Wisconsin HOMES rebate: heat pumps, energy efficiency, and more

Homeowners in Wisconsin who are interested in lower energy bills and making their homes more energy efficient and comfortable will be happy to hear about new rebates available via the federal Inflation Reduction Act (IRA).

The IRA already gives homeowners significant federal tax credits to make their homes more energy efficient and environmentally-friendly. For example, you can get a credit worth up to $2,000 on the installation of a heat pump for cooling and heating your home. But on top of that, you can now get an upfront rebate for many of the same projects. The rebates are significant: up to $14,000 for a project, depending on your income level. Combined with the federal tax credit, we’re talking about major savings. In fact, some projects can actually be free for lower-income households!

Wisconsin already had some rebates for these types of home energy upgrades, so it can be confusing to make sense of all of these new IRA-related rebates. This goal of this article is to help consumers sort out which rebates they can qualify for.

Why is Wisconsin offering home energy rebates?

The federal Inflation Reduction Act of 2022 helped to make renewable energy upgrades (like solar panels) and energy efficiency more affordable for homeowners. The Energy Efficient Home Improvement Credit is a big part of it, as it gives consumers a 30% federal tax credit for upgrades like heat pumps.

A lesser known provision of the IRA is the Home Energy Rebate program, which is sometimes incorrectly referred to as HEEHRA. The Home Energy Rebate program is funded by the federal government, but administered by state, territorial, and tribal governments. Local governments must apply for the program, which is the reason why these rebates are only now being offered by Wisconsin. It’s one of the first states to offer it.

There are two parts: the Home Efficiency Rebate Program (known as HOMES), and the Home Electrification and Appliance Rebate Program (known as HEAR). The HOMES rebates are available now in Wisconsin, while HEAR will be coming later this eyar.

It starts with a home energy assessment

The HOMES program always starts with a home energy assessment. It includes a check of the insulation level in your home, tests for air leaks, an analysis of your heating and cooling systems, and an inventory of the appliances in your home and an estimate of their energy usage. The contractor will use tools such as an infrared camera to see how much heat loss (or heat gain in the case of summer) is occurring through your walls and attic, or a blower door to depressurize your home to find air leaks.

The assessment also includes health and safety checks, such as identifying mold, gas leaks, and checking for required smoke and carbon monoxide detectors.

Depending on the size of your home, a home energy assessment can take between 30 minutes and 3 hours on average. More extensive testing, such as a blower door test, will take longer.

To get a home energy assessment, you can visit Wisconsin’s Focus on Energy website to find a registered contractor. Note that it must be an IRA registered contractor, and not a general Focus on Energy Trade Ally contractor. Here’s the link for IRA contractors: https://www.clearesult.com/partner-hub/find-contractor/focus-ira?specialty_1_filter=266&sortBy=asc

However, you will want to start with the income prequalification link listed later in this article to find out if you are qualified to receive larger rebates for low- and moderate-income households. If you are, you’ll create a Focus on Energy account, which will guide you through the rest of the HOMES rebate process. If your income is too high to qualify, you can instead reach out to any of the IRA contractors at the link above.

Be sure to let the contractor know that you are looking to receive the HOMES rebate. At the end of the assessment, you’ll receive a report with a list of recommended upgrades, with the estimated cost and expected annual savings.

There is a cost for the home energy assessment, but low-income households can qualify for a $500 credit. All households can receive a 30% federal tax credit worth up to $150¹. There are specific requirements to ensure that you qualify for this tax credit, so be sure to read the article in the footnotes.

What is the HOMES rebate for Wisconsin residents?

The HOMES rebate focuses on making Wisconsin homes more energy efficient. This means lower energy bills, but also improved comfort because your home will have fewer hot and cold spots and fewer drafts. It’s also a smart move to eliminate drafts and make sure that your home is insulated as best as possible, because it reduces the size of heating and cooling equipment that you need.

The rebates cover a wide range of upgrades: heat pumps, furnaces, appliances such as refrigerators, ranges, dishwashers, clothes dryers, and more are included. The appliance must be ENERGY STAR rated to qualify.

