NEFI has learned that some states are proposing to require that the existing heating system be removed - or otherwise made inoperable – in order for a home to qualify for an IRA heat pump rebate.

The new federal law, the Inflation Reduction Act (IRA), offers heat pump rebates of up to $8,000 per home. It is part of the broader electrification rebate program, which offers up to $14,000 for installation of all-electric appliances and related projects in a home, depending on household income and the type of work done. While federally funded, these IRA rebates will be administered by state governments. These rebates are not yet available. States must first write and submit implementation plans to the U.S. Department of Energy (DOE) to receive funding.

NEFI strongly advocates that consumers be allowed keep their existing system as a backup/secondary heat source. This is a health and safety issue. Unfortunately, the federal law and U.S. DOE guidance are confusing and poorly written. Given this, some states believe they have leeway for this type of restrictive interpretation.

This new proposal does not apply to the federal home energy efficiency tax credits, which are separate from the rebates, are administered by the IRS, and went into effect on January 1, 2023.

Bottom line: It is possible some states may restrict the ability of homeowners to obtain an IRA heat pump rebate for hybrid systems. Like many other rebate program requirements and procedures, this will vary state-by-state. Stay tuned for updates from your state energy office or heating fuel associations for more information.

Also please note that NEFI has pledged support to our state association partners as they work to ensure fair implementation of the IRA rebates, while preserving consumer choice. We are also exploring options at the federal level to push back on these kinds of dangerous proposals.