$8.8B energy efficiency rebate program on hold in most states, underway in some

• Twelve states and the District of Columbia have launched rebate programs funded by the Inflation Reduction Act to help homeowners and low-to-moderate income households increase their energy efficiency.
• The Home Owner Managing Energy Savings Act, or HOMES, and the Home Electrification and Appliance Rebates, or HEAR, were allocated $8.8 billion under the IRA that is set to be disbursed, while a similar residential energy efficiency tax credit was ended early by the Republican tax and spending law.
• David Terry, president of the National Association of State Energy Officials, said the association has been “repeatedly” assured by the U.S. Department of Energy that all obligated funds for the rebate program “will ultimately get out the door.” All states except South Dakota applied for the funding and have received conditional awards.

A DOE spokesperson said in an email that the department “is continuing to conduct a department-wide review to ensure all activities follow the law, comply with applicable court orders and align with the Trump administration’s priorities.”

Terry said he is “optimistic at this point” that the administration is working to streamline the program and will then resume negotiations with the remaining states within a framework “that would allow the programs to operate a little bit more cheaply and a little bit more quickly.”

The IRA sets the HOMES and HEAR programs to run either until their funding runs out, or Sept. 30, 2031.

HOMES set aside $4.3 billion in rebates for “whole-home retrofit packages based on the reduction in home energy use,” such as “building envelope upgrades, appliance and HVAC equipment replacement, and installation tasks,” according to the nonprofit Northeast Energy Efficiency Partnerships.

HEAR set aside $4.5 billion “to fund efficient electrification of low- and moderate-income households” with alterations like “appliance upgrades, installation costs, and enabling measures such as upgrading circuit panels, insulation, air sealing, ventilation, and wiring,” NEEP said. Those appliances include heat pumps and heat pump water heaters.

“While many federal energy programs and tax credits have been impacted by recent federal policy changes, this program, which is administered through state energy offices, has remained in development but has run into some roadblocks,” NEEP said.

The Trump administration has been working to claw back funding for other IRA programs, including the Greenhouse Gas Reduction Fund and Solar For All grants. In July, President Trump signed the One Big Beautiful Bill Act, ending the 25D residential clean energy tax credit and the 25C energy efficient home improvement credit after this year.

States are individually responsible for creating the rebate programs to disburse this funding. According to NASEO, 12 states plus D.C. have launched one or both programs, though six — North Carolina, Wisconsin, New York, California, Maine and Colorado — are in a pilot phase.

“One of the reasons a lot of them did pilot phases initially was to work out any kinks, things that might have been unique to a particular part of the state they were working in, or a particular client,” Terry said. He cited Maine, where state officials wanted to offer upgrades for older manufactured housing, and had to find equipment that would “physically fit and work properly in those homes.”

Terry said he sees potential for the program to have nationwide energy efficiency benefits such as providing “good guidance on the bang-for-your-buck of different measures in different types of housing and in different locations,” and by bolstering experience among contractors.

D.C., Georgia, Arizona, Indiana, New Mexico, Rhode Island and Michigan have programs fully up and running. Only Michigan, Wisconsin, D.C., Georgia, Indiana and North Carolina have established both HOMES and HEAR programs — the other states have only launched HEAR.

“Georgia is very active — they're having great success with their rebate program,” Terry said. “Indiana had their program negotiated and approved just before the new administration took office, and launched [in May], and that seems to be going well. And certainly the other states, they're going through the funds pretty quickly.”

Terry said there are variations from state to state “in terms of the particular market they're trying to target,” but “they're largely all trying to target affordable, moderate and lower income households where the benefit belongs. I think that's going well.”

NASEO has issued a recommendation for the requirements associated with these programs to be streamlined, and Terry said that one of the reasons so few agreements were negotiated under the Biden administration is that DOE at the time “put an extraordinary number of requirements on these programs that were not in statute.”

“It made them very complicated to negotiate, and complicated to implement,” he said. “So we, early on in the Trump administration, flagged that streamlining the requirements would be very helpful in terms of bringing down administrative costs. And if you bring down administrative costs, that frees up more money for the rebates.”

There are several states that are waiting for negotiations with DOE to resume but “have one or both of their programs essentially fully prepared … and just need some quick updates and finalization with [DOE], and they'll be ready to launch,” Terry said. “And some of those are relatively large population states. So nationally, [their launch] will certainly have an impact.”