Timestamps are included in the YouTube description online as well as links to resources mentioned in the discussion. Links can also be found listed below the transcipt here for convenience.
Contact Information
Erin Kempster: ekempster@opiniondynamics.com | Jeana Swedenburg: jswedenburg@opiniondynamics.com | Dr. Ellen Steiner esteiner@opiniondynamics.com
Transcript
LL:
Hello and welcome back to the Opinion Dynamics podcast. My name is Liz Law, and I’m Managing Editor here at Opinion Dynamics. Today I am really excited to get started with a conversation with three of our subject matter experts talking about the IRA funding, and it’s a massive topic, so we’ve got some heavy hitters. First, Aaron Kempster is our Director of Decarbonization at Opinion Dynamics. Erin, welcome. We are also excited to have Dr. Ellen Steiner, Vice President at Opinion Dynamics and third, joining us today is a Director, Jeana Swedenburg. So also welcome, Jeana. So if we can start with, a basic, you know, what is, what is IRA, what is the funding? And also it’s current state. Erin, would you mind giving us a start on that?
EK:
Yeah, happily. Um, yeah, thanks for that great intro. So IRA is the, the latter acronym of two recent large funding bills that are affectionately known as BIL and IRA. The first was the Bipartisan Infrastructure Law and the second being the Inflation Reduction Act. And it, it’s hard to talk about one without the other. Uh, when BIL came through, I think everyone in the industry was exceptionally excited. It had quite a bit of funding for the types of work that are important in this industry. And then IRA came along and sort of blew that all out of the water. Uh, this is a, a level of funding that we haven’t seen in quite some time, and I think we’ll discuss a little bit later some of the parallels to the earlier ARRA funding. But the IRA or Inflation Reduction Act is also known as HR 53 76. Uh, it was a, a pithy 274 pages as passed, uh, which actually <laugh>, I, I’m not joking there. It actually seems pretty short for, for the monumental amount of programmatic mandate that’s in there. Uh, it was actually signed last August on August 16th in 2022 by, by President Biden. The BIL or Bipartisan Infrastructure Law before that was in November of 21. So two big years for two big bills. So IRA has a total of somewhere in the neighborhood of $370 billion in investments. Uh, and that’s, that’s billions with a B, it’s, it’s a lot of money <laugh>, and it’s, it’s not all towards energy outcomes for sure. It’s, it’s broken across a number of different sectors. One of the big things to talk about when we talk about IRA is the incorporation of Justice 40 and, uh, Justice 40 to my knowledge, is the way that the federal government has begun thinking about equity within its own programmatic work. So, it’s application through the Inflation Reduction Act follows an executive order in 2021.
Um, there was interim implementation guidance on that in 2021 in July, and then additional guidance in 2023. But I think folks are still waiting to hear final word on how the federal government wants to think about equity in the context of all of this funding, and particularly how to actually screen geographically and otherwise for the communities that are sort of encompassed in that Justice 40 language, which we’re calling Justice 40 communities. So there’s a climate and economic justice screening tool, or EJUST, which I’m not sure if I’m pronouncing exactly correctly. Uh, it was released in beta and then in version one in February, 2022. And I think we’re still waiting for the, uh, the final version of that. But in the interim, there have been a number of organizations that have sort of risen up to, to help fill the blanks as, um, as folks need to start planning for how to implement this funding.
So when we’re talking about the Inflation Reduction Act, we’re talking about again, a number of different investments. It’s healthcare, it’s clean energy, it’s uh, individual incentives, it’s vehicles, it’s manufacturing, it’s air pollution, conservation, climate transportation. A lot of those are, as you can tell by the language, are very intertwined. The clean energy piece is the piece that I think we’ll probably be talking quite a bit about today. Although, uh, vehicle funding and transportation and infrastructure funding and grid-side funding is all sort of part and parcel of, of the, the broader conversation. The, the two programs that folks may be most familiar with, if they’ve only had sort of a, a brush with news about IRA to date are the clean energy rebates and efficiency funding. The first program known as HOMES. And the second, which has gone through an number of, of different monikers and I believe is now being called HEEHRA by the Department of Energy.
