The defense production act. American-made electric heat pumps to millions of homes. Each of these new facilities would be able to produce approximately 100,000 products per year, or 1 million heat pumps per year in total. This would represent about 25 percent of current U.S. annual heat pump sales.

Implementing the DPA

Leveraging DPA funding in the IRA to kickstart residential building decarbonization

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Oct 19, 2022 • 1 min read

By Rachael Grace, Stephen Pantano, Ari Matusiak, Leah Stokes, Noah Goldmann

The Defense Production Act (DPA), together with the Inflation Reduction Act of 2022 (IRA), creates a once-in-a-generation opportunity to reduce energy bills for everyday Americans, bolster national energy security, spur domestic clean energy manufacturing capacity, create good-paying jobs and deliver meaningful progress in the fight against climate change. If Congress and the Biden Administration leverages the DPA to its full potential, it can provide efficient American-made heat pumps to millions of homes that currently heat their homes with expensive, unreliable delivered fuels.

Key takeaways

The Department of Energy should maximize the use of the Defense Production Act by:

  • Leveraging the initial $500 million tranche of DPA funding in the IRA to drive investment in up to ten new domestic heat pump manufacturing facilities, which will ensure that American manufacturing capacity can meet the increased demand for heat pumps;

  • Utilizing a series of Advanced Market Commitments (AMCs) to order the production of 7.5 million heat pumps (4.65 million heat pumps for space heating and cooling and 2.85 million heat pump water heaters) that can help bring down runaway energy costs for households that currently rely on delivered fuels; and

  • Working with the DOE's Loan Programs Office (LPO) and the Export-Import Bank’s (EXIM’s) Make More in America program to provide low-cost capital to manufacturers to expand or establish domestic production facilities.

DPA by the numbers. $100 million: average cost per facility. $500 million: DOE could invest $500 million of DPA funding. 10 heat pump facilities: in exchange for approximately 10 new facilities across the U.S. 20-30k: creating thousands of jobs.