California's Home Energy Rebate Program

A new rebate program gives homeowners in California big rebates on energy efficiency, home electrification, and electric appliances. While smaller tax credits and rebates have already been available, this new program offers larger rebates than before: up to $8,000 for a heat pump, and potentially $14,000 per electrification project.

Not all of the rebates are available yet, but the California Energy Commission (CEC) has announced that they are currently accepting applications for the first phase of the program.

Complete information about every rebate that will eventually be offered isn’t yet available from the CEC, but because California’s program is funded by the federal Home Energy Rebates program, we do have some information about what to expect. This article will dive into the details about what we know so far, what rebates you can expect to be eligible for as a California homeowner or renter, and how to apply for rebates.

What is the Home Energy Rebates program?

The federal Inflation Reduction Act of 2022 introduced several incentives to help make the cost of energy lower for homeowners. The first is the Energy Efficient Home Improvement Credit (EEHIC), which gives homeowners a 30% federal tax credit for a wide range of energy efficiency and renewable energy upgrades, such as solar panels, heat pumps, and insulation. That tax credit has been available for a few years and has helped to speed the adoption of renewable energy.

Another incentive program in the IRA that has only started to become available in the Summer of 2024 is the Home Energy Rebates program. Unlike the EEHIC, this program isn’t a tax credit, but an upfront rebate. The funding is provided by the federal government, but the program is administered by state, tribal, and territorial governments. This is the reason for the longer adoption time: state governments have to apply to the federal government and put in place measures needed to operate the program, such as creating a network of qualified contractors.

There are two parts to the program. The Home Owner Managing Energy Savings or HOMES Rebate is for upgrades that improve a home’s energy efficiency by at least 20% through measures such as insulation, air sealing, and heat pumps. If the upgrades result in at least a 35% reduction in annual energy use, the homeowner can receive a rebate as much as $8,000.

The second part is the High-efficiency Electric Home Rebate Program or HEAR. This program is aimed at home electrification, which means switching away from fossil fuel-powered appliances to electricity. The HEAR program can potentially cover a wide range of electric appliances, including heat pumps, ranges, cooktops, heat pump hot water heaters, and clothes dryers. Crucially, it also includes up to $6,500 in electrical wiring and panel upgrades, which can be a cost barrier for older homes.

HEAR is limited to low- and moderate-income households, but the income limits vary by location, so if you live in a high income area, you might be surprised that you can qualify even if your income is above average for the nation.

HEAR rebates can be substantial: $8,000 for a heat pump and $14,000 for a total project, with up to 100% of the cost covered for low-income households.

Which Home Energy Rebates are available in California?

The first rebates to be available in California is the HEAR program, which California refers to as HEEHRA (an older name used before the Inflation Reduction Act was passed). There are two phases to California’s HEEHRA program:

• HEEHRA Phase I launched in October 2024, and is available now
• HEEHRA Phase II is expected to launch in late 2025 or early 2026

This program is aimed at low- and moderate-income households, with low-income households being eligible for double the rebate of moderate-income households.

HEEHRA covers both single- and multi-family homes. These are the rebates that have been announced:

Multi-family homes refers to buildings with four or more households. You’ll notice that in Phase I, there are more rebates available for multi-family homes than there are for single-family homes. In the federal rebate program, single-family households are also eligible for electric appliances such as stoves and clothes dryers. These rebates may eventually be available to California single-family households. The California Energy Commission notes: “HEEHRA Phase II is under development with a RFI and public workshop planned for fall 2024”.

Based on this, it’s reasonable to assume that the same electric appliances and wiring upgrades that are eligible for multi-family households in Phase I will also be available in Phase II, but we’ll have to wait for more information.

Other states have rolled out their programs in a similar way. For example, New York is offering rebates on heat pumps but not other appliances in their program. However, they will apparently be expanding their rebates eventually. While the federal government allows states to offer rebates for a wide variety of electric appliances, the operation of the rebate program is ultimately up to each state.

HOMES Rebate for energy efficiency will be coming soon

The second part of rebate program that will eventually be adopted by California is the HOMES rebate for energy efficiency.

Unlike HEAR, the HOMES rebates are available for households at any income level, though lower- and moderate-income households will have higher rebate limits.

The HOMES program starts with a home energy assessment by a qualified contractor, who will do an in-depth assessment of your home’s energy usage and make recommendations to lower your energy usage. Typically, this starts with insulation and air sealing, and low cost upgrades such as LED light bulbs.

HOMES rebates could also include cover ENERGY STAR appliances, including heat pumps. The rebates you are eligible will depend on the recommendations made by the contractor, who will select upgrades with the biggest bang-for-the-buck to fit within the project budget.

In California, this rebate will be known as the HOMES Pay for Performance Program. According to the CEC, it will launch in 2025 or 2026.

How much money will be available for rebates?

California’s will receive up to $291 million for the HOMES rebate program, so this is a very substantial program. The federal government will make the money available until at least September 30, 2031.

Which contractor can I use for this program?

You need to use a TECH Clean California-certified contractor to receive this rebate. The easiest way to do that is to simply start the application process, but if you want to browse the available contractors, you can use the Contractor Finder at the Switch is On website. Visit the link below, and then filter the search by selecting “TECH Heat Pump HVAC” under “Certifications”.

Here is the contractor search site: https://switchison.cleanenergyconnection.org

How do I apply for California’s home energy rebate program?

At the time of writing, applications for single-family and multi-family home rebates are being accepted.

Single-family households can receive the rebate by working with a HEEHRA-eligible contractor. You can seawrch for contractors at the Switch is On website: apply for the rebate

Here’s the application for multi-family homes: https://techcleanca.com/incentives/heehrarebates/