The USA’s Inflation Reduction Act (IRA), passed by Congress on August 12, is designed to spur investment in clean energy through tax incentives, grants and other funding mechanisms. The Act’s sponsors estimate that the bill will drive investment of nearly $369 billion in clean energy and climate priorities, making it the largest investment ever made in sustainability and climate in the history of the United States.
The IRA aims to push American consumers and industry away from their reliance on fossil fuels in order to reduce greenhouse gas (GHG) emissions by about 40 percent below 2005 levels by 2030.
The biggest share of the funding goes to tax credits and rebates for a host of renewable technologies including solar panels, wind turbines, heat pumps and electric vehicles. The IRA will also direct billions of dollars to “disadvantaged and low-income” communities based on various Environmental Justice (EJ) criteria – such as income, energy burden and demographics. Disadvantaged communities across the United States face disproportionately higher energy costs and exposure to poor indoor and outdoor air quality, which poses a danger to the livelihood of millions of households.
The High Efficiency Electric Home Rebate Act (HEEHRA) includes $4.5 billion in direct rebates for low and moderate income households that install new, efficient electric appliances. For instance, a low income household will receive a rebate covering the full cost of a heat pump installation up to a cap of $8,000. They could also be eligible to receive up to $1,750 for a heat pump water heater, $840 for an electric stove and $840 for an electric clothes dryer. If required, the household can also receive up to $4,000 for an upgraded breaker box, $2,500 for upgraded electrical wiring and $1,600 for insulation, ventilation and sealing.
For moderate income households, the same rebates are available to cover 50 percent of the costs. This will enable roughly one million low and moderate income households to go electric.
How will the IRA help American families?
- Tax incentives that can help low and moderate income families save money on their energy bills, leading to potential up-front saving of $28,500 per household
- The average family is projected to annually spend $1025 less on energy in 2030 than it does today
- Up to $7500 in tax credits for purchasing an EV
- $4000 credit for buying a used EV
- $7000 average savings on installing rooftop solar panels
- Up to $14000 in rebates to switch over to electric appliances
- If a household installs a modern electric heat pump to replace their furnace, a heat pump for water heating and converts to an electric vehicle and rooftop solar, they will save $1,800 per year on energy bills.
The challenge lies in educating and incentivising eligible energy customers to take the credits and rebates to convert their homes and lifestyles.
That’s where Advizzo comes in.
How Advizzo can help
Through our data science and behavioral science based customer engagement programmes for utilities, we can help you to promote the IRA’s electrification grants and incentives to households that are eligible.
- Identify customers in the low income/disadvantaged brackets and segment them into groups that can be target marketed
- Engage those customers with communications to help them understand what funding is available to help them electrify their homes and lives
- Engage them to help them understand the benefits of electrifying their homes and lives
- Nudge them towards making the required electrification changes. You can read more about the power of the ‘nudge behavioral science theory.’
- Measure the success of the customer engagement campaigns through A/B testing. You can read more about the importance of A/B testing in our blog – How to reliably measure energy and water savings.
How will you identify your low and moderate income customers? And how will you promote the IRA’s electrification incentives and grants? Talk to us today to learn more about our behavioral science-based customer engagement programs – we’d love to hear from you.