Maine hopes IRA money will get heat pumps to more people, especially in multifamily housing

Maine hopes IRA money will get heat pumps to more people, especially in multifamily housing

Maine is drafting plans for its share of nearly $9 billion in home energy and efficiency rebate funding from the Inflation Reduction Act, with a straw proposal due out by the end of the year for input from contractors and other professionals who will be on the front lines of promoting new and expanded incentives to the public.

The landmark 2022 climate legislation known as the IRA included two programs focused on household rebates for weatherization, electrification and more, aiming to reduce energy use, costs and emissions for low-income families in particular.

Maine and other states are crafting applications to the U.S. Department of Energy that detail how they hope to use the funding on new and expanded incentives. States will have to balance offering larger rebates with ensuring more availability, while navigating overlaps with existing programs and considering new goals.

The IRA programs at issue include $4.3 billion across all states for “energy-saving retrofits” and another $4.5 billion across states and tribes for efficient electric appliances and equipment.

“It’s an unprecedented amount of money to be going to this particular thing of helping people make their homes more modern, cleaner, healthier and cheaper to operate,” said Kristin Eberhard, the senior director of state and local policy with the electrification advocacy group Rewiring America.

Maine, for its part, can get about $36 million from each program — and, under each, must direct a minimum of about $11.5 million to low-income households and another $2.8 million or more to low-income people who live in multifamily housing.

“It’s really transformative,” Eberhard said. “It’s going to have a much bigger impact than anything we’ve seen up to date on those harder-to-reach households.”

Maine energy officials say these groups are already a priority for growing the impact of existing rebates, and will be top of mind in their IRA plans.

“We’re trying to figure out where the gaps are and how we could deploy these funds to fill some of those gaps,” said Efficiency Maine Executive Director Michael Stoddard, whose quasi-governmental agency oversees state energy incentives.

More income flexibility to get heat pump rebates

Through rebates, loans, aggressive marketing and coordination throughout the supply chain, Maine has emerged as a national leader in deploying electric heat pumps, which provide high-efficiency space heating, cooling and water heating.

Buildings are an entrenched source of planet-warming carbon emissions in Maine, where a greater share of households rely on home heating oil than any other state. That dependence declined from 70% to 56% in 2022, the state reported on Nov. 9.

Maine has already met the initial 2025 heat pump target in its climate action plan, but lags behind on its goal for getting the technology into lower-income homes.

The state already offers hundreds of dollars off heat pumps for people of any income. Lower-income families can get $2,000 off their first unit. For those who qualify for government assistance, both equipment and installation may be free.

This 100% coverage is essential for the lowest-income families, Eberhard said — those who “can’t put up anything.” But Maine’s existing program “only has so much funding,” she said. “It can only reach so many households.”

“So some of that is where these rebates are going to come in and … give an infusion where they will be able to reach a lot more low-income households,” Eberhard said. “They know how to do it now. It’s just the money to do it.”

Efficiency Maine, working with MaineHousing and the Governor’s Energy Office — the federal designee for receiving this IRA money — is contemplating new income tiers to help make higher rebate amounts more accessible, according to Stoddard.

People with the lowest income might qualify for the highest rebates — $8,000 or 100% of project costs for heat pumps, under IRA rules. And the state might split the moderate-income category, which will receive lower rebates, into two tiers, offering more flexibility for people at different income levels than under current programs.

People in multifamily buildings are able to qualify alone or collectively, based on their income or the share of tenants in the building in each bracket. The IRA also includes rules that would allow renters to request rebates for their apartments.

Stoddard expects IRA funding will be especially useful for moderate-income households to move toward “whole-home” heat pump systems, which are a key part of Maine’s long-term electrification goals.

Maine may forego overlapping incentives

But just as important, he said, is what Maine doesn’t plan to do with its IRA funds.

“What these IRA rebate programs enable us to do is expand and extend the number of customers that we can serve — but it’s not likely that it’s going to dramatically change the amount of incentive on any individual project,” Stoddard said. “That may be true in other states … where they’ve had no programs until this money came along, but that’s not the case in Maine.”

Several kinds of heat pump hot water heaters, for example, are basically free under current incentives, so Stoddard doesn’t expect to emphasize those for IRA funding.

Likewise, he doesn’t expect Maine’s single-family home insulation rebates will change. He said the IRA’s rules for modeling energy savings for these rebates could be onerous or too costly for individual customers.

Instead, Stoddard expects Maine to focus this pool of money again on multifamily buildings, where the IRA’s requirements may be easier to accommodate in bulk.

These rebates come from the efficiency portion of IRA, and will vary depending on how much energy the user will save — hence the need for modeling. But weatherization isn’t the only allowable path to achieving those savings, Stoddard said, meaning that multifamily buildings could also use this money for heat pumps.

Outreach and market transformation plans

State applications for this IRA funding have to include consumer education and outreach plans and other strategies, including a “market transformation plan” on how the use of this money will help lead to ongoing home energy investments.

Eberhard said Maine has already set a standard for this kind of transformation with its approach to heat pumps — working “upstream” with suppliers, distributors, contractors and retailers to make savings and resources as accessible as possible.

“If we had that in every state in the country, where you walked into Lowe’s [and heat pumps were front and center], and your contractor knew how to do it, and your distributor could take care of the rebate — that’s a real game-changer,” she said.

There’s no hard deadline for states to apply for the IRA rebate funds, and the money is available through the fall of 2031. But Dan Burgess, who heads the Maine Governor’s Energy Office, said efforts like those that Maine has already established should make its IRA rollout easier.

“I think we’re in a good place to put these funds to good use and to hopefully be one of the early states moving forward with a rebate program,” he said.

Maine hopes IRA money will get heat pumps to more people, especially in multifamily housing is an article from Energy News Network, a nonprofit news service covering the clean energy transition. If you would like to support us please make a donation.

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