The landmark Inflation Reduction Act (IRA), signed into law by President Biden in August 2022, provides billions of dollars in grants, loan programs, and tax credits that can help transform the health care industry by significantly increasing access to funds that will create resilient and renewable infrastructure. Many of these investments have the potential to improve care, deepen resilience, and reduce costs. Leveraging the Inflation Reduction Act (IRA) for the Health Sector is meant to help health stakeholders take advantage of the opportunities for resilience and emissions reduction in this historic legislation. Climate change is the most significant threat to human health in the 21st century, according to more than 200 medical journals. Climate change presents acute threats and disruptions to facility operations, with the majority of healthcare evacuations resulting from climate-sensitive events. Notably, health sector organizations can actively reduce the potential for harm by anticipating these challenges, investing in resilient infrastructure, and reducing contributions to climate change through improvements in sustainability and efficiency.
Many in health care are seeking changes, including connecting the heating, ventilation, and air conditioning (HVAC) system to a backup power supply to ensure proper temperature control and ventilation, creating a backup power supply using onsite power generation in power outages, and expanding emergency power capacity.
Financial benefit is often a primary motivator for organizations to upgrade buildings. Modernization improves operational efficiency as well as produces substantial cost savings. In a recent survey, many organizations stated that improving operational efficiency led to savings on utility costs and, therefore, to financial benefit and are supporting future sustainability activities.
The IRA includes numerous changes to the tax code that will
allow health sector stakeholders to receive tax credits and, in some cases, direct payments for clean energy projects. The Treasury Department and the Internal Revenue Service (IRS) intend to propose regulations addressing the application of the rules that taxpayers must satisfy to qualify for the energy community bonus and the domestic content bonus credits under §§ 45, 45Y, 48, and 48E of the Internal Revenue Code.
Examples of incentives and credits that healthcare organizations may be eligible for include:
- Investment Tax Credit for Energy Property (26 U.S. Code § 48) for projects beginning construction before January 1, 2025. This tax credit is for investment in renewable energy projects, including fuel cell, solar, geothermal, small wind, energy storage, biogas, microgrid controllers, and combined heat and power properties. A technology-neutral tax credit for investment in facilities that generate clean electricity and qualified energy storage technologies will replace § 48 for facilities that begin construction and are placed in service after 2024.
- Credit for Qualified Commercial Clean Vehicles (§ 45W) (page 52 of the Guidebook) is a tax credit for purchasers of qualified commercial clean vehicles, including passenger vehicles, buses, and ambulances. It is available for vehicles placed in service in 2023 and acquired before 2033. A "qualified commercial clean vehicle" must meet certain requirements and satisfy the requirements under § 30B(b)(3)(A) and (B) of the Code for being a new qualified fuel cell motor vehicle. Initial guidance on commercial clean vehicles is available (linked in resources).
- The Energy Efficient Commercial Buildings Deduction (§ 179D) (page 115 of the Guidebook) is a tax deduction for energy efficiency improvements to commercial buildings, such as improvements to interior lighting, heating, cooling, ventilation, hot water, and building envelope. It is applicable starting in 2023 and has no expiration date.
- The Rural Energy for America Program (REAP) (page 42 of the Guidebook) provides guaranteed loan financing and grant funding to agricultural producers and rural small businesses for renewable energy systems or to make energy efficiency improvements. Many health facilities have utilized REAP as funds may be used for renewable energy systems as well as for the purchase, installation, and construction of energy efficiency improvements, such as high efficiency heating, ventilation, and air conditioning systems (HVAC); insulation; lighting; cooling or refrigeration units; doors and windows; and replacement of energy-inefficient equipment. Funds can also be used for underutilized renewable energy technologies. The IRA funding will remain available until September 30, 2031. Additional information is available in the “Notice of Solicitation of Applications for the Rural Energy for America Program for Fiscal Years 2023 and 2024" (linked in resources).
Examples of where facilities may be able to tap into funding to make a difference:
Nursing Home Uses Energy Efficient Commercial Buildings Deduction
- A nursing home sometimes struggled to maintain its indoor air quality during increasingly frequent wildfire events. Using the Energy Efficient Commercial Buildings Deduction, the facility was able to improve its heating, ventilation, and air conditioning (HVAC) system and building envelope. The site improvements could to the nursing home reducing its use intensity by 27% in 2023 compared to 2022. These improvements also help the facility improve its indoor air quality, protecting residents and staff from wildfire smoke.
Nursing Home Uses Rural Development Investment- A facility could utilize the Renewable Energy and Energy Efficiency Loans and Grants opportunity to purchase and install a 350-ton chiller system for the nursing home/long-term care campus of buildings. This project may save 560,923 kWh annually, enough electricity to power 52 homes.
Assisted Living Facility uses Rural Development Investment- The facility could utilize the Renewable Energy and Energy Efficiency Loans and Grants opportunity to install energy-efficient doors, windows, lighting, insulation, and a new boiler. The investment could improve the living conditions of the residents and generate an annual energy cost savings of more than $9,100.
ApplyingSome of the opportunities listed above are grants that will require applications. Each opportunity will have its own application requirements and process. General advice for first-time applicants that may be applicable to many types of applications is included below:
- Include a Unique Entity Identifier (UEI). A UEI must be provided for an application to be submitted and reviewed. A UEI can be obtained by accessing “SAM.gov".
- Keep the audience in mind. Reviewers will use only the information contained in the application to assess the application. Therefore, the applicant should be sure the application and responses to the program requirements and expectations are complete and clearly written. Do not assume that reviewers are familiar with the applicant's organization. Keep the review criteria in mind when writing the application.
- Start preparing the application early. If applying electronically through “Grants.gov," please ensure that adequate time is allotted to register and download applicable software and forms. Grants.gov offers several grants-related YouTube videos. You are encouraged to begin with "Intro to Grants.gov – Applying for a Federal Grant on Grants.gov," which provides startup requirements and tips.
- Formatting tips. Be sure pages are numbered (including appendices) and that page limits are followed. Limit the use of abbreviations and acronyms, and define each one at its first use and periodically throughout the application.
Resources:
Questions or feedback: OCCHE@HHS.GOVIf you participate in any of these opportunities, please share your experience with AHCA/NCAL at
emergencyprep@ahca.org