The electrification rebates (“High-Efficiency Electric Home Rebate Program”) enacted in the Inflation Reduction Act (IRA) provide point-of-sale rebates to enable low- and moderate-income households across America to electrify their homes. Because the electrification rebates are statutorily required to occur at point of sale, contractors and home improvement retailers must be able to determine and verify the eligibility of potential recipients. Effective income verification is crucial to drive high program uptake, decrease market friction and unlock the transformational benefits of electrification.
In this memo, we offer recommendations that the U.S. Department of Energy (DOE) can utilize to guide State Energy Offices (SEOs) to success. We also analyze high-level pathways for SEOs to implement effective and efficient income verification programs: categorical eligibility, geographical eligibility and records-checking tools, as well as layered software solutions.
Income verification recommendations
Point-of-sale income verification does present challenges, both in terms of the statutory requirements and the diversity of customer, contractor and retailer needs. However, DOE can and should establish guiding principles to communicate best practices and deliver market consistency. We recommend that these principles include:
1. Maximize simplicity and accessibility. SEOs should ensure that income verification tools are easy for all parties to use and actively seek to reduce barriers to participation for low- and moderate-income households.
2. Avoid a “one-size-fits-all” solution. SEOs should implement multiple verification pathways (even if housed in one system), which will ensure that all eligible recipients can participate. No one solution will work for all eligible recipients in all use cases.
SEOs should establish categorical eligibility as a “first-pass” option to quickly target population subsets while also recognizing that categorical eligibility alone will miss a large portion of rebate-eligible households.
3. Prioritize flexibility and innovation. SEOs should predefine and reward their desired outcomes, not specific processes.
SEOs should allow entrepreneurs, implementers and software developers to utilize a variety of appropriate income data and create novel verification solutions, provided they meet predefined outcomes.
SEOs should also allow third-party software solution providers to shoulder the risk of guaranteeing income verification to a predefined level of accuracy, which would encourage innovation, efficiency and risk-taking.