How To Capitalize on IRA Incentives

What type of installs do you do now and how will IRA impact them?

If your company currently focuses on furnace and air conditioner installations, then it may be time to expand into heat pumps, given the rebate funding available for these installations, as well as the $2,000 tax credit.

Yes, there are tax credits available for a gas furnace or high-efficiency air conditioner that tap out at a combined amount of $1,200, but heat pumps will also be eligible for up to $8,000 from an electrification rebate when your state program launches.

I still bump into contractors who tell me that heat pumps don’t work in cold climates, to which I say the industry has solved this. Reach out to your distributor or equipment manufacturer to get the latest on product options and to understand the training involved for installing them.

Another question to consider is what process your techs use to size the equipment and to commission it at install.

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The US Department of Energy’s rebate program requirements call for states to set guidelines for proof of commission testing and proof of combustion-safety testing on fossil fuel equipment in homes where this equipment is impacted by an installation.

If your process for either of these important quality assurance measures is ill-defined or non-existent, you’ll need to think through what it will look like to raise the company’s game enough to participate in the state programs.

What type of work are you willing to do? Are you willing to pilot or partner now?

The IRA funds a variety of energy efficient installations – from the much talked about heat pump installation, to insulation, air sealing, water heaters, electrical panel upgrades, and ventilation work.

The electrification rebate program allows an income-qualified homeowner to get a rebate at the point for individual installations, whereas the HOMES rebate program requires a modeled 20 percent efficiency gain or more to be eligible for the rebate, likely through a bundled set of improvements.

HVAC contractors who expand their scope of services to include electrical work, water heating, or insulation, for example, have an opportunity to take a bigger piece of the work pie for every customer who qualifies for these rebate programs.

In the case of a lower-income customer, the rebate could very well cover the total cost of the work, making it a no brainer for the homeowner and a good opportunity for the contractor to increase their revenue generated per household considerably. Another option would be to create lead-generation partnerships with complementary businesses to be able to refer customers to one another.

If your company is serious about doubling down on the opportunities presented by these rebate programs, I strongly recommend you don’t wait until the month before they launch to figure out how you want to participate in them.

Pilot new lines of business early to understand where the process breaking points and knowledge gaps are. Develop your marketing and sales messaging to support the direction you want the company to go once the programs launch.

Rest assured, there are HVAC companies out there now who are trying to figure out how to evolve into the whole house, home performance space so that they have an early lead and can maximize growth and profits with IRA rebate programs.

Depending on your growth strategy, can IRA help you grow lines of business, market share, and lifetime value? If so, what training, tools, software, and staffing will you need? Who can help you think through that?

Let’s say you’ve made the decision to expand your business to include some of these other installation types which will be subsidized through the IRA. You now are faced with a whole set of new questions on what you’ll need to answer to accomplish that cost effectively.

There are a number of consultants, business development companies, contractor training organizations, standards training trade organizations, and even OEMs who can help an HVAC company focused on box switch outs expand into new services. Links are provided online to just a few organizations that my company has partnered with in the past that you can start with.

My next article will dive even deeper into contractor program requirements and some of the nuances of preparedness, including software requirements for energy and bill modeling, as well as home energy audit requirements.

If you’re interested to see what states have applied for their federal funding, the US DOE keeps a state tracking page updated. Another helpful link is to the state energy office map page on The National Association of State Energy Offices website that will help you track down a contact at your state energy office. This is the best way to have early intel on what your state will be doing. These links and other resources can be found online at southernphc.com/pearlcertification.

Read the rest of this series on IRA rebates.

To learn more about Pearl Certification and read other articles in this series as they become available, visit the Southern PHC Pearl Certification page.