During the upcoming weeks, Recurve is excited to delve deep into the guidance recently released by the Department of Energy (DOE) on the Inflation Reduction Act HOMES and HEEHRA rebate programs. These groundbreaking initiatives hold the potential to reshape the energy landscape and drive significant cost savings for homeowners and the environment alike.  The series of blogs will uncover insights and impressions from the guidance and shed light on how states can implement these programs.  This first post covers application nuances and the quick-start program option to accelerate IRA implementation.

Application Options: Warming Up for the Race Ahead

We all eagerly awaited the release of this guidance; now that it's out, states can find their own pace.  The application process is already open and states can apply at any time. As states step through the requirements, local needs, and opportunities for innovation, they have some options to stage their applications — or get started right away.   

Applications for the state's allocation are due by January 31st, 2025 in order to secure funding.  A state can either (a) request additional funding from its total formula allocation to continue its approved Quick Start program (more on that later!) or (b) submit an application to DOE to administer a full program with a new plan.

States must notify DOE in writing by August 16th, 2024 if they are declining funds. If states decline, funds will be redistributed to other State Energy Offices in accordance with 42 U.S.C. 18795(a)(2)(B), the original distribution formula in the legislation.

While the deadlines for decisions are fixed, DOE left some room for states to stagger key elements of their application process.  Pulling all the application details together from 100+ pages of guidance may look intimidating. Given the expected level of detail, DOE allows certain application components to be in a second application document.  These elements are focused on things that may take a little more time to get "settled" as states deliberate, collaborate, or initiate requests for information or full requests for proposals.  

DOE's staggered application options help close the potential gap in information to prepare a full plan.  States can therefore submit their responses to DOE through one comprehensive document or two complementary documents, the second providing additional details:

• State Application. States may submit a single package of responses for all application requirements. This application would be the comprehensive plan for the program and specify all details as required in the guidance. Approval of this application would secure all funds and allow states to get moving on implementation immediately.
• State Implementation Blueprint. For specific requirements identified by DOE within the guidance, states may submit the State Application and then elect to defer the submission of specific requirements to their State Implementation Blueprint.  

Note that the State Implementation Blueprint must be submitted after receipt of the application award and a minimum of 60 days prior to the planned program launch. DOE will provide the state feedback and approval to proceed. Requirements that can be deferred to the State Implementation Blueprint can be easily located in the guidance as they are marked with an “X” within the application requirements tables.  

With this two-part application option, states can secure funds, and then have time to research and work on some of the critical details of implementation according to their local needs.  States that are ready to move can do so with a single application.

Quick Start Programs: First Out of The Blocks  

Another interesting application alternative in the guidance is the Quick Start option. This option highlights the urgency to deliver the benefits of this historic investment quickly. States can apply to use up to 25% of their allocated funds to establish a Quick Start program for HOMES or HEEHRA, and it appears that DOE will prioritize processing these applications to allow states to get funds moving more quickly to targeted areas of intervention, to leverage existing programs or pilot new designs.

To qualify, a state must include this request in its application and set a goal to launch its rebate program within 2023. A State Application for a Quick Start must include responses to all Application Requirements.  All rebate program requirements, except low-income and low-income multifamily allocations, will apply to Quick Start programs. 

The DOE guidance suggests some interesting starting points for states to utilize the Quick Start Program path.  One option is to leverage existing state program infrastructure to launch a program more rapidly.  This may be well suited to states that already have program models that meet all or most of the guidance criteria; and program administrators are ready to coordinate and collaborate with SEOs. For example, several measured programs are already approved and operating in California with plans that would comply with DOE criteria, including using advanced M&V software to calculate savings.

Another option is to pilot a program using the Quick Start funds before committing the state’s entire funding allocation to a particular program design. This allows states to test the waters on the models envisioned in the guidance, and make a more informed decision on what design will be most impactful in helping them to achieve their goals.  States also have the discretion to limit the scope of the Quick Start program to target specific populations, policy goals, or other state priorities to achieve more rapid rebate delivery and effective, human-centered program designs.  

Throughout the guidance, DOE urges states to prioritize and selectively target low-income households and disadvantaged communities for rebates [SCEP Guidance pg. 15, footnote #30], and this could be another opportunity for Quick Start applications. Using targeting as a best practice aligns with Recurve’s findings demonstrating that customer targeting including energy usage patterns is the key to ensuring that programs help reach the LMI customers who need it most. Meter-based targeting can drive larger bill savings and help mitigate the risk of potentially increasing energy burden from electrification. Identifying and focusing on serving customers with the greatest potential for having good outcomes from an intervention, which is often highly correlated to energy burden, allows the funds to drive maximum impacts and value to participants.

Finally, in the program application requirements section, DOE also gives states the option to use a targeted approach to prioritize reducing greenhouse gas emissions which could be a focal point of a Quick Start initiative. This pathway will be critical for state energy offices that intend to use these funds to complement their existing programs dedicated to state decarbonization goals. 

The Race is On — Set A Pace for Success

The length of the application and the reporting requirements may seem intimidating as one first cracks open the guidance. We are confident that point by point, each requirement has a straightforward solution that will align with a state's goals and comply with DOE's expectations.  The time is now to get planning or just get started on this run.  

In our next post, we’ll dig into the importance of embedded open source Measurement and Verification (M&V) in the guidance.  

Join the Flex Coalition webinar on August 9th for more policy details from the DOE Guidance on IRA HOMES. Register here.