These startups help busy contractors get electrification rebates faster

Rebates are a cornerstone of the bid to electrify the roughly 115 million U.S. homes that still need to ditch fossil-fuel equipment to meet climate targets.

Utilities already offer more than an estimated $2 billion in residential efficiency and electrification rebates across North America each year, which go to installing heat-pump AC/​heaters, heat-pump water heaters, insulation and more. Another $8.8 billion in home energy rebates from the 2022 Inflation Reduction Act is expected to start flowing to states in the coming months.

But wrangling rebates can be tricky. Contractors — often the ones to do the work of claiming rebates, either for themselves or on behalf of customers — say that juggling various federal, state, local and utility programs can be a logistical headache. They have to navigate different eligibility rules, file step-by-step project documentation and deal with uncertainty over when and whether the rebate will come through. To manage what can be a complicated process, some installers will even outsource the work to services that specialize in handling rebates.

“Contractors are not accountants,” Lacey Tan, a building-electrification expert at the climate think tank RMI, explained via email. ​“Time spent completing applications, doing trainings, marketing and communicating incentives, etc., takes time away from their sales and installs.” (Canary Media is an independent affiliate of RMI.)

That’s why a growing number of companies are developing software that contractors can use, right on their smartphones, to get home-decarbonization rebates more easily than ever before. These tools aim to aggregate multiple incentives in one place, streamline the process of applying and notify contractors as soon as applications are approved.

This kind of software is badly needed in the industry, according to Andrew Krause, CEO of California-based residential solar and electrification contractor Northern Pacific Power Systems and adviser to Eli Technologies, a startup working on this problem. Right now, ​“getting a rebate is essentially as complicated as getting a mortgage.”

Many rebate-program administrators still operate manually in a digital world, which creates friction, he said. He’s had application files get misplaced and rebate funds run out without him being notified.

“Most contractors have been burned by rebate programs and have very limited trust in them,” Krause told Canary Media. ​“When homeowners make investment decisions [based] on bad data…that puts a contractor’s brand and reputation at risk.”

Turning a rebate into cash upfront

The problem of helping sort out rebates for contractors is big enough that one startup recently pivoted its whole model to focus on it. Home-decarbonization startup Sealed announced this month that it was dropping its consumer-facing business of the last 10 years, which consisted of weatherizing homes and installing heat pumps, to specialize in rebate software for contractors.

With its Sealed Pro software, the startup believes it can ​“have a bigger impact,” said co-founder and CEO Lauren Salz, catalyzing far more projects than Sealed could have done working directly with consumers.

Notably, Sealed Pro enables contractors to get rebate cash upfront, so they don’t have to wait for the rebate application to be approved, according to the New York–based startup. Sealed takes out loans to be able to front these payments.

And the tool is fast, Sealed claims. Typically, rebates can take weeks or months to pay out, according to Salz. But working with Sealed, contractors can get the rebate payment, minus a 25 percent fee, in just 10 days. 

Sealed launched its software last October in Southern California, helping contractors access rebates from the 3C-REN (Tri-County Regional Area Network) Single Family Home Energy Savings program.

These rebates are based on the actual amount of energy savings households achieve in the 12 months after contractors weatherize and install efficient equipment in their homes. While this ​“measured-savings” approach is Sealed’s specialty — the company originally built its consumer-retrofit business around accurately estimating energy savings — Sealed says it will cater to all rebate types, including discounts on equipment and programs that focus on modeled energy savings.

Contractors are likely to see more rebates of all stripes in the coming months as states start up programs funded by the Inflation Reduction Act’s $4.3 billion HOMES program. (Another $4.5 billion will go to electrification and appliance state rebate programs for low- and moderate-income households.) Sealed Pro is currently available in California and New York, with plans to roll out to more states, especially those first to deploy IRA rebate funding.

Since Sealed Pro launched, the startup says it has helped contractors — the company declined to say how many — get $1 million upfront for 3C-REN rebates. The 3C-REN program has been around since May 2022, but in just the last five months, contractors using Sealed Pro have claimed 46 percent of the program’s total payouts, according to April Price, a manager of the 3C-REN program.

Making it easier to apply for multiple rebates at once

It’s not just Sealed tackling this challenge. Other companies have also recently raised money to expedite rebates. The startup Rock Rabbit closed a $3.1 million seed round in February, and California-based Eli Technologies announced $6.8 million in seed funding the same month. While neither is currently offering rebate dollars upfront like Sealed, both say they plan to do so in the future.

There’s ​“a lot of creativity” in how rebate and other incentive programs are designed, making the landscape particularly difficult to navigate, said Rock Rabbit co-founder Aimee Bailey. It can be ​“pretty overwhelming — and beyond what average mom-and-pop installers are able to really do,” she noted. Rock Rabbit provides a one-stop shop where contractors can find rebates, tax credits and financing options for home-decarbonization projects.

Currently, the Palo Alto, California–based company is focused on heat-pump incentive programs in the state, where it’s processed more than half a million dollars in rebate funds since it was founded in 2023, Bailey said.

Software tools can also help contractors quickly apply to multiple programs to combine incentives for a project, like installing a heat-pump water heater.

In some areas of the Golden State, three or four relevant programs might exist, said Jeff Coleman, CEO of Eli Technologies. Instead of submitting applications for each one, Eli’s software walks contractors through a single series of tasks to capture all of the relevant project details, such as documentation that the previous water heater was powered by gas, the make and model of the new equipment, proof of purchase, permits and photos showing, for instance, that a thermostatic mixing valve was installed. ​“And then we parse [that information] out into the different programs on the back end,” Coleman said.

Eli typically charges contractors a monthly fee for its rebate-management software that caps out at $500, in addition to a per-project fee of $100 to $350. The software is available in California and New York, and, like Sealed, Eli will be closely following which states are first to roll out IRA rebate programs to support local contractors.

Krause of Northern Pacific Power Systems is using Eli’s software to manage his company’s rebate applications to California’s Self-Generation Incentive Program for heat-pump water heater and home-battery installations. The company, which is both a paying customer of and an investor in Eli, has used Eli’s software to prescreen qualifying customers much more quickly and cheaply, Krause said, taking some of the pain out of applying to the program.

For now, Krause still relies on a different, more analog third-party service to handle applications for other rebate programs his company participates in. But, he says, he’s excited about the wave of startups developing software to make the process easier. ​“I think we need them all” to make incentives easier to access. ​“To the extent contractors have a good experience, electrification will go faster.”

Note: This piece has been updated to correct the date of Rock Rabbit’s seed funding round.