Program Requirements: Rebate Conditions and Levels

In general, Home Efficiency Rebates state programs must:

• Provide rebates only for projects that:

o are initiated on or after August 16, 2022,15 o meet all DOE requirements within this document, and o meet any additional requirements determined by the state for their program.

12 Includes awarded administrative funds through Home Energy Rebate Programs Early Administrative Funds ALRD, as applicable.

13 Section 50121 states that a “State energy office that receives a grant pursuant to this section may use not more than 20 percent of the grant amount for planning, administration, or technical assistance” related to the Home Efficiency Rebates. 42 U.S.C. 18795(c)(4).

14 See definition of Rebate Funds in Section 2.1.

15 As stated in IRA Section 50121(c)(1), “[a] HOMES rebate program carried out by a State energy office receiving a grant pursuant to this section shall provide rebates to homeowners and aggregators for whole-house energy saving retrofits begun on or after the date of enactment of this Act and completed by not later than September 30, 2031.”

https://www.energy.gov/scep/articles/home-energy-rebate-administrative-and-legal-requirements-document

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• Provide rebates only for completed projects.16

• Provide rebates for heating, cooling, and water heating products only if they are certified as meeting the ENERGY STAR product criteria in effect on the date of installation.

However, where there is no ENERGY STAR certification for central heating and cooling systems or central water heating systems suitable for multifamily buildings, states may propose to use available systems subject to an alternative equipment efficiency standard for DOE review and approval.

• Make increased rebate levels available to low-income households at less than 80% AMI.17

• Provide and enforce use of an acceptable method to verify that (a) a participating single-family household’s income is less than 80% AMI,18 and (b) a participating multifamily building has at least 50% of households with incomes less than 80% AMI.19

• Determine whether the multifamily building qualifies as a low-income building (i.e., the building has at least 50% of households with incomes less than 80% AMI). If the building is a low-income building, a state may calculate the “per dwelling unit” value at the less than 80% AMI amount for all units. Alternatively, a state may calculate the “per dwelling unit” value at the less than 80% AMI amount in proportion to the ratio of LMI to non-LMI units.

• Allow categorical eligibility determinations based on other federal programs that meet the income thresholds, as listed in the supplemental document Federal Programs Approved for Categorical Eligibility.

• Maintain a list of state or other programs that meet the income thresholds and provide reliable income verification that the state uses for categorical eligibility.

• Retain a copy of the invoice for work performed at the eligible address. The invoice must show the specific work performed, the address where the work was performed, the name and contact information for the contractor(s) performing the work, the dates on which the work was performed, the total project cost prior to the rebate, and the rebate amount.

Additional requirements apply if the work is being funded by rebates from more than one source. See Section 3.3.2.

• Ensure the rebate does not exceed the total project cost when combined with other permissible/eligible program rebates accepted by the eligible rebate recipient (i.e., total rebate funding must not exceed the total project cost).

16 Point of sale rebates is not a requirement of 50121; however, DOE is providing and recommending workflows that would apply rebates that result in a purchase price reduction. Additionally, programs can be structured so that an aggregator, implementer, or contractor may carry the rebate until savings are modeled or measured and the state is able to provide a rebate on the completed project amount. For 50121 modeled energy savings projects in low-income multifamily buildings, states may request approval from DOE to pay rebates in stages that align with completion of portions of the project. See Section 3.1.3 Program Requirements: Low Income Homes for additional details.

17 42 U.S.C. 18795(c)(2)(C) and (d)(3).

18 HUD calculates median family income levels for areas across the United States. HUD has a website available here where users can view these calculations. Information about HUD’s methods for calculating AMI statistics is available here. HUD typically updates these values in March or April of each year; however, due to impacts of the COVID-19 pandemic on data collection, HUD released its 2023 income limits in May 2023.

19 If requested, DOE will work closely with states to develop methods. Additional information can be found in the Technical Information, Best Practices, and Implementation Recommendations.

http://www.energy.gov/scep https://www.energy.gov/scep/articles/ira-50121-50122-home-energy-rebates-categorical-eligibility-list https://www.energy.gov/scep/articles/ira-50121-50122-home-energy-rebates-categorical-eligibility-list https://www.huduser.gov/portal/datasets/il/il2022/select_Geography.odn https://www.huduser.gov/portal/datasets/il/il22/Medians-Methodology-FY22.pdf https://www.energy.gov/scep/recommendations-program-administrators

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• Ensure that rebates are not applied to specific energy efficiency upgrades funded with other federal grants or rebates.

• Communicate with retailers and distributors to ensure they provide a process for handling returns of rebated appliances as applicable. This process must be included in the participation agreement referenced in the Consumer Protection Plan.

• Ensure that upgrades benefit only the residential portion of a mixed-use building where the state has defined the residential portion of the building as a multifamily building.

Upgrades that benefit any portion of the commercial space are not eligible for rebate.

• Ensure that a single address cannot receive both a measured and a modeled rebate under 50121.