But those two programs, the import of those, uh, HOMES is a whole home efficiency program, which can follow either a modeled or a measured pathway whereby a home or a residence will have sort of this baseline level of energy use and then will have energy efficiency and decarbonization interventions. And then we’ll see what level of savings results and we’ll earn incentives based on, on that. The, second, which is, I’m gonna call it HEEHRA (High Efficiency Electric Home Rebate Act), uh, might be passe at this point, but we’re going with it. Um, HEEHRA is more of an electrification end-use unit incentive program. So this is a program where incentives are paid at the point of sale. So you as a resident would either find a contractor or go to a retailer for one of the incentivized devices, you would receive credit at the point at which you’re, you’re purchasing that thing. And so that reduces the first cost rather than some of the more traditional energy efficiency programs, which not getting too deep into the <laugh> the weeds of vernacular for our industry, but they’re known as downstream programs where, you know, the customer will get a rebate, let’s say in the mail six weeks or so after making the purchase. But the point of sale, uh, rebate or incentive really addresses that first cost issue for folks who can’t float the money. Uh, and that program in particular is directed towards low and moderate-income folks. I believe I, I would need to look at the area median income limitations for that, but it’s really meant to address the folks who aren’t necessarily gonna be early adopters for economic reasons. So I’m happy to, to go deeper on any and all of that. Uh, the, the last piece that I’ll say is that for those two programs in particular, the funding will be coming out through the state energy offices and everyone is waiting with bated breath for, uh, guidance from the Department of Energy, which is due to arrive on our doorsteps sometime potentially in the next month. So to be continued.
LL:
To be continued indeed. Ellen and Jeana, since I know that you both specialize in a little bit in, in different sections, I suppose is the best way to put it, then Erin, are there impacts to some of the work that you do or potential impacts from, from IRA, um, or other areas outside of the HOMES in the HEEHRA that you are finding impactful in your work that maybe we wanna clarify before we move forward or?
ES:
I think the only piece that we may wanna elucidate a little bit more is, again, you know, how the funding streams are going to work. Um, and Erin, you’re our expert here, so Erin, correct me if I’m wrong, but again, a lot of these funds will move through the Energy State offices and then each state based on the federal guidelines that hopefully are coming out in the next month. And Erin reference will have the ability to use those guidelines to design programs that are gonna be locally appropriate, um, in terms of the different design elements. Um, and so I think that’s a really good flexibility piece that they’ve built into this. And I think one of those things that I continue hearing from our utility clients is this idea that, you know, what is going to be the impact of this funding? How does this add to, and hopefully accelerate our movement towards decarbonization.
But you know, there’s just a lot of, I think, questions that we’re hearing in terms of, again, how do these funds work with other funds? You know, all of these different types of funds will have different rules associated with them. And so how do we think about those types of things? You know, again, one of my passionate areas is workforce education and training and you know, being part of what does that look like? You know, how do we make sure the curriculum is solid and solid means, not just from a technical perspective, but making sure we are incorporating instructional design principles and adult learning theory into, that material. And then there’s been a lot of investment in workforce education and training, um, in the past from an energy perspective. And again, how do we make sure that if someone going to a class is great, but if learning doesn’t occur or you’re not able to apply that learning on the job, then that investment may not be reaping the rewards we’re hoping will be.
So we’re at a tipping point really in this situation where we can train and retrain existing contractors in these spaces to really focus on, we’re going to install this heat pump to maximize energy efficiency into air quality and greenhouse gas reductions. And that’s what we wanna get to. And the beauty of that is that we get to then also kind of redefine this trade because it is more than just going on a dirty roof or go climbing through an attic, um, to do these types of upgrades, but it actually is the ability to potentially become a hero for our country and in, in this fight of climate change. And so I think there’s a lot of exciting things, but that might be the point I bring up. Jeana thoughts?
JS:
Yes, Ellen, I was thinking along the same lines as you as, I think the biggest question for me is how do we keep this influx of funding from competing with all of the, you know, structural funding that’s been in place for the past several decades? And so how do, like what is the plan for encouraging collaboration across program administrators at the private level with utilities as well as the government level, federally and state? For example, I know the program Erin mentioned, HEEHRA, has money set aside for electric panel upgrades, which it’s my understanding that most utility programs wouldn’t be funding incentives for that type of renovation in a home. However, it’s gonna be necessary for fuel substitution projects and electrification, um, advances. So how do we assist the industry in kind of working together and handholding in those places that the programs can really lock together in step and, you know, provide a more comprehensive service to both residential and commercial customers?
