Retail Observer

RETAILOBSERVER.COM MARCH 2024 54 Frank Sandtner, Senior Director of Business & Financial Services, Nationwide Marketing Group INFLATION REDUCTION ACT: MOVING FROM CONCEPT TO ACTIVE STATE INCENTIVE PROGRAM Frank Sandtner Rebate Incentives I f you've followed the news updates on the Inflation Reduction Act, you might wonder where things are since the state-level programs were announced in 2022. Frankly, you haven't missed much. However, significant events have happened behind the scenes, including development of the state application process, funding to the states in preparation for the rebate programs, DOE best practices development to help states submit applications, and development of software, controls, and processes to manage rebates. On January 17, the DOE announced that the first applications in CA, HI, NM, and NY are under review. Modifications may be needed, but once processed those states will be funded to start planning their launch. Some of these states will likely have their programs running by mid-2024 — exciting news for those states and the consumers who'll be eligible for rebates. Retailers in those states and others across the country will need to be prepared for customers who'll come in preapproved for or seeking a rebate. What will their role be? How will they process rebates? How are DOE and the states ensuring that retailers are ready to work with these customers? Throughout this process Nationwide Marketing Group has worked with the DOE to ensure that independent retailers have answers to these and other questions. NMG aims to ensure that independent retailers can access the tools and resources to help their customers with the rebate process. We've learned from the DOE that there will be two ways independent retailers can process IRA transactions: (1) through an API from the retailer's existing POS system to the DOE rebate system, or (2) a manual process. Let's look at how each process works. After announcing the IRA programs, the DOE engaged PNNL (Pacific Northwest National Labs) to build workstreams for the various rebate scenarios. They came up with 18 scenarios that consider whether a retailer or contractor is involved, or if a homeowner is attempting DIY work. Based on these 18 scenarios, PNNL is developing sophisticated software that can be tied into a retailer's POS system and take care of the heavy lifting on some critical verification steps, including: 1. Ensure that the customer has completed income verification 2. Make sure the address of the home to be upgraded qualifies 3. Determine the dollar amount of the incentive, based on product selected 4. Make sure the vendor is qualified 5. Ensure that the incentive doesn't exceed any cap that may apply 6. Reserve state funds for the home upgrade 7. Issue coupon codes to retailers/contractors, redeemable via the state 8. Capture post-installation information to allow release of funds to the retailer/contractor 9. Enable returns and exchanges by the customer As you can see from these scenarios, the API will be the preferred approach to make sure the required steps are followed. To that end, Nationwide has introduced the DOE and PNNL teams to all the major POS vendors used by our members and many other independent retailers. The goal is for our POS vendor partners to build a connection to the DOE's API to handle all verification steps seamlessly, instead of needing to be done manually. If a retailer is unable to access the API for any reason, all the above steps will need to be managed and verified manually. Fortunately, we've made it clear to the DOE that they need to develop manual processes for the above steps so as not to bar independent retailers from participating in the rebate programs. We've been assured that is their plan. What about the 46 states that haven't applied? Each state has until August 2024 to let the DOE know whether they will apply for the program, or if they'll develop their own system to handle the rebates. States that intend to apply will then have until January 31, 2025 to submit their application. The DOE is regularly updating www.energy.gov/ scep/home-energy-rebates-program-status-state-applications with state application statuses. You'll notice on the linked list that each state has only applied for the "Home Electrification and Appliance Rebates." There's another IRA program, sometimes called HOMES, that deals with energy efficiency. Each program has about the same incentive dollars. Fortunately, the Home Electrification and Appliance Rebates are focused on heat pump dryers, electric stoves/cooktops, and heat pump water heaters. It also has a focus on low-income households. If you operate in multiple states, you should know that even if each state uses the DOE rebate system, the program might not be the same in each state. The DOE said that some states may put all the incentives toward multifamily or low-income households. Finally, some states may not use the retail channel for their IRA programs, but may opt to rely solely on contractors. Nationwide will monitor these rebate programs and work with the DOE to keep the independent retail channel at the forefront of these discussions. RO

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