• Ensure that a single address cannot receive a rebate from both HOMES (50121) and Electrification (50122) for the same measure. To implement this, the DOE database will not allow the following:

o No electrification rebates will be made for addresses that are in the process of receiving a rebate for measured savings (and vice versa), with the exception of rebates for electric load service centers or electric wiring.

o No electrification rebates will be made for addresses where a modeled rebate has already been given for that upgrade.

3.1.2.1 Modeled Home Efficiency Rebates

Modeled Home Efficiency Rebates is a program path within Section 50121, using calibrated home energy models consistent with the BPI-2400 standard to estimate energy savings prior to the upgrades, providing rebates for homes predicted to achieve a minimum of 20% energy savings.

When a state allows rebates using a modeled savings approach, the state must calculate rebate amounts consistent with Table 2 and based on (1) estimated energy savings calculated reflecting only completed energy improvements20, (2) household income level, (3) total project cost reflected in final invoice, and (4) home type consistent with the definitions in Section 2.1.

Table 2. Modeled Savings Rebate Levels

Single-Family

Modeled Energy Savings

Income Level Rebate Amount

20%-34% Less than 80% AMI* Lesser of $4,000 or 80% of project cost

80% AMI and greater Lesser of $2,000 or 50% of project cost

35% or greater Less than 80% AMI* Lesser of $8,000 or 80% of project cost

80% AMI and greater Lesser of $4,000 or 50% of project cost

20 For 50121 modeled energy savings projects in low-income multifamily buildings, states may request approval from DOE to pay rebates in stages that align with completion of portions of the project. See Section 3.1.3 Program Requirements: Low Income Homes for additional details.

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Multifamily

Modeled Energy Savings

Income Level Rebate Amount

20%-34%

A building with at least 50% of households with incomes less than 80% AMI*

Lesser of $4,000 per dwelling unit or 80% of project cost

A building with at least 50% of households with incomes 80% AMI and greater

$2,000 per dwelling unit up to $200,000 per building

35% or greater

A building with at least 50% of households with incomes less than 80% AMI *

Lesser of $8,000 per dwelling unit or 80% of project cost

A building with at least 50% of households with incomes 80% AMI and greater

$4,000 per dwelling unit up to $400,000 per building

*States may increase the maximum amount available for low-income households upon approval from DOE.21 See Section 3.1.3 for details.

3.1.2.2 Measured Home Efficiency Rebates

Measured Home Efficiency Rebates is a program path within Section 50121, using a DOE-approved open-source measurement and verification (M&V) methodology to measure home energy savings post-installation of the upgrades, providing rebates for homes or a portfolio of homes that achieve measured energy savings of at least 15%. When a state allows rebates using a measured savings approach, the state must calculate rebates consistent with Table 3 and based on (1) the reported energy savings measured through a DOE-approved open-source advanced M&V software, (2) household income level, (3) total project cost reflected in the final invoice or a payment rate as defined in Table 3, and (4) home type consistent with the definitions in Section 2.1.

Table 3. Measured Savings Rebate Levels

Single-Family

Measured Energy Savings

Income Level Rebate Amount

15% or greater Less than 80% AMI kWh, or kWh equivalent, payment rate equal to $4,000 for a 20% reduction of energy use for the average home in the state or 80% of project cost*t

21 42 U.S.C. 18795(c)(3).

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80% AMI and greater kWh, or kWh equivalent, payment rate equal to $2,000 for a 20% reduction of energy use for the average home in the state or 50% of project cost*

Multifamily

Measured Energy Savings

Income Level Rebate Amount

15% or greater

A building with at least 50% of households with incomes less than

80% AMI

kWh, or kWh equivalent, payment rate equal to $4,000 for a 20% reduction of energy use per dwelling for the average multifamily building in the state or 80% of project cost*t

A building with at least 50% of households with incomes 80% AMI and greater kWh, or kWh equivalent, payment rate equal to $2,000 for a 20% reduction of energy use per dwelling for the average multifamily building in the state or 50% of project cost

* Per statute, the measured energy saving of the home or portfolio of homes must achieve 15% savings, but the calculation of the rebate is based on a 20% reduction of average home energy use of an in the state.

t States may increase the maximum amount available for low-income households upon approval from DOE.22 See Section 3.1.3 for details.

3.1.3 Program Requirements: Low-Income Homes

Low-income households are important populations for the Home Efficiency Rebates. IRA Section 50121 provides larger rebates for single-family homes occupied by low-income households (below 80% AMI)23 and allows states to request authority to provide even larger rebates – up to 100% of project costs – to allow meaningful retrofits of low-income homes.24 In addition, Section 50121 provides incentives to encourage contractors and aggregators to serve disadvantaged communities.25 The inclusion of these statutory components demonstrates the importance of ensuring low-income households and communities have access to rebates as an integral part of a Section 50121 program’s design.

Nonetheless, structural barriers can – and do – prevent low-income households from benefitting from rebate programs. Previous evaluations have shown that existing energy efficiency programs have not served low-income households equitably without reserved funding, with only 13% of residential energy efficiency program funds going to low-income households, well below the presence of low-income households in the markets for these programs.26

22 42 U.S.C. 18795(c)(3).

