Get ready to save money. What you should know about the federal rebates for home energy upgrades

The first phase of rebates for energy-saving home appliances, funded by the Biden Administration’s Inflation Reduction Act, is officially open.

The upgrades aim to help low- and middle-income renters ultimately save on their bills, and assist building owners in installing energy-efficient and less polluting appliances.

What do the rebates cover?

The rebates offer between $700 to $8000 back for appliances such as heat pump water heaters and HVAC systems, induction stoves, electric ovens and more, plus the necessary electrical panel upgrades to support those installs. Only equipment installed from now on can be covered by the rebates.

Who’s eligible?

This first round applies to low- and middle-income apartment buildings with five or more units. For a building to qualify, more than half of the units need to have tenants who are at or below 150% of the area median income.

For example, in L.A. County, a four-person household making $147,000 or less would qualify and in Orange County a four-person household making $193,500 or less would qualify.

Why it matters

A major portion of the planet-heating pollution we generate is tied to fossil fuels used in our homes via gas appliances such as water heaters, furnaces and stoves.

As we transition to cleaner sources of electricity such as wind and solar, we need to do two primary things at home: better insulate our homes so we need to use less energy, and swap out old appliances for highly efficient electric ones, such as those covered by these rebates.

Another reason to swap out gas appliances for electric? The pollutants from appliances such as gas stoves have also been found to be harmful to our health.

The background

California was one of the first states to submit an application to receive this home energy rebate funding. The Biden Administration's Inflation Reduction Act is considered a landmark piece of legislation. It's the single largest federal investment in history to help local cities and counties across the country adapt and respond to increasingly severe heat, storms and drought. Rebates like these are one piece of that legislation, and they aim to help people upgrade their homes to be more resilient to things like power outages and rising energy costs.

California received $290 million in June to implement home energy rebate programs. $80 million of that funding is available for this first phase.

Do you save money?

Yes, that's the idea. That said, the upfront installation costs for these newer appliances are high, which is the purpose of the rebates. Ultimately, these highly efficient devices, especially when paired with solar and battery storage, will help households cut costs.

For example, switching from traditional A/C to a heat pump can save you more than $300 per year. When combined with additional efficient electric appliances and solar and battery storage, household savings are estimated to be in the thousands per year. Before you consider appliance upgrades, it’s also a good idea to first ensure your home is properly insulated — that will further help you save money because you'll need to use a lot less energy in the first place.

How to apply

The building owner or a certified contractor must apply for the rebate. You can find certified contractors here and learn more about how to apply here. If you're a renter interested in upgrading an appliance, you can share info on the program with your landlord and encourage them to apply.

What's next

The California Energy Commission says rebates for single-family homes will open sometime in the next few weeks.

Learn more about qualifying appliances

• Heat pump water heaters
• Heat pump HVAC
• Induction stoves

More resources and info on home upgrades and electrification