The IRA – Inflation Reduction Act – is a new US federal law passed in August of 2022 that aims to invest into domestic energy production while promoting clean energy. This law directly affects utility companies as this electrification incentive will power a wave of new electric demand.
What does this mean for utility customers?
To simplify it, the government is incentivizing consumers and businesses through the purchase of energy efficient appliances, EVs, solar panels, and other energy-efficient products through tax credits and rebates. This will lower energy costs in the short term and over time help mitigate drastic weather volatility and other symptoms of climate change. The ultimate goal is to provide a healthier energy future for our kids and generations to come.
What actions should utility companies take right now?
Here are three important next steps:
1. Start communicating to your customers and educating them on the benefits of IRA.
Educate customers on what this new law can provide them. Since this is a federally-funded state program, each state has to establish and run the program. Know what your state has established so you can educate your customers.
Make your customers aware of the specific tax credits and incentives. Many consumers are already thinking about clean energy solutions and energy-efficient products, so use this opportunity to help them save money. For example, there are rebates covering 50-100% of the cost of installing new electric appliances, including super-efficient heat pumps, water heaters, clothes dryers, stoves, and ovens. There are also rebates for households to make repairs and improvements such as exterior windows and doors in single-family and multi-family homes to increase energy efficiency. If homeowners are interested in solar, there are tax credits covering 30% of the costs to install solar panels and battery storage systems – and this even applies to community solar projects. Consumers can get upfront discounts on new EV purchases up to $7,500. For more information, visit: https://www.energy.gov/energysaver/articles/inflation-reduction-act-2022-what-it-means-you.
I recently received a letter in the mail from Pella that read “Residential Tax Credits – Now Available” on the outside of the envelope. I was curious to see what information they had on replacing windows and the IRA. To my surprise, they promoted the benefits and explained what that means for homeowners who make improvements such as replacing exterior windows and doors:
I read more on their site, which was super easy to understand with FAQs and all: https://www.pellabranch.com/tax-credit/.
Make sure you have information on your website that helps your customers understand what the Inflation Reduction Act means for them, especially if you can offer solutions that qualify for rebates of tax credits.
2. Be a leader, not a follower
Not many utilities are talking about the Inflation Reduction Act. In fact, while I was googling “IRA” and “utilities”, it was difficult for me to find any information through the utilities’ websites that spoke about this. There were a variety of different energy efficiency programs and product solutions, but I couldn’t find anything about the IRA specifically.
Be a leader on this topic. Boost your search with keywords such as tax credit, rebates, Inflation Reduction Act, and IRA, so you can be found. Generate pages of content that are informational or develop blogs. Start to educate your customers through newsletters, emails, online account management tools or even communications in their bills. Integrate it into their customer lifecycle journey so that you can help them through this evolution into clean energy. The more you talk about it, the more they’re familiar with what it means and the more opportunity there will be for you to provide products/solutions that could fit their needs. Use the tax credits and rebates as an offer to new customers. Similar to the Pella example, I only opened the envelope because it had “Tax Credits – Now Available”. It’s relevant because tax season is right around the corner and savings is top of mind for many consumers, especially in this volatile market.
This is one of the biggest clean energy legislations in US history, so be a leader in this space.
3. Develop a strategy and roadmap to create a program around the IRA
This is a marathon, not a race. We are headed toward aggressive goals in the clean energy space and this movement will take a concerted effort across the energy and utility space. Think about developing a short- and long-term strategy and a 3-5-10 year roadmap. Perhaps it’s expanding new partnerships or products that qualify or promoting existing solutions you offer today. Either way, it’s a benefit for your customers which in turn boosts revenue and takes all of us closer to a world with clean-er energy.
With our extensive experience in the utility space, Pragmatic can work with you to develop a strategic roadmap, short- and long-term communication strategy, and a positioning for yourself in the marketplace. Be the leader, not the follower. The next 10 years will have huge transformations fueled in part by the IRA, so start taking action now! Reach out now.