EK:
Yeah, there’s been a lot of really interesting conversation recently about the idea of a one-stop shop or sort of like a concierge model that can help really combine all of these different sources ahead of the customer’s interaction point. Because it’s, I think, kind of a fallacy to think that a customer who – I think we’re still operating under the assumption that folks think about their utility bill like eight minutes a year, you know, to expect individual residents or even small and medium businesses to think deeply about the, you know, eight to ten or more different types of funding that are at their disposal and what the requirements are of each to, to both of your points is probably not realistic. And it’s not even just the need to combine or figure out how to enmesh the incumbent programs that exist already with all this new funding.
It’s the different streams of funding within this bill as well that have to work together. You know, there, the funding is coming out through a variety of different models. It’s coming through tax credits, it’s coming through rebates, it’s coming through, uh, apprenticeships, uh, apprenticeship assistance. And even with the workforce education and training, it’s true Ellen, that the, uh, there’s 200 million that set aside for workforce development and training that will be coming through the state energy offices that those state energy offices will be able to direct. But I believe there’s also a couple other pots of funding and, and apprenticeship requirements that are embedded within the other funding. Uh, you know, a lot of that funding is coming out through the EPA via the Greenhouse Gas Reduction Fund. There’s the Energy Efficiency Conservation Block grants that were through the earlier, uh, legislation. So there’s an awful lot at play here. It’s gonna be a really interesting challenge for all of us to, to figure out how it’s going to, to basically play nice with each other and just make sure that the communication is there.
LL:
There are a lot of variables at play here, especially speaking, um, you know, as a, as a company that focuses and does a lot of work on research and evaluation. I’m gonna, you know, feel free to jump in anybody, but I am gonna kind of point to Ellen first. Can you speak a little bit to how that, the complexity and the, um, interactive nature of all of these things, what does that, what does that mean from a implementation or which, maybe Erin can speak, to or evaluation? How does that impact the work that we do or how should it be impacting it, maybe is another way to look at it?
ES:
Well, thanks Liz. Um, yeah, so we have had the, uh, honor of actually evaluating two of the largest decarbonization programs in the country for California. Both, um, BUILD and TECH. BUILD is a new construction electrification program. And TECH is a, uh, program focused on retrofits, but specifically on heat pump water heaters and air source heat pumps. And through that process, these are new markets, especially in California. You know, there were definitely policy barriers and other barriers in place, um, especially on the water heater side. Um, and so these are really pretty, I mean they’re very emerging markets. Um, and so when we designed our evaluation for both BUILD and TECH, we took what we’re calling a developmental evaluation approach. Developmental evaluation isn’t new. Um, George Patton, who is a very well-known academic theorist in the world of evaluation, not energy specific, you know, talks about developmental evaluation as a process that includes asking kind of evaluative questions and gathering information to kind of provide feedback and support with developmental and evidence-based decision making and course-corrections along kind of an emergent path.
So, these again, are programs that… TECH and BUILD, you know, they are purposely pilots, they’re purposely there to try and pilot different techniques and strategies so we can then, um, learn from those and figure out which ones scale and which ones don’t. And so this idea of, we’ve been able to, we were hired about the same time as the implementer and we served, again, we’re still independent, we’re still third party, but we sit in on the design of the program, their strategy, so we can make sure that we design good evaluation near-term/real-time type evaluation so we can then feedback loops and data so then they can make modifications. And I think it’s worked really well. So developmental evaluation is somewhat of a, you know, we talk about evaluation historically in many different ways. You know, we have formative versus summative.
Formative is a little bit more like developmental evaluation is that you’re trying to put time points into the process where you’re measuring things and not waiting two years later. And we talk about qualitative versus quantitative methods, and we talk about impact process and markets. So lots of different types of frameworks. This framework is trying to take the best of all of them. We don’t have the luxury anymore from a time perspective of saying, we’re gonna do a program for three years, we’re gonna then take a year to evaluate it, and then we’re going to put the lessons learned at the next program. We don’t, from a climate perspective, have that time and I think we have to acknowledge that. So again, we’re purporting, especially with new markets pilots. Um, and again, programs are going to evolve by their nature that we need to be doing developmental evaluation.
