42 U.S.C. § 18792 — Energy efficiency revolving loan fund capitalization grant program

(a) In general. Within 1 year after November 15, 2021, the Secretary must create a program, under the State Energy Program, that gives States capitalization grants. States use these grants to start a revolving loan fund, which then makes loans and grants as this section describes. (b) Distribution of funds. (1) All States. (A) The Secretary must use 40 percent of the money described in subsection (j) for capitalization grants to any State that qualifies for the State Energy Program, following a formula set out in federal regulations (10 C.F.R. § 420.11 or its replacement). (B) If some States don't claim their share, the Secretary redistributes that leftover money to the other States that want capitalization grants. (2) Priority States. (A) The Secretary must use 60 percent of the funds for extra "supplemental" grants to priority States, using a formula the Secretary decides. (B) Leftover supplemental funds go to other priority States that want them. (C) A supplemental grant can't be more than $15,000,000 per State, and it adds to — it doesn't replace — the regular grant from paragraph (1). (c) Applications. A State applying for a capitalization grant must give the Secretary an application including: (1) how the grant will be used, including plans for a new or existing revolving loan fund; (2) how much need there is in the State for energy-audit loans and grants; (3) what benefits building and energy upgrades are expected to bring to communities; and (4) for priority States asking for the supplemental grant, why they need the extra money. (d) Timing. (1) The Secretary sets deadlines for States to (A) deposit grant money into the revolving loan fund once received, and (B) start using it as described in subsection (e)(1). (2) States must start using the grant within 180 days of receiving it. (e) Use of grant funds. (1) A State that gets a grant (A) must offer loans as described in paragraph (2), and (B) may offer grants as described in paragraph (3). (2) Loans. (A) Commercial energy audits. (i) A State may loan money to an eligible business (see clause (iv)) to pay for a commercial energy audit. (ii) That audit must: measure the building's total energy use; find and recommend cost-effective ways to cut energy use — in lighting, heating/cooling systems, windows, appliances, and insulation; estimate the savings from those changes using Secretary-approved software; identify when energy demand peaks and what's driving it; recommend systems to manage or shift that peak demand; and estimate total savings if every recommended upgrade is made, again using approved software. (iii) The audit may also suggest ways to boost efficiency using electric or other high-efficiency systems, including ones running on natural gas or hydrogen. (iv) An eligible recipient is a business that mostly operates in the State giving the loan and that owns or runs one or more commercial buildings, or commercial space in a mixed-use building. (B) Residential energy audits. (i) A State may loan money to an eligible individual or business (see clause (iv)) for a residential energy audit. (ii) That audit must: use the same evaluation method as the Home Performance Assessment used in the Energy Star program; recommend cost-effective efficiency upgrades — lighting, HVAC, windows, appliances, insulation; recommend ways to manage peak energy demand; compare the home's energy use to similar homes nearby; and give the home a Home Energy Score (or equivalent) using the Department's scoring tool or something similar. (iii) The audit may also suggest electric or other high-efficiency upgrades, including natural gas or hydrogen systems. (iv) An eligible recipient is either an individual who owns a single-family home, condo, duplex, or manufactured home, or a business that owns or runs a multifamily building. (C) Energy upgrades and retrofits. (i) A State may loan money to an eligible recipient (see clause (ii)) to make upgrades that: were recommended by the audit; meet at least one Home Performance Assessment criterion; improve comfort, efficiency, or air quality; and are cost-effective while either cutting energy use or improving peak-demand management. (ii) An eligible recipient is someone from (A) or (B) above who either already completed an audit funded by one of these loans, or completed a similar audit paid for another way that meets the same standards (or that the Secretary otherwise approves). (iii) The loan must be fully paid off by the earlier of: the year the upgrades reach the end of their expected useful life, or 15 years after installation. If a loan covers several upgrades, use the longest-lasting one to set that deadline. (D) Referral to contractors. After an audit, the State may refer the recipient to a qualified contractor to estimate the upfront cost of each upgrade and of all the upgrades together. (E) Loan recipients. States must, as much as possible, prioritize loans to people and businesses who can't get private financing. (3) Grants and technical assistance. (A) A State may spend up to 25 percent of its grant money on grants or technical assistance for eligible entities (see (B)) doing the audit and upgrade work described above. (B) Eligible entities are: (i) a business eligible under paragraph (2)(A)(iv) with fewer than 500 employees, or (ii) a low-income individual (as defined in section 3102 of title 29) who owns a home. (4) Final assessment. If a State gave a grant under paragraph (2)(C) for upgrades, it may later — within 1 year after the upgrades are done — give that recipient a loan or grant to pay for a final audit measuring the actual energy savings. (5) Administrative expenses. A State may use up to 10 percent of its grant for administrative costs. (f) Coordination with existing programs. States are encouraged to build on programs and infrastructure they already have. (g) Leveraging private capital. States must, as much as possible, use the grant to attract private investment too. (h) Outreach. The Secretary must tell States that these grants exist. (i) Report. Within 2 years of getting a grant, each State must report to the Secretary on: (1) how many recipients got loans for commercial audits, residential audits, and upgrades, and how many got grants; and (2) the average cost of upgrades across all the audits the State funded. (j) Authorization of appropriations. Congress authorized $250,000,000 for fiscal year 2022, available until it's spent.