Energy Efficiency Gets a Raise Through Historic Infrastructure Investment & Jobs Act

powerline, bridge, buildings infrastructure

On November 15, President Joe Biden signed the Infrastructure Investment & Jobs Act (IIJA) into law after months of negotiations between the House and Senate. The $1.2 trillion Bipartisan Infrastructure Deal is a historic investment in the country’s infrastructure and competitiveness, with provisions ranging from rebuilding America’s roads, bridges and rails to expanding access to clean drinking water and energy efficiency while advancing environmental justice.

The bill was first introduced on June 4 in the House by Representative Peter DeFazio (D-Ore.) and was passed by the Senate on August 10 in a 69-30 vote, with 1 no vote. It was then stuck in the House, as the vote was delayed due to disagreement over whether the legislation should be passed without the related but separate $1.7 trillion Build Back Better Act. Ultimately, the two were not signed into law together. The House passed IIJA with a 228-206 vote on November 5 with the understanding that there would be additional efforts to pass Build Back Better.

On November 19, the Build Back Better Act passed the House in a vote of 220-213, and as it stands, includes $555 billion for climate and clean energy initiatives. Notably, this encompasses tax credits covering home weatherization and the installation of solar panels. Further, there is $109 billion for universal pre-K, $150 billion for affordable housing and $167 billion for Medicare expansion. It is anticipated that some version of it will pass the Senate by the end of the year.

IIJA includes numerous new grants and investment programs that are directly related to energy efficiency. Apart from tackling an array industries and fields, the different components in IIJA vary in amount of money allocated, eligibility requirements and application processes.

State Energy Program

States and territories are eligible to receive funding to enhance energy security, advance state-led energy initiatives and maximize the benefits of energy efficiency. Funding for this program has been increased to $500 million for FY 2022 – 26, or $100 million annually. Previous annual allocations were approximately $62.5 million. Additionally, there will no longer be a match requirement to receive funding.

Energy Efficiency Revolving Loan Fund Capitalization Grant Program (Part of Investing in New Strategies for Upgrading Lower Attaining Efficiency or INSULATE Act)

This component appropriates $250 million over five years for the establishment of this grant program under the State Energy Program for states to conduct commercial or residential energy audits or upgrades and retrofits. Funding will go through the state energy offices with priority given to achieving energy efficiency improvements in states with the poorest building efficiency. 60% is allocated to the highest per-capita energy-using states with the remaining 40% distributed to all states. Midwestern states ranking as the country’s top energy users per capita include North Dakota, Iowa and South Dakota. Further, there is an additional $250 million per year through FY2026 that DOE can allocate on a competitive basis to distribute loans to eligible business- and homeowners. 25% of this additional funding can be used for direct grants to small businesses and low-income homeowners.

Energy Auditory Training Grant Program (Part of INSULATE Act)

This program authorizes $40 million under the State Energy Program for a competitive grant designed for states and territories to train individuals to conduct energy audits or surveys of commercial and residential buildings. Individual state and territory allocation is capped at $2 million.

Energy Efficiency and Conservation Block Grant (EECBG) Program

Expanding previous applications of EECBG funding, this program provides $550 million in block grants to cities, communities, states, U.S. territories and Indian tribes to develop, promote, implement and manage energy efficiency, renewable energy, conservation and zero-emission transportation projects. Funding is distributed formulaically, with 68% to larger cities, 28% to smaller communities through the state energy offices, 2% to tribes and 2% for an additional competitive program from DOE.

Weatherization Assistance Program

$3.5 billion is allocated to this program to increase flexibility, per home expenditures and additional weatherization for homes already worked on. States that disburse to community action agencies are eligible to receive funds based on the consideration of three components specific to each grantee:

  • Low-income Population Factor: The share of the nation’s low-income households
  • Climate Factor: Necessary heating and cooling degrees
  • Residential Energy Expenditures Factor: The financial burden that energy use places on low-income households

Cost-Effective Codes Implementation for Efficiency and Resilience

A total of $225 million total is designated for a competitive grant program within the Building Technologies Office to enable sustained, cost-effective implementation of updated building energy codes. The funding is designed to be distributed over five years, averaging to $45 million per year. States and tribal governments—either alone or in partnership with local building code agencies, codes and standards developers, relevant professional organizations, local and utility energy efficiency programs or consumer advocates—are eligible. The overarching goal is to help understaffed and underfunded local governments upgrade their building codes to the most recent energy efficiency standards.

Energy Efficient Schools

DOE is authorized with $500 million to run a competitive grant program for public schools to make energy efficiency improvements, install renewable energy, install alternative vehicle charging or procure alternative vehicles such as electric school buses. The goal of these defined measures is to improve indoor air quality and make repairs or renovations that directly reduce energy costs on school grounds and from school buses.

Energy Efficient Nonprofits

501(c)(3) nonprofit organizations are eligible to apply for competitive grant funding through DOE that totals to $50 million to make energy efficiency improvements.

The wide breadth of IIJA also includes funding for energy efficient adjacent fields that are of equal importance.

Grid Resilience

One of the larger investments included in IIJA is $5 billion for FY 2022-26 to establish a grant program to support activities that reduce the likelihood and consequence of impacts to the electric grid due to extreme weather, wildfire and natural disaster. On a competitive basis, the grant will be distributed to states, tribal governments, local governments or public utility commissions to demonstrate innovative approaches to transmission, storage and distribution infrastructure that enhance and improve grid resilience. Some included strategies are installation of DERs such as microgrids, weatherization, undergrounding, monitoring and vegetation management. Matching requirements apply and vary on grantees’ entity type.

Transmission Facilitation Program

The IIJA creates a $2.5 billion revolving loan fund for transmission developers or microgrid owners and operators to create new electric power transmission lines. This allows DOE to serve as an “anchor tenant” for a new or upgraded transmission line by entering limited capacity contracts with transmission project owners and builders. Once the project is deemed financially viable, DOE can sell the contract.

Rural Energy Infrastructure

Under this program, rural areas are defined as cities, towns or unincorporated areas with fewer than 10,000 people. $1 billion is provided to improve the cost-effectiveness of energy systems, site or upgrade transmission and distribution lines, reduce emissions from energy generation, develop microgrids and increase energy efficiency in rural areas, where almost 20% of the American population lives.

Natural Gas Distribution Infrastructure Safety and Modernization Grant Program

With the goal of modernizing natural gas distribution pipelines, reducing incidents and fatalities and avoiding economic losses, $1 billion is appropriated to remain available for the Secretary of Transportation to make competitive grants to modernize natural gas distribution pipelines. Since 2010, thousands of pipeline incidents in the United States have resulted in hundreds of injuries and deaths, tens of thousands of evacuations and more than $4 billion in damages.

MEEA will be working with Midwest state energy offices to coordinate opportunities to maximize these various investments. MEEA will also continue to track and share additional details regarding updates on the implementation processes related to the new or increased streams of funding. For more information, contact Policy Associate Amanda Caloras.