And so when we think about developmental evaluation, we talk about kind of this perspective of complexity. So again, the methodologies are very much focused on interconnections between each of the different program elements. Um, we talk about adaptability. So again, it’s not a clean process. Sometimes you write a general evaluation plan, but they- all stakeholders need to understand that’s gonna change. So, for example, we are exploring public donation of metered data in California, um, and we are exploring where’s that line? Like when we think about, you know, as researchers, we’ve always like, oh, protect PII (Personal Identifiable Information), but on the other hand, we give a lot of data about ourselves, maybe unknowingly to lots of different parties. And so the CPUC’S very interested in like, okay, what can we push a little bit more for public donation of data since data is so expensive to acquire?
Um, and so we didn’t have any plans, like this is a new idea. So then, all of a sudden we did ten interviews. They weren’t planned, we just literally did them. We designed them in a week, we implemented them to understand where people’s questions were going to be about this new approach that wasn’t planned for. But again, as evolve, as new ideas come into play, we’re able then, or an evaluator of any sort, can actually move and be agile with that. Again, this is important, though. Even though we’re walking alongside, we’re still keeping an independent third-party view. We’re feeding data in based our other experiences and feeding in our knowledge and expertise about what data you should collect. But again, ultimately still the program implementer who’s actually deciding what they want to take that information and apply it. We also are very focused on utilizations.
The research is very timely and very and designed to be very active. We wanna make sure we can get insights quickly back into that feedback loop. So these, all these pieces allow us to both think about, we’ve gone through different, I think, historical trends at one point we’re gonna do impact and process evaluation together. At another point we are going to do them all separately and they done by separate people. This is really, again, capitalizing on this interconnectedness piece. So like, we’ll take the TECH program as an example. We look at the program itself when we do impact and process evaluation, but we’re also looking at the market and understanding what the market is doing so we understand what kind of efforts could TECH build upon or are TECH actually driving. Um, we’re also talking about the policy landscape cuz that’s changing every day. New policies are being passed. Um, and again, how does that interplay with what’s going on in the program? And then, finally, we look at the technology piece. Technology is advancing rather quickly in this space. And so being able to stay on top of that enables us also to understand the impacts the programs having, but also really codify the lessons learned and best practices, um, from this program. So they can be applied to other programs that we know are coming down the pipe. But no, that was a lot Erin, thoughts?
EK:
Great. Yeah, so I love the, the definition of developmental or you know, maybe we’ll someday call it evolutionary evaluation. We’ll see. Um, and in the context of the Inflation Reduction Act programs, I think in particular in relation to the HOMES and HEERA portions of the funding. So HOMES and HEEHRA are gonna total I think 9 billion, uh, together. And it’ll be up to this, each state and territory and, and tribe how to develop a program in response to the guidance that’s coming out from DOE uh, DOE had actually issued, uh, a request for information back in March asking for I think, response to something like 73 questions. Some of which had to do with, you know, what do we do since this program’s life cycle is ten years? And to your point, Ellen, the market changes, the technology changes, the policy changes, and so how do you make a program that’s reflective of those changes?
And I, I wouldn’t be surprised if they got quite a few responses saying, you know, these programs need to be adaptable. I haven’t seen evaluation being a huge topic of, of these conversations just yet, which has been interesting because there’s been a really big focus from the states in particular on ensuring, uh, a prevention of waste fraud and abuse is, is sort of the term, uh, of art that’s being used. And it seems like a process like this, a developmental evaluation process, would be ideal to ensure that the money being spent is supportable, that it’s being applied where it’s needed, and it’s responsive to the changing market conditions. So, you know, we’ll see what comes out in the DOE guidance about any sort of requirements, any sort of data collection requirements as well. But it, it seems like the right time to be having this conversation.
JS:
That’s a really good point.
EK:
And that’s not just cuz I work here <laugh>
JS:
<laugh>, that’s a really good point, Erin, because I was at an evaluation conference, uh, last November and there was a speaker who was talking about IRA and the plans, a representative from the DOE, and obviously because the audience was mostly evaluators, the question of program evaluation came up and what the expectations would be there. And even at that point, you know, that was several months ago now, uh, they weren’t sure, you know, what the requirements for evaluation were gonna be. But I think it is so clear that evaluation of this massive amount of funding will be necessary to ensure that the program is accomplishing what it intends to, but also is re-correcting so that we’re not learning about pitfalls after the 10-year period. And I think that’s why developmental evaluation in particular is a way to not only provide feedback and continuous improvement opportunities as the programs go along in implementation, but also to ensure that the utilities and government entities involved in the implementation of these programs remain nimble themselves, which we know has been historically a challenge, uh, within the industry. So I think that evolution throughout the next decade while we’re looking at this funding, could very much be aided by this concept of developmental evaluation and continuous improvement of the programs.