23 Compare 42 U.S.C. 18795(c)(2)(C) with 42 U.S.C. 18795(c)(2)(A).

24 42 U.S.C. 18795(c)(3).

25 42 U.S.C. 18795(b)(5).

26 “Meeting the Challenge: A review of Energy Efficiency Program Offerings for Low-Income Households” by the American Council for an Energy-Efficient Economy. Available at https://www.aceee.org/research-report/u2205.

https://www.aceee.org/research-report/u2205

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Similarly, multifamily buildings provide housing for over 19 million low-income households nationally, or over 15% of all U.S. households.27 In addition to low-income single-family homes receiving distinct treatment in the statute, Section 50121 identifies low-income multifamily buildings for specific rebate thresholds.28 Delivering upgrades for low-income multifamily buildings alongside critical periods of recapitalization or refinance requires a significantly longer planning, design, and construction process than energy upgrades for single-family homes.29 Building owners may also be less incentivized to make whole-building modifications where the cost savings accrues to the tenants with little monetary benefit to the owner (the “split incentive” problem).30 Historically, the multifamily sector has been significantly underrepresented in energy efficiency program accomplishments.31

To ensure low-income single-family and multifamily homes – two building categories specifically called out in the statute – are successfully served through the Home Efficiency Rebates, states must reserve a portion of their rebate funding to serve these households. Specifically, at a minimum, each state must:

• Allocate a percentage of its rebate funding for each of the rebate programs in line with its percentage of low-income households. Nationally, approximately 40.3% of U.S.

households are eligible for rebates as low-income households. Appendix A contains information on the percentage of low-income households for each state and the associated minimum dollar amount that must be allocated to serve low-income households in each state.32

• Allocate at least 10% of its rebate funding to serve low-income multifamily buildings. This allocation must be additional to and separate from the allocation for low-income households. The table in Appendix A contains the dollar amount of the 10% minimum allocation of rebate funding that must be reserved to serve low-income multifamily buildings in each state.

• Design each rebate program to be capable of delivering the rebate allocations to low-income single-family and multifamily households. States must ensure that their program implementers make a focused effort to deliver the volume of projects to low-income households needed to spend this rebate allocation.

• If a state has failed to disburse the rebate funds allocated to low-income households within five years of receipt of its total formula funding allocation, it may request that DOE authorize the state to reallocate those funds to households at other income levels. DOE

27 Analysis of ACS 2020 data from the LEAD tool. Data available at https://www.energy.gov/scep/slsc/lead-tool.

28 Compare 42 U.S.C. 18795(c)(2)(C) with 42 U.S.C. 18795(c)(2)(B).

29 “Capturing the Value of Energy Upgrades in Affordable Multifamily Homes: How Policy Makers Can Pave the Way to Efficiency” by the Natural Resources Defense Council. Available at https://www.nrdc.org/sites/default/files/energy-upgrades-affordable-multifamily-homes-policymakers.pdf.

30 “Building Decarbonization Solutions for the Affordable Housing Sector” by the American Council for an Energy- Efficient Economy. Available at https://www.aceee.org/sites/default/files/pdfs/u2204.pdf.

31 “More Savings for More Residents: Progress in Multifamily Housing Energy Efficiency” by the American Council for an Energy Efficient Economy. Available at https://www.aceee.org/sites/default/files/publications/researchreports/u1702.pdf.

32 This minimum allocation of rebates will facilitate direct benefits to low-income households in relative proportion to their representation in the state. States are encouraged to go above and beyond this minimum allocation to target rebate recipients more selectively or to increase the amount of rebates reserved for low-income households and disadvantage communities.

http://www.energy.gov/scep https://www.energy.gov/scep/slsc/lead-tool https://www.nrdc.org/sites/default/files/energy-upgrades-affordable-multifamily-homes-policymakers.pdf https://www.nrdc.org/sites/default/files/energy-upgrades-affordable-multifamily-homes-policymakers.pdf https://www.aceee.org/sites/default/files/pdfs/u2204.pdf https://www.aceee.org/sites/default/files/publications/researchreports/u1702.pdf

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• Not prior to 2029, if a state has failed to disburse the rebate funds allocated to low-income households and has less than 10% of unallocated rebate funds remaining, it may request that DOE authorize the state to reallocate those funds. DOE will reallocate the funds upon a demonstration of the state’s good faith efforts at distributing its low-income multifamily rebate allocation.

• Ensure a homeowner or building owner is eligible for low-income rebate levels.

• Verify that (1) a participating single-family household’s income is less than 80% AMI,33 and

(2) a participating multifamily building has at least 50% of households with incomes less than 80% AMI. Income must be verified at the household level (e.g., income cannot be “estimated” based on demographic information).

• Allow categorical co-enrollment based on other federal programs that meet the income thresholds, as listed in the supplemental document Federal Programs Approved for Categorical Eligibility.

As authorized by statute, a state may…