With billions of dollars in federal funding available to states to develop and expand residential energy retrofit programs, a new paper from the American Council for an Energy-Efficient Economy (ACEEE), the AnnDyl Policy Group, and the Building Performance Association (BPA) outlines how states can maximize the impact of the funds to lower utility bills and cut climate pollution. 

The report offers insights for how states can integrate funding from the Inflation Reduction Act of 2022 and the 2021 bipartisan infrastructure law with existing state, local, utility, and other resources available for residential retrofits. Combining complementary funding sources—known as “braiding and stacking”—can help maximize impact while reducing the cost of home energy retrofits. The report identifies $53 billion in federal rebates, grants, and other incentives, in addition to potentially unlimited funding from tax credits and deductions for residential energy retrofits. It found another $30 billion in non-federal resources from housing funds, state and local programs, utility programs, and financial institutions, with recommendations for how to integrate the funding sources.

The report found that retrofit programs can boost energy savings and reduce household energy burdens by prioritizing equitable access to historically underserved communities. Renters and rental properties have long been underserved by efficiency programs, so the report recommends creating options to bring energy retrofits to multifamily and single-family rental buildings while protecting renters from potential displacement. The paper also calls for providing capacity-building resources and technical assistance to community-based organizations, contractors, and retailers to help eliminate barriers to participation. 

The paper identifies eight program elements essential for successful retrofit programs. They are:

• Providing training and workforce development opportunities,
• Delivering affordable financing,
• Offering rebates and incentives,
• Prioritizing energy equity and environmental justice,
• Addressing health and safety prior to home efficiency upgrades,
• Incorporating grid flexibility in building efficiency,
• Ensuring secure access to data, and
• Planning for long-term market transformation and oversight.

The new federal resources are an important opportunity for states not only to upgrade a significant portion of U.S. homes but also to educate Americans about energy efficiency and help spur wider retrofits.

View and download report