EK:
And I think that’s a really important point about the objectives of this funding because different programs have different objectives and if they’re all gonna play together nicely in, in the same sandbox here, it’s gonna be really important to, and I don’t wanna get into a discussion about attribution specifically right now, but I think the ideal is transformation of the market. And so having that sort of complexity viewpoint and being able to track these broader trends, uh, as opposed to, you know, did this $1 do ‘X thing’ that you wanted it to is gonna be really important, I think, in order to achieve the goals of, of the DOE. But I think that the developmental evaluation process and having that complexity perspective is gonna be really when it comes to achieving the goals of, of this broad swath of funding.
ES:
Yeah, and then Erin, I think as you were talking, it made me think about, you know, as well as embedding into this evaluation framework with developmental evaluation, some mechanism to make sure we’re sharing those best practices and lessons learned as they across the different states. So again, everybody’s hopefully gaining that knowledge and ability to implement and activate those insights.
EL:
But this isn’t the first time that we’ve seen a large chunk of money put forward as a way to help with solutions. And I, I am seeing discussions talking about lessons learned from the ARRA funding, the American Recovery and Reinvestment Act and, and how that’s playing out on the ways that people are approaching, um, or thinking about the Inflation Reduction Act and IRA and I didn’t know if any of you had thoughts in terms of whether it’s related to evaluations that came out of ARRA funding, but are there lessons just in general that we can learn from that or how they might apply or draw those connecting dots?
JS:
Yeah, Liz, I’m having a lot of feelings of nostalgia as we’re having these conversations about IRA and BIL because I started my career in the age of the ARRA funding, you know, when we got nearly 800 billion uh, you know, blast into the economy in response to the housing crisis to get us out of a recession in 2009. One of my first projects within the energy industry was actually talking, in person, to community action program representatives in Massachusetts, uh, talking about how they were feeling about the ARRA funding being meshed in with utility funding for the weatherization assistance program in the state. Uh, Massachusetts got one of the largest assignments of that money, and uh, it was, it was stressful, it was exciting, but it was stressful. So, the good news is it does feel like there are elements of IRA and Bill that have learned lessons from some of the chaotic excitement that happened during ARRA where, you know, before ARRA was meant to be spent in only three years. And now with this IRA funding we’ve got a whole decade which the, you know, issues we were just talking about with Ellen and Erin who allows for much greater investment in the workforce and allows for a less of a temporary bandaid of funding fit. Uh, we also are all acknowledging the need for collaboration and realizing that the funding streams can’t be competitive, that to really achieve the objectives of the federal programs that utilities and the state agencies will need to work together to ensure that the funding interlock and provide comprehensive services for customers. And I think the partnerships and the collaborations specifically at the community organization level is also really important and realizing that some of the funding recipients aren’t used to receiving these great amount of funds, you know, in this way. And so trying to provide support either administratively or on the implementation side to have everybody working together and provide, you know, the guidance needed to really make sure this funding flows directly to consumers in the most effective way possible.
So I think with all of the, you know, lessons learned from ARRA, there are some challenges that are presenting themselves with IRA and BIL that are reminiscent of what we saw with ARRA that maybe haven’t been fully learned and put solutions in place. Uh, for example, you know, the nimble nature of the programs and the individual customization across regions and states that variation provides really market-specific opportunities but can also create confusion in the market. Um, you know, if people are hearing about money funneling from their government or utility in different ways, additionally, as we noted, there’s clearly a need for massive collaboration, but I’m not quite sure if there’s a plan in place for that. And although we do have ten years to spend the money rather than three years to spend the money, I don’t know how much of that ten years is intended on that front-end planning, uh, and program design piece.
