Tennessee could begin rolling out Home Energy Rebates funded by the Inflation Reduction Act in mid-2025. (Getty Image)
The more than $8 billion set aside for household energy rebates under the Inflation Reduction Act is slowly beginning to flow out of federal coffers, but Tennesseans will likely have to wait until spring 2025 to apply for their share of the rebate.
Each state must create its own plan for doling out the funding, which could put the money residents spend on energy-efficiency upgrades back into households’ pockets if they meet certain requirements. New York and Wisconsin were the first states to begin offering federally funded energy rebates to their residents in mid-August, two years after President Joe Biden signed the Inflation Reduction Act and its slew of energy-focused subsidies into law.
In total, the discount funds are expected to reach 1% to 2% of households across the country.
Tennessee submitted its application to the U.S. Department of Energy (DOE) in mid-August for the more than $167 million earmarked for the state. Tennessee’s 2025 rollout timeline largely depends on how quickly the DOE approves the state’s applications and when Tennessee can contract with the Tennessee Valley Authority — the chosen operator — to operate the program.
Tennessee is one of 26 states and U.S. territories that have applied for full program funding — a total of $3.6 billion so far — as of Aug. 23. Fifty-one of the 56 states and territories have indicated they are establishing rebate programs, and nine have had at least part of their funding applications approved. South Dakota is not participating in the Home Energy Rebates program, the DOE said.
What Tennessee’s Home Energy Rebate Program Could Look Like
The program offers two types of rebates: home efficiency rebates based on whole-home energy savings through energy efficiency improvements, and home electrification and appliance rebates for the purchase of new, energy-efficient electrical appliances for low-income households.
The U.S. Department of Energy has set aside just over $83 million for each program, with about $27 million to be set aside for low-income single-family homes and another $7 million for low-income multi-family buildings.
For the Home Efficiency Rebate program, rebate amounts are based on the amount of energy savings a household achieves through improvements and the household’s annual income.
A low-income single-family home with an expected energy savings of 35% or more can receive up to $8,000, or 80% of the cost of their project, whichever is less. Households earning more than 80% of an area’s median income can receive the lesser of 50% of the project cost or $4,000 for the same energy savings benchmark. Multifamily buildings have a separate set of requirements.
To qualify for Home Electrification and Appliance rebates, homeowners and building owners must be replacing a non-electrical appliance, be part of a new construction project, or are purchasing a heat pump for primary heating and cooling for the first time. Eligible appliances may include: heat pump water heaters, heat pumps for space heating and cooling, electrical load service center upgrades, electrical wiring and insulation, air sealing, and ventilation.
Single-family homes earning less than 80% of the area median income can receive up to 100% of the cost of a qualified project. Households earning between 80% and 150% AMI can receive up to 50%. The maximum rebate per building is $14,000.
Tennessee would cooperate with TVA
States are allowed to use up to 20% of the funds received for administrative costs, but Tennessee has chosen to limit the administrative reserve to 15%, leaving about $8 million more available for rebates.
To do this, Tennessee would contract with TVA to implement the rebate programs through the energy giant’s processes for existing rebate programs and its network of partner contractors. TVA would bear the costs of implementing its program and the administrative costs of a contracted third-party implementer.
Home Energy Rebate projects are completed exclusively by approximately 200 Tennessee contractors who are members of TVA’s Quality Contractor Network.
