DOE Guidance for Home Energy Rebates Adopts Recommendations for Equity

On July 27, the Department of Energy released long-awaited guidance for the Home Energy Rebate Programs, outlining requirements applicable to the states and territories that will administer these programs. (Separate guidance is forthcoming for Tribes.)

We previously shared our recommendations to DOE to implement the Home Energy Rebates in a way that prioritizes equity and environmental justice. Many of our recommendations were incorporated into the new guidance as either requirements or recommendations, which are discussed below. 

  • Set-asides for low-income and disadvantaged communities: While DOE declined to require states to reserve 100 percent of the rebates for low-income and disadvantaged communities, we are pleased that DOE has established a minimum requirement for states to allocate a percentage of rebate funds in line with its percentage of low-income households. For example, in California, 40.7% of households are considered low-income (with an income less than 80% of Area Median Income), so at least 40.7% of the state’s total allocation of rebate funds (approximately $292 million) must be allocated for low-income households. Separately, DOE followed our recommendation to require states to establish a set-aside for low-income multifamily buildings, although the agency is requiring a 10 percent allocation (in contrast to our recommendation of 20 percent). In California, that means at least an additional $17.5 million in rebate funds must be allocated for low-income multifamily buildings.
  • Streamline income verification: States must allow categorical eligibility based on other Federal programs with compatible income thresholds, including Medicaid and the Supplemental Nutrition Assistance Program, and are encouraged to allow applicants to establish eligibility through a variety of means, including documentation, enrollment in State or local programs, and self-attestation.
  • Clearly identify disadvantaged communities: The DOE guidance does not establish a set-aside specifically for disadvantaged communities, but does require states to address delivering rebates and ensuring benefits to disadvantaged communities as part of each state’s mandatory Community Benefits Plan. Disadvantaged communities may be identified either using the Climate and Economic Justice Screening Tool developed by the White House, or states may apply for DOE approval to apply their own definition and mapping tool.
  • Coordination with other programs: States are strongly encouraged to design their rebate programs to integrate with related existing programs and combine effectively with other funding sources, including other federal funding, tax credits, and funding from other state, local, or utility programs.
  • Best practices for multifamily affordable housing: While only the section 50122 home electrification rebates are required by statute to be provided at the point of sale, DOE encourages states to structure section 50121 home efficiency rebate programs so that aggregators, implementers, or contractors can carry the rebate until savings are modeled or measured, at which point the state can provide a rebate for the completed project. DOE also provides recommended workflows that would apply rebates resulting in a purchase price reduction. Furthermore, the guidance clarified a number of ambiguities about how limitations and incentives would apply in the multifamily building context, such as the $14,000 limit applying on a per-dwelling unit basis, for the duration of the program. States will have the discretion to establish maximum installation incentives for multifamily buildings based on either dollar amount per building or number of claimable dwelling units.
  • Robust tenant and consumer protections: DOE’s guidance for both rebate programs contain important requirements for low-income rental units intended to protect tenants. For at least two years after receiving rebates, building owners must continue to rent to a low-income tenant, not evict a tenant to obtain higher rent tenants, and not raise the rent of any tenant in the building as a result of the rebate-assisted energy improvements (except to recover actual increases in property taxes or specified operating expenses and maintenance costs). If the property is sold within two years of receiving a rebate, these conditions must be part of the purchase agreement and apply to the new owner. If an owner does not comply, they must refund the rebate. Another critical consumer protection recommended in our comments and adopted by DOE is the use of approved qualified contractor lists. As part of each state’s required Consumer Protection Plan, the state must describe how the program will develop a qualified contractor list and what qualifications contractors will be held to (including credentials, training requirements, and labor standards). Other consumer protection measures required in the guidance include home assessments and quality assurance protocols.
  • Program evaluation and equity measurement: DOE requires states to collect certain information and either participate in DOE-led impact and process assessments or conduct their own such assessments that meet DOE’s requirements. States will be required to collect data including whether the rebate was used in a disadvantaged community or for a low- or median-income household, and if the home is new or existing construction, or occupied by a renter or owner.
  • Transparent and accessible information: States must describe an outreach and education strategy including planned activities for both household and contractor outreach, such as outreach partnerships (e.g., with local governments, community-based organizations, labor unions) and channels (e.g., digital ads, direct mailings) and educational materials (program website, fact sheets). In addition, states must make their required Community Benefits Plan and Consumer Protection Plan accessible on a public website. States must also publish the Community Benefits Plan’s milestones and progress towards milestones.
  • Required community engagement: The Community Benefits Plan that all states are required to submit for approval from DOE includes key community engagement components. Most notably, the Community Benefits Plan must include at least one public input session to solicit input on the state’s proposed deployment plan and also explain how it will continue to solicit and respond to community feedback during the program. Even better, the state is required to describe how solicited input was used in its program design. DOE also encourages states to partner with and provide funding to community-based organizations, labor unions, and other stakeholders to engage with underserved households and disadvantaged communities throughout the program.
  • Advance a diverse workforce: Each state’s required Community Benefits Plan must describe how the state will work with “responsible contractors who invest in ongoing workforce education and training and ensuring jobs are of sufficient quality to attract and retain skilled workers.” If the state is not also applying for a grant for contractor training under section 50123 of the Inflation Reduction Act, then the state must also “describe how it is supporting education and training of both new and incumbent workers” to meet the needs of the rebate programs. In addition, the Community Benefits Plan must include a section on how Diversity, Equity, Inclusion and Accessibility (DEIA) objectives will be addressed, including how the state will work with underrepresented businesses and training organizations that serve workers who face barriers to accessing quality jobs. Examples of potential DEIA actions provided in the guidance include committing to partnering with minority- or women-owned businesses to deliver rebate-funded home energy upgrades and partnering with workforce training programs serving people with disabilities, returning citizens, opportunity youth, and veterans.

This guidance establishes a strong baseline for the Home Energy Rebate Programs, and now the spotlight turns to states. It is essential that State Energy Offices reach out to environmental justice and frontline communities and incorporate their priorities when designing programs. DOE’s program requirements function as a floor, and states seeking to meet more ambitious or equity-focused climate and energy goals should consider how they can exceed the guidance’s minimum requirements. For example, some states may be well positioned to allocate 100 percent of rebates to low-income and disadvantaged communities, prioritize renters or communities with the most energy burden, or increase the set-aside for multifamily affordable housing. In addition, many critical details remain to be filled in at the state level, especially regarding the details of each state’s Community Benefits Plan and Consumer Protection Plan, including how the tenant protections will be enforced. We will continue to work with our partners to support equitable implementation of the Home Energy Rebates Programs in this next phase.