Despite the benefits of the Inflation Reduction Act (IRA), a large number of homeowners have not taken advantage of the tax incentives. This presents a unique opportunity for contractors to tie these tax savings into their customer offerings. Educating homeowners on the benefits of the potential tax incentives will drive sales and improve cost savings for consumers interested in electrification products — creating a consumer mindset shift that will positively impact our industry and help us reach our climate goals.

What the IRA offers homeowners

As the single biggest climate policy in history, the IRA includes $370 billion in investments and takes a unique incentive-based approach, a golden opportunity for homeowners to embrace clean energy solutions and start their electrification journey. One of the most monumental parts of the legislation is that the incentives are uncapped and renew every year — meaning the IRA can benefit an unlimited number of qualifying homeowners.

The IRA isn’t limited to solar projects. The legislation provides homeowners with extensive benefits for a wide range of electric products such as solar panels, batteries, HE HVAC, heat pumps, windows/doors, EVs and EV chargers, breaker box upgrades and energy-efficient home appliances.

While tax incentive and rebate programs provide consumer discounts to cover the partial, or in some cases, full cost of home-efficiency projects, home electrification and appliance rebates provide immediate, income-capped discounts to help low- or moderate-income households electrify their homes.

The home efficiency rebates program rewards homeowners who achieve energy savings of at least 20% (modeled) or 15% (measured). This means that the installation of rooftop solar can lead to significant cost savings for families when they reduce their energy output.

The economic benefits of the IRA are extensive, but it’s also important to remind consumers that cost savings and saving the planet can go hand-in-hand. Solar power and utility-scale battery installations are making up a larger part of America’s energy grid, leading to an 8% year-over-year reduction in U.S. power-sector emissions in 2023. This resulted in a growing economy paired with shrinking greenhouse gas emissions — a phenomenon that has not occurred since before the Covid-19 pandemic — and a clear sign for optimism.

How contractors can tie in tax incentives

The structure of the IRA is not only intricate, but the rebate program is also dependent on how states administer funds — making this legislation complex for contractors and installers as well as homeowners. Relevant clean energy stakeholders need to make sure team members understand these intricacies and can market these incentives to homeowners accurately and with confidence.

For most homeowners, the electrification journey begins when consumers seek to replace an existing electric version of a product that no longer works or improve its performance and safety. Electric appliances, high-efficiency HVAC, an electric panel/breaker box or a heat pump are common products that are replaced or upgraded in this stage.

While homeowners look to a variety of places to help them research and make decisions about electric product purchases, general internet searches and customer reviews are the top sources considered. As a result, companies’ customer testimonial programs should not only be found in internet searches and customer reviews, but it’s good to reference authentic examples of customers who have achieved increased savings through IRA initiatives.

As homeowners adopt more complex products — such as solar panels and electric tankless water heaters — contractors have a greater opportunity to refer homeowners to online resources that provide clear, reputable information about the IRA, as well as have personal conversations about the long-term savings the legislation can provide. As rebate programs are expected to enter markets in select states early next year, homeowners should be encouraged to act promptly when opportunities arise.

The challenges of a new approach

Adjusting an existing company’s sales approach is never an easy task. By incorporating tax incentives into the sales and marketing process, companies will be forced to provide more training, a revamped online presence and a new sales strategy. Many contractors and installers, who have operated in the same fashion for most of their careers, may also be resistant to adopting a different sales method.

This education process will also extend beyond basic awareness of available tax incentives; it involves honing the ability to articulate these benefits persuasively to potential clients. This calls for comprehensive training programs that not only impart knowledge about tax structures and incentives but also focus on refining the IRA messaging in contractors’ sales pitch. Recognizing this, companies must be prepared to invest in training initiatives and provide employees with the knowledge and confidence to drive new sales.

The growing adoption of electric products, coupled with the significant tax and rebate benefits offered by the public sector, have ensured clean energy companies have a unique opportunity to educate customers on the cost-saving legislation of the IRA. Contractors will be a significant part of the clean energy movement and while there will be challenges along the way, a new sales approach will help to improve the lives of consumers, drive business growth and protect our planet for future generations to come.

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Billy Parish is the co-founder and executive chair of Mosaic, a leading financing platform for U.S. residential solar and sustainable home improvements.