For most homes, insulation and air sealing will a main focus of their HOMES rebate project. This is because the rebate is based on the predicted energy savings, and adding insulation and sealing air leaks often has the biggest return on investment.

Here’s a summary of the rebates available:

As you can see, there are a couple things that determine the size of the rebate you’re eligible below. They’re explained below.

Area median income (AMI): an explanation

The first thing to explain about the table above is Area Median Income (AMI). While the HOMES program is available to any household, lower- and moderate-income households have larger rebates available.

The income thresholds are based on the median income in each area. This means that if you live in a higher income area (such as a city like Madison), households will be able to qualify with a higher income than households in a lower income area.

Income thresholds are also adjusted for the number of people living in each household. This means that if you have a large family, you can qualify for low- and moderate-income at higher income than a person living alone.

Because of these factors, larger households or those living in higher income areas might be surprised that they are still able to qualify for the low- or moderate-income rebates.

If your household income is above the moderate-income threshold (which is set at 150% of the area median income), you’ll still have some rebates available.

To find out if you qualify for the higher-level rebates or just the standard rebate, you can fill out the short form at the link below. It will tell you if you qualify for higher rebates or just the standard rebate. (If you qualify for the higher rebates, it will ask you to create an account to continue, but you don’t have to do that if you’re only trying to check your qualification.)

Here’s the the prequalification form on the Focus on Energy website: https://focus-ira.clearesult.com/prequalification

Modeled Energy Savings: how much will your project save?

The other factor that goes into determining the size of the Wisconsin HOMES rebate that you’re eligible for is the estimated energy savings of the project. It’s referred to as a “modeled” energy savings because the contractor doesn’t measure the actual energy savings after the project is completed. Instead, they use an industry-standard process called BPI-2400² to estimate how much energy the contractor’s proposed home upgrades will save the homeowner.

The contractor will ask for 12 months of the homeowner’s energy bills to get a baseline of the home’s energy usage. From there, the contractor uses the BPI-2400 software to model how much energy their proposed upgrades will achieve. If the project can achieve the higher tier of energy savings – 35% or greater savings – the homeowner will receive double the rebate of the lower tier. For lower-income households, this means a maximum rebate of $10,000, which is high enough to make substantial upgrades to a home.

The minimum energy savings is 20%. Projects with lower energy savings won’t qualify for this program.

Insulation and air sealing upgrades under the HOMES rebate

The HOMES rebate is performance based: the greater the energy savings, the higher the rebate you can receive. This incentivizes contractors to recommend upgrades that have the biggest bang-for-the-buck. In most cases, this means that the contractor will recommend some combination of insulation and air sealing.

When it comes to air leaks, most people think of cracks they see around doors and windows. However, the biggest air losses in homes often occur in the structure of the home: the attic, at the foundation, and around chimneys and vents. It can be difficult for the average homeowner to identify these leaks, which is why it’s so important to start with a professional home energy audit.

Insulation can have a lucrative payback for older homes. Even homes built as recently as 2015 and earlier will perform significantly worse than homes built after the updated 2015 building code. According to a report at the Department of Energy, a home constructed to the 2015 building code will save 30.8% on its energy bills or an annual average of $890 compared to the same home built to the earlier 2006 building code³. Based on the average cost of insulating and air sealing to the newer standard, this will have a financial payback of 4 years or a total savings of $12,400 over 30 years.

However, it’s harder to make big gains on newer homes compared to those built earlier, especially around the 1970s or earlier. In homes of that era, you may have little insulation in the attic, which can be upgraded for relatively low cost with blow-in cellulose insulation and air sealing. Old homes may also have low insulation levels in the walls that can also be upgraded with blown-in cellulose. Older homes also frequently have air tightness problems that can be quickly sealed with spray foam insulation.

But there’s many more upgrades that a contractor can make, including sealing air ducts and adding ventilation to reduce summer heat gain and avoid mold. You can read Wisconsin’s Material and Installation Standards⁴ document for insulation and air sealing to learn about these measures in detail.