Um, which maybe means, like what Ellen said, that the need for it to be continuous throughout the 10-year period is even more important. Lastly, you know, there were four additional mandates that were tied to the ARRA funding back in 2009. There are multiple funding streams and channels, as Erin mentioned, for this IRA and BIL funding. Sometimes when you have that many designations, there can be conflicting goals and I think illuminating those and trying to keep any of the funding streams from competing from one another will be really important, um, to document and thoroughly discuss and designate because I think we’ve all seen that the legislation does not intend for this new IRA funding to replace any of the existing programs in place, but more so try to add to that and amplify the outcomes of these programs with an influx of funding. Ellen, do you have any thoughts on that amplification element of the intent of this IRA and BIL funding
ES:
Yeah, Jeana, I think you bring up a good point because I think, you know, it’s an interesting question. Like we want this all to, you know, perfectly be coordinated, and yet we can’t let the perfect get in the way of the good, like we still also gotta get programs out there. And so I think this concept of amplification is becomes really interesting. You know, I am working on an evaluation currently of a really novel program whose role is to take existing community-based partnerships and almost basically amplify their services, um, either through additional funding or providing connections to wraparound services. And again, I think wraparound services is a very key point that CBOs play a particularly effective role at. And yet they may have one or two connections and again, the amplification comes in when we’re trying to make, you know, record expungement, um, you know, a wraparound service, uh, travel support, a wraparound service, childcare, a wraparound service.
Um, and so I think those are really important pieces to continue to think about how do we provide those services. One of the things I think we have to be super careful about, and I’m gonna go back to workforce education and training, but I’ve heard some discussions where, you know, there’s focus on, oh well that’s too much time to ask someone to do the training. And I think we have to just make sure that, like the training needs to be based on good needs assessment development of effective learning objectives and effective of, you know, excellent learning and training intervention. And that can’t be delivered by time. It takes whatever time it’s gonna take and you know, by trying to quick start or you know, take a shortcut, we’re doing a disservice. But what we need to be doing to me is focusing on those wraparound services.
So again, it may be difficult for an underrepresented worker to access the training. That’s the problem we need to be solving, not trying to make it shorter <laugh> unless there’s really a need to make it shorter. Um, and so again, I think those are really important pieces, and again, I think, you know, Jeana brought up a really good point. As we have heard the intention of this funding is not to replace existing programs, it is to what all, again, use the word amplify it is to amplify those programs is the ability to be able to further our reach with these programs so that we can again deal with climate change. It’s here, we don’t have a choice <laugh>. So you know, I think it could be easy for an organization to get almost caught up in this idea of like, oh, well I can’t act cuz I don’t know enough. And so again, where’s that balance? And you know, having some direction hopefully DOE will be providing that. But also, all of us need to be thinking about what are the best communication pathways we can develop to again amplify our learnings.
JS:
And Ellen, on the topic of workforce education and training, do you feel like that is an area where we’ve improved with this IRA funding compared to ARRA? Because I recall in those sessions with those community program representatives, there was a real hesitancy to do an influx of hiring within the workforce because of the temporary nature of the funding. But it seems like from what I’ve heard with IRA is that the investment is more in the long-term career formation within the clean energy industry so that hopefully, the skills learned and brought on through this IRA funding can be used long term beyond the 10-year, you know, structure of this funding timeline. Do you feel like that’s accurate? Do you see that the intentions might match the solutions?
ES:
I do… that the intentions match the solutions and, and what’s nice about this is that it comes along at the perfect time. So independent of IRA funding, we have a mass level of individuals in these trades retiring 20 to 30% is the estimate. And so, like, you know, we need to make progress on kind of undoing some of the expectations. Oh you know, someone has to go to a four-year college to be successful. Well, is that really true? You know, and be able to again, talk about these jobs, I think in a different way because they are so important to the climate change story. Um, and you know, see there’s a whole bunch of really cool equipment now and metrics and I think things are just not talked about enough about when we’re thinking about people who may wanna go into these fields. Um, and that’s everything from, you know, think about how we educate our students. I mean, probably eighth-grade Earth Science is maybe the best place to start the conversation about energy jobs, but that’s not in our curriculum, that’s not in our textbooks today and there’s lots of great people working on that currently. But how do we start to embed even earlier on that ability for that to be an option, to be an opportunity? Cuz again, if you don’t know what you don’t know, then you don’t know there’s a trade there to go after you don’t know how to get there. And so again, I think it is a perfect opportunity because we need people in these, these trades anyway. And yes, we are trying to transform this market, and that means these skills are not going to be not needed, there’s no doubt in my mind they will continue to be needed and grown.
EK:
I think that last point is, is really an important one to emphasize again as well cuz these programs are pointed at total market transformation and you know, we’ve been talking mostly about the HOMES and HEEHRA portions of it, but there’s also a massive amount of funding for clean manufacturing initiatives and local content requirements. You know, this is, this is all about trying to build a stability of expectation so that the, the investments that are being made today aren’t sort of a, a temporary bump, but something that be maintained into the future.
