The landmark Inflation Reduction Act (IRA) was signed into law in 2022 and is still being implemented. And contractors who specialize in energy-efficient HVAC, solar, lighting, or plumbing installations are already making plans to capitalize on the largest federal investment in residential electrification and decarbonization programs in history.
These contractors are looking to expand or diversify their businesses through two IRA residential energy-efficiency rebate programs: Home Efficiency Rebates (HER, formerly HOMES) and Home Electrification and Appliance Rebates (HEAR).
Together, these programs will give single-family and multifamily homeowners $8.8 billion in rebates for home energy projects and purchases of ENERGY STAR equipment and appliances. IRA programs also offer millions of dollars in direct funding for contractors, including:
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The Training for Residential Energy Contractors Program, which provides $200 million for states to train, test and certify contractors for their HER and HEAR programs.
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The opportunity to perform all of the installation services in a home energy project and potentially supply the appliances or equipment used in the project.
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Through the Low-Income Communities Bonus Credit Program, there will be opportunities for customers who previously couldn’t afford to do a project that are not able to make those upgrades. This could expand the potential customer audience size for contractors.
There are also IRA tax credits that benefit contractors, including:
- The 45L New Energy Efficient Home Credit, which provides up to $5,000 in credits for new home construction or major residential retrofits.
- The 179D Energy Efficient Commercial Buildings Deduction, which offers up to $5 per square foot in credits for initiatives that reduce energy use.
In addition, because HER and HEAR are targeted to low- and moderate-income homeowners , they create an expanded market for contractors. You can now target customers who normally wouldn’t be able to afford upgrades.
Of course, like any large federal program, there are many moving parts and plenty of questions that need to be answered when it comes to the IRA. Here’s what we know so far about how contractors can capitalize on IRA, HER, and HEAR opportunities.
What the states are doing
HER and HEAR will be administered by state energy offices (SEOs). Each SEO has until Jan. 31, 2025 to apply for HER and HEAR funding . There will also be separate programs for American Indian Tribes.
Less than eight months before the deadline, 17 states or U.S. territories had submitted their HER funding applications. States can design their own HER programs, but the applications have to be reviewed by the Department of Energy (DOE) to ensure each program maximizes benefits for consumers. New York was the first state to receive DOE approval and begin distributing HER rebates to residents.
SEOs must also create criteria for contractors who want to participate in HER and HEAR programs, and maintain a list of approved contractors . To find out how you can participate, including qualifying for the IRA contractor training program, contact your state SEO.
The role of Snugg Pro
Snugg Pro, an energy auditing and productivity program that provides comprehensive solutions for contractors, can be a valuable tool for navigating the brave new world of the IRA, HER and HEAR programs. As of July 2024, Snugg Pro is the first and only platform to be BPI-2400 compliant and approve by the DOE.
Snugg Pro can create easy-to-understand proposals that help you close sales opportunities on the spot. It can also calculate savings for energy upgrades; educate homeowners about comfort, health, and safety upgrades; create detailed cost templates; model HVAC systems; track job-stage pipelines; apply dynamic financing; and manage crew communications.
See for yourself. Discover how Snugg Pro can empower your team with this versatile and accredited platform.