ENERGY STAR products for the HOMES rebate

The other major part of the HOMES program is rebates on ENERGY STAR appliances. ENERGY STAR is a program administered by the US Environmental Protection Agency. The label indicates that the product meets a federal standard for energy efficiency: on average, products with the ENERGY STAR label can be 20%-70% more efficient than conventional products, depending on the product category.

In addition to insulation and air sealing, your contractor for the Wisconsin HOMES rebate will likely recommend some ENERGY STAR appliances, which could include heating and cooling equipment such as a heat pump. ENERGY STAR cold climate heat pumps run on electricity and will both heat and cool your home, allowing you to replace existing furnace and air conditioning equipment with a single appliance. Heat pumps are also highly efficient - much more than a conventional electric furnace or baseboard heating, and are cleaner and safer than a natural gas or propane furnace.

THere’s a lot of know about heat pumps, so you can read my article Heat Pumps for Homes: A Primer to learn more.

List of ENERGY STAR products that qualify for the HOMES rebate

In addition to insulation and air sealing, here’s a complete list of ENERGY STAR product categories that are eligible for Wisconsin’s HOMES rebate. Note that some equipment, such as heat pumps, may have additional requirements, so be sure to check with your contractor.

• Heat pumps: air-source ducted, air-source ductless (mini-split), and ground-source (geothermal)
• Furnaces
• Boilers
• Wood stoves
• Air conditioners
• Refrigerators and freezers
• Dishwashers
• Ranges and cooktops
• Clothes washers and dryers
• Pool pumps
• Windows, doors, and skylights
• Ventilation fans

It’s worth noting that while this looks like a great opportunity to upgrade old appliances, the rebate program rewards projects with the highest return on investment, and projects that don’t give homeowners at least a 20% reduction in energy costs won’t qualify for HOMES.

This means that your contractor is most likely to recommend upgrades with a big impact, such as heat pumps, furnaces, and air conditioners. Some ENERGY STAR appliances, such as clothes washers and dishwashers, can be significantly more efficient than conventional models, but they are unlikely to be a major part of a home’s overall energy use compared to bigger energy hogs like air conditioning.

How to receive your HOMES rebate

The Wisconsin HOMES rebates that you qualify for are applied directly to your invoice. This means that you don’t have to carry the cost of the project and wait to receive your incentive later. The rebates are discounted right off the cost of the project.

As mentioned earlier, if you fall into the low-income category, this can mean that you don’t have to pay anything for your home upgrades. That’s a huge benefit.

You can still receive a 30% federal tax credit

Low-income household might not have to pay anything after the HOMES rebate is applied, but for everyone else there might be a project balance left over. Luckily, whatever you pay can qualify for the Energy Efficient Home Improvement Credit from the federal government, which will give you a 30% federal tax credit.

This tax credit can be significant: as much as $2,000 if you install a heat pump. With both the IRA rebate and tax credit, homeowners can end up paying relatively little to have major energy upgrades made to their home.

To learn more, you can read my article on heat pump tax credits.

Coming soon: even bigger rebates on electrification projects

Another part of the federal Home Energy Rebates program is the High-efficiency Electric Home Rebate Program, which gives even bigger rebates for projects that switch homeowners away from fossil fuels to clean electric appliances. This includes big-ticket items such as heat pumps, heat pump hot water heaters, and ENERGY STAR electric ranges.

The HOMES rebate does offer rebates for some of these, but the electrification rebates take it even further, with rebates as much as $14,000 with 100% of the costs covered for low-income households. The program even allows you to include upgrades to electric wiring and electric panels, which can be a significant part of the project cost if you want to switch to an electric heat pump or range.

Wisconsin refers to this program as Home Electrification and Appliance Rebates (HEAR). HEAR isn’t available yet, but is expected to launch very soon: sometime in 2024, according to Focus on Energy. When it does, I’ll be sure to update this page.

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