ES:
I like it. No, absolutely <laugh>.
EK:
Yeah, the, the point about communication, I think, is also an important one. Like we’ve said before, we’re still waiting for guidance from the Department of Energy about the, the residential side programs we’ve been talking about. But there has been some indication that they’d really like to see these programs augment or accelerate or amplify what’s already in place, even just through the, the FAQ that have become available on like the, the DOE program websites. And there are mechanisms in place in some locations to, to really accommodate that. My playground historically has been in Massachusetts, I came up through the regulatory system there and I believe that there’s a, a mechanism, uh, in Massachusetts by which the existing energy efficiency programs can undergo like a midterm modification. So that allows for some nimbleness or flexibility within the existing regulatory paradigm that will, is gonna be essential if we’re actually going to make these programs align.
It would be great if, you know, that were a practice that could be undertaken sort of across the board so that you don’t have utility or other third-party energy efficiency programs that have these baked-in plans that are inflexible in the face of, of new forms of funding. Um, also, we do keep talking about the, the 10-year lifespan of this funding, but it’s, it’s unclear whether it’ll actually last that long. You know, some folks are saying, you know, a lot of the, the funding at least on the residential side might go out the door in the, in the first couple years. And so it becomes all the more important to make sure that we’re not, to your point, like letting the perfect be the enemy of the good while acknowledging of course that we need to also do it right and do right by communities who have not been done right by in the past. Uh, so it’s really finding that balance that’s, that’s gonna be very tricky and I think is gonna require a degree of flexibility that may be new for, for a lot of locations and territories.
ES:
And Erin, that’s a good point. You know, if we look at pilot programs across the country, look at Texas, look at California’s, the TECH program was part of this. I mean, you know, these funds were bought to last three to four years, and often they ran out of funding, you know, four to six months. That is an interesting piece to this. And again, they were very, uh, advantageous shall we say, in terms of their incentive amounts and such. But again, like I said, we have an opportunity to do this right. And I think that is, that has to be the underlying goal here. Um, and it’s a hard thing cuz sometimes, you know, again, I know what these types of large acts, the goal is to spend the money on some level. Um, and yet how do we make sure we spend the money in a way that, again, maximizes the outcomes that we’re looking for, so.
EK:
Right. Heat pump water heaters have been one to 2% of the total market for a decade now. And if we’re hoping for them to become the, the majority of the market, then we really need to squeeze every tiny bit of learning that we can out of every dollar that goes into the market currently.
JS:
And I think that goes back to Ellen’s point of the developmental evaluation being so important because you know, what is gonna be the objective of spending this money? Is it to touch as many people as possible? Or is it to provide as deep of savings in as large of retrofits per building as possible where people might not have been able to afford that without this additional funding. Uh, and maybe there will be variation across jurisdictions in that answer, but I think it’ll be really important to be able to measure success, to know, you know, what were they actually going for with these programs and with this funding.
ES:
And Jeana, I think that brings up this good point, right? Like, I know I’ve had a couple of DOE folks reach out to me and talk about this. We absolutely need to have a common set of metrics that are clearly defined, not in just what they are, but how we measure them so we can compare across. And then there has to be also a bucket of metrics that are going to be unique to that program strategy, that program intervention. And so again, thinking about that is also seemingly, I mean it’s key if we don’t, if we miss that stuff upfront. And that’s again where developmental evaluation does come in because you spend that time making sure that the program tracking data actually matches what, what we need to use it for. Um, I can tell one of the lessons in TECH, you know, we found a specific field that was being interpreted differently by the contractors than we intended it to be interpreted all of a sudden then instead of finding that out in three years, like we figured that out in two weeks and said, wait a second, they’re interpreting it this way, we want it this way.
And we’re able to put in, you know, a quick like message or definition of that metric into the application database, you know, we solved it within three weeks. Like that’s a very different temporal element that is so key to being able to kind of make sure we’re getting that right data.
JS:
And Erin, you know, you brought up that we’re waiting to hear some exciting news from the DOE this summer. Do you know what we are expecting to hear? You know, like what should we be waiting for <laugh>? Uh, or what do you wish we could, we are going to hear later this summer to get some of the answers to the things we’ve been talking about today?
