THE INFLATION REDUCTION ACT

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The Inflation Reduction Act of 2022 (IRA) is the largest ever climate investment by the Federal Government in American history, projected to reduce greenhouse gas (GHG) by 31-44% below 2005 levels by 2030. The IRA will also bring energy bill relief to U.S. households by incentivizing the adoption of more efficient, all-electric appliances. Importantly, the IRA fully recognizes the key role of highly efficient, variable-capacity heat pumps in slashing domestic GHG emissions and lowering energy costs for Americans. In fact, at least 87% of U.S. households, 104.7 million, could save $37.3 billion a year on energy bills if they were using modern, high-performance heat pumps and water heaters.

High Efficiency Electric Home Rebate Program (HEEHRP)

• Allocates $4.5 billion in grants to states and tribal governments for home energy improvement projects including point-of-sale heat pump rebates.
• 10-year program, administered through State Energy Offices, likely to start mid-2023.

- Parameters of state-administered programs may vary.

• Single-home maximum cost offset is $14,000.
• Caps on rebates per qualified equipment type:
  - $8,000 for a heat pump.
  - $1,750 for a heat pump water heater.
  - $1,600 for insulation, air sealing, and ventilation.
  - $2,500 for electric wiring.
  - $4,000 for an electric load service center upgrade.
  - $840 for a stove, cooktop, range, oven, or heat pump clothes dryer.

Designed to support low-to-moderate income (LMI) households.
- Example:
- Households making up to 80% of area median income are eligible to receive a 100% rebate of up to $8,000 on the cost of heat pump installation.
- Moderate-income households (making 80-150% of area median) are eligible for a 50% rebate up to the same limits.
(E.g., To claim up to the cap of $8,000, must spend $16,000 on heat pump installation.)
- Households with incomes above 150% of area median are not eligible.

This program will be administered by the energy department of the state of Minnesota. They are currently working out the details and should have income guidelines and program guidelines available early in 2023.