With the 2022 Inflation Reduction Act (IRA) and the Bipartisan Infrastructure Law (BIL), the Biden administration delivered once-in-a-generation levels of funding for clean energy. The IRA alone directs nearly $400b in federal funding to incentives, grants, and loan guarantees that will support the work of transforming our energy system and reducing carbon emissions across every sector of American life.
The Biden administration has rightly structured much of this funding to catalyze private investment and spur equitable market transformation. But as these federal dollars begin to flow, the big question facing States, utilities, and community organizations is how to maximize the impact of IRA funding.
The opportunities are as vast as they are urgent. A recent report found that 90% of all counties in America have experienced a climate-related disaster in the last decade. This is where we can lean into VEIC’s 37 years of experience designing and implementing policies and programs that have transformed energy markets from Vermont to Hawaii. Here are the top three Best-Practices that inform our approach to market transformation:
First, make sure your program serves the people who need it most.
The energy transition presents an unprecedented opportunity to redress longstanding environmental injustices and make energy more affordable for millions of Americans. This is the promise of clean energy, but in order to actually reduce unfair energy burdens, we will need programs built with collaboration and intentionality. Since 2017, when we started tracking results through our equity metrics framework, VEIC has delivered 47% of our program benefits to historically disadvantaged communities or communities with high energy burdens. As states implement HOMES and HEEHRA residential rebate programs with IRA funding, they will be required to show that at least 40% of the funding serves communities with low- and moderate-incomes. Well-designed programs will be essential.
Second, prioritize planning.
To get program design right, it is critical to prioritize planning. Decisions made in the early stages will determine whether or not a program catalyzes durable markets for efficient products. A holistic approach starts with engaging local partners to identify the unique factors that affect a program’s success. It’s important to keep the design simple and consistent and to cultivate brand trust with marketing and outreach that reaches the people you want to serve. Trained customer service personnel can answer questions, build confidence in the program, and provide specialized services like translation for non-native speakers.
In California, where VEIC works on TECH Clean California, a statewide program to accelerate the adoption of clean space and water heating, thorough planning enabled us to launch a statewide grant program in just three months. Quick Start Grants have so far provided $4 million to test scalable solutions to overcome market barriers to heat pump space and water heating adoption—86% of this funding supports solutions that will benefit low-income households or disadvantaged communities. Click here to read more about the Quick Start Grant program.
Third: don’t forget the midstream!
As we all saw during the COVID-19 pandemic, supply chains are only as strong as their weakest link. Working directly with distributors can help states see the field, overcome gaps in product availability, and ensure ongoing technical support for new products. While many of the rebates for the IRA HEEHRA rebate program will flow directly through large retailers, vetted and trusted midstream suppliers can provide another layer of consumer protection. A qualified contractor network can stay current on the most recent technologies, deliver consistent results, and grow local economic opportunities.
In Vermont, a heat pump program built around a trusted brand, qualified contractor network, and well-designed midstream incentives achieved a 1000% increase in heat pump adoption in just seven years. Click here to read our report about the policy, regulatory, and program frameworks driving heat pump market transformation across the Northeast. Â Â
The IRA bill represents a historic opportunity for communities across the U.S. to electrify our homes and businesses. But once the sugar rush of government funding subsidies, States must ensure that they have created durable demand for decades to come.