The Inflation Reduction Act (IRA), signed into law in August 2022, includes $200 million in electrification and energy efficiency contractor training grants, as well as contractor incentives per qualifying electrification project (up to $500) and per qualifying energy efficiency project ($200).
In addition, the IRA provides billions of dollars in up-front discounts — much of which will flow through contractors — that will reshape the residential HVAC and household appliance landscape. This funding will make electric machines like heat pumps and heat pump water heaters the default economic choice for millions of households across the country. The IRA also includes residential electrification and energy efficiency tax credits that will lower the cost of electrification for millions more households.
Last but not least, the IRA creates opportunities for contractor growth beyond residential HVAC and appliance replacements. Tax credits for new energy-efficient homes may be claimed by builders, and tax deductions for commercial energy-efficiency retrofits may in some cases be transferred to retrofit designers, including contractors.
Taken together, these electrification incentives represent a once-in-a-generation market opportunity for HVAC contractors. The IRA will lead to tens of millions of heat pump installations and 900,000 new contractor jobs over the next decade—and ambitious contractors who understand the incentives and opportunity can claim an outsized share of that new market.