EK:
Yeah, let me just, uh, let me just dust off the crystal ball that I have on my desk here and, uh, and pull it out <laugh>. Um, no, and, and you know, I have all due respect to all the folks at the DOE who are working mightily to provide the guidance that everybody’s waiting on. This is no small task and, uh, you know, you, you can’t please all the people all the time. So I’m sure that they’re gonna catch flack no matter what comes out. But my gosh, like, thank you <laugh> for all the work that’s being done. If, if you’re any of you are listening to this, I hesitate to prognosticate too much. And especially since we really are on the eve of some firm guidance, I would just point people to the FAQ page that exists for the state and community energy programs site, the, the SCEP site through DOE, which is the section of the department that will be administering, uh, these HOMES and HEEHRA funds.
There are some, some good FAQs there. Uh, in addition, the IRS has been coming out with guidance on a lot of the sort of overlapping tax credit that are available, uh, to, to residents in particular. So the, the 25 C and the 25 D tax credits still have a few open questions about them, but, um, there’s some good guidance already out on the IRS site and I believe that the IRS has also instituted a, like an IRA-specific page to make it a little easier for folks to find the information that they need. So I’m gonna, I’m gonna punt on that one respectfully, but definitely use the opportunity to, to give a huge thanks and shout out to all the, the good folks <laugh> working on, uh, producing the, the guidelines that we all need.
ES:
I know that in this state of California, you know, there has been comment rounds where the CEC is asking specifically from, you know, customers what they’d like to see, you know, getting some guidance. Some of that’s also was just interesting to kind of hear, you know, actual customers talking about this. And again, there, there’s definitely a bit of an angst there. Um, and so, you know, things to think about, unintended consequences of just anything this big, right? Like they said, they’ve done an amazing job. But I know that’s one of the things too that’ll be interesting to see how it plays out.
EK:
Yeah, that’s been a tough piece is the, the communication around these incentives to a broader audience and, you know, should it be handled at the federal level, should it be handled at the state level? It’s, it’s gonna take a, a village to get us all there for sure. And some of the pieces had to fall in place first, you know, there, there are eligibility requirements for the equipment at issue here that had to be sorted through between Energy Star and CEE to figure out what tiers were gonna apply to different programs. And you know, there, I think, uh, the initial stages there was a slight mismatch between the tax credits and the, uh, the incentive program. So, there was a lot of stuff to be worked through just to even harmonize these federal lines of funding, let alone everything else that exists already. So, yeah, again, to the point about coordination and, and communication, uh, those are gonna be big ones and, you know, the, the door is not closed from what I understand on the idea of retroactivity, but you know, again, stay tuned… we’ll see.
JS:
I know all of us energy industry nerds will be waiting with bated breath for the, the next level of guidance because I think with each official communication we get this funding, you know, becomes even more real and exciting for what it can do for, you know, our country and its energy transition that it’s moving forward with.
EK:
Yeah, it’s, it’s a really ‘rising tide lifts all ships’ kind of situation. You know, if you’re, uh, if you care about carbon in particular, you know, there’s a lot of, uh, electrification, incentive money. Uh, if you care about bringing manufacturing to your state, there’s a huge amount of manufacturing support. Workforce development is gonna create just a boatload of jobs, hopefully across the board. And, uh, it’s, there’s something for everyone in there. So it’s an exciting moment to be in this industry and, and hopefully to be anyone here in this country who can actually benefit from, from what’s gonna be happening. So we’re on the cusp of, uh, some very cool stuff.
LL:
I, I think that we, um, as, as a company and as an industry are incredibly lucky to have the experts, uh, such as yourselves and people as an industry thinking about these things and looking forward at how we can do this right. Thank you very much for your time, my guests again today. Were Dr. Ellen Steiner, Jeana Swedenburg, and Erin Kempster. I appreciate all of your time.
End music.
🔗Links from the discussion🔗
Text of the Inflation Reduction Act: https://bit.ly/3DbVvM0
White House IRA Guidebook: https://tinyurl.com/3m2m9xhc
Clean Energy Open Funding Opportunities (aggregates from across federal departments): https://tinyurl.com/bdhd3m47
IRS Inflation Reduction Act landing page: https://tinyurl.com/mjdpx3za
Office of State and Community Energy Programs Home Energy Rebate Programs FAQ: https://tinyurl.com/nhkt6adh
Workforce Development and Business Owner Training Programs: https://tinyurl.com/5n975s7b
Also check out our memo: Developmental Evaluation for IRA Programs