Between Oct. 28 and Nov. 9, the Build Back Better Act inspired significant haggling in Washington before finally receiving passage in the House of Representatives.
At approximately $1.7 billion spread over 10 years, the bill’s size had decreased significantly, both in cost and scope of programs, since its origination. However, significant decarbonization, weatherization, and other energy efficiency measures seem to have largely avoided the budget scalpel as negotiators made final revisions.
The bill contains other industry — and business — relevant content, ranging from tax policy to penalties for labor law violations, on to funding for integrated energy systems and other technology research. The noncomprehensive overview below focuses only on funding, rebates, and grants in the House version that could directly affect HVAC contractor project opportunities if they become law.
Front of the Class
K-12 schools, which received considerable attention in earlier COVID-related funding, remain a high priority in the House bill.
The Rebuild America’s Schools Grant Program would receive more than $40 billion distributed through 2026. That money would go to states, which would allocate it for a range of “capital construction, energy efficiency, and climate resiliency” projects as the state sees fit.
The bill also specifically encourages states to develop strategies for addressing “indoor air quality, water quality, energy and water efficiency, renewable energy, and decarbonization.”
The Rural Energy Savings Program would receive $200 million spread across 10 years.
As its website explains, the Rural Energy Savings Program provides loans to rural utilities and other companies. Those organizations, in turn, provide energy efficiency loans to qualified consumers to implement durable cost-effective energy efficiency measures.
Training for Tomorrow
One of the more modern-sounding components in the bill targets HVAC specifically: the Home On-Line Performance-Based Energy Efficiency (HOPE) contractor training grants.
This measure would fund $500 million in grants to nonprofits that would “provide training courses and opportunities to support home energy efficiency upgrade construction services to train workers, both online and in person,” for such work.
Participating training programs would need to be accredited by the Interstate Renewable Energy Council or other DOE-approved organization. Training would cover contractor certification and/or energy auditing and assessment.
As for training content, the language specifies Energy Star-qualified HVAC systems; Wi-Fi-enabled home energy communications technology; insulation installation and air leakage control; indoor air quality; energy-efficiency retrofits in manufactured housing; and residential electrification training and conversion training.
Retrofit Rebates
The Home Owner Managing Energy Savings (HOMES) Rebates program would use part of a larger $9 billion pool to support state energy offices in establishing HOMES programs for their constituents.
Adequately certified contractors could participate and projects would involve “installation of one or more home energy retrofit measures” that qualify. Other language includes modeling software and methods contributing to home efficiency retrofit strategies.
For single-family and multifamily homes of not more than four units, the rebates themselves would be tied to the level of savings achieved: $2,000 for a retrofit that achieves at least 20% modeled energy system savings, or $4,000 for retrofits that achieve 35% savings.
Both amounts would revert to 50% of the overall project cost, whichever is lower.
Larger multifamily dwelling owners could participate as well, with the total rebate capped at $200,000 and $400,000, respectively, per building.
In an apparent nod to interests who do not benefit from the larger electrification trend, the HOMES program does allow a 6-year window for the purchase of Energy Star-certified “high-efficiency natural gas HVAC systems and water heaters” to contribute toward the formula calculating total energy savings for a home.
Weatherization is another plank in energy-efficiency strategy. Low-income homes and their systems are historically ripe for wasted energy. In its current form, the bill would allot $850 million to the Weatherization Assistance Program (WAP).
WAP grants go to states administering their own weatherization programs and support for such projects.
Currently, states using these grants must observe an average weatherization expenditure per household of not more than $6,500. This bill would adjust that amount to $12,000.
Heat-Pump Help
The High-Efficiency Electric Home Rebate Program would be a new 10-year, $3.5 billion initiative under this legislation. Consumer rebates would run up to $1,250 for installing a heat pump for water heating.
GARAGE NO MORE: Once popular for sunrooms and garages, heat pumps would continue into the rest of the home with a nudge from BBB incentives. For units of 27,500 Btuh or more, rebates would run $3,000, or up to $4,000 if the heat pump HVAC system meets Energy Star “cold climate” criteria and is installed in a cold climate region. (Photo courtesy Pete Brown (CC by 2.0))
Equipment would qualify if it is part of new construction, or if it replaced a nonelectric heat pump water heater, some other nonelectric water heater, or an electric resistance water heater.
For heat pumps of 27,500 Btuh or more, rebates would run $3,000, or up to $4,000 if the heat pump HVAC system meets Energy Star “cold climate” criteria and is installed in a cold climate region.
For heat pumps smaller than 27,500 Btuh, the corresponding rebates would amount to $1,500 and $2,000 for cold climate installations.
Heat pump retrofits would have to replace one of: a nonelectric HVAC system; an electric resistance system, an air conditioning unit that does not have a reversing valve and has a lower SEER than the new system.
An additional rebate would kick in if the qualified project included “insulation, air sealing, and ventilation” within 6 months before or after the main project.
Total rebates for any single home’s electrification-related project would be 50% of project cost, capped at $10,000.
The bill’s language also includes incentives for qualified contractors to carry out such project, ranging from $100 to $500.
The DOE would publish a list of qualified electrification projects by no later than July 1, 2022.
The bill includes an additional section on rebates for similar work in “low- and moderate-income households and multifamily buildings.” Heat pump-related rebates in those applications would run $2,000 to $3,000 higher than the general scenarios described above.
While it must rely solely on electricity, a heat pump may qualify for these programs regardless of whether it is air-sourced, geothermal, or water-sourced.
Federal Buildings & Affordable Housing
The federal building stock is too large to ignore in such a significant energy-efficiency effort. Of interest to contractors doing government work, the bill proposes a $17.5 billion Federal Energy Efficiency Fund over 10 years, issued as grants for agencies to meet energy conservation goals and reduce emissions. Electrification and other HVAC improvements are part of — but not all of — the qualifying projects here.
As part of the Housing Investment Fund, another $9.64 billion would go toward increasing and preserving affordable housing, and to “improve the energy and water efficiency” of that housing.
Rural rental housing also receives special attention in the form of $4.36 billion to support new housing, conduct energy efficiency upgrades, and make other improvements under the Housing Act of 1949 that is administered by the Department of Agriculture.
Chamber of Secrets
The Senate is expected to work on its own version of this bill in December. That version will have its differences, but those may or may not pertain to these industry-related sections.
In addition, budget-related rules in the Senate may present additional obstacles for the legislation. But for now, the House’s version represents the clearest vision of how the administration’s energy goals might translate to support for HVAC-relevant projects in the field.
