Even with the incentive of energy savings, getting customers to spend the money needed to upgrade to energy efficient lighting can be surprisingly challenging.
This is especially true during economically shaky times, when companies might be nervous about any big capital expenditures.
However, you’ve got a powerful tool at hand: energy-efficient lighting rebates. Knowing your options for rebates and incentives can lessen sticker shock and help you make the sale to customers who might otherwise be gun shy.
In part one of our two-part series, we’ll explain the resources and tools you can use to find rebates for commercial LED lighting. We’ll also spell out the pros and cons of each type of rebate to help you make the right choice for your project.
Who Offers Lighting Rebates and Why?
There’s a common misconception that lighting rebates are all government funded. They’re actually managed by local utility companies as an incentive to lower energy use.
Utility companies are required by Public Service Commissions to operate power plants at 80% of peak capacity or lower. Over 80%, the utility has some rather unappealing options to choose from so they can meet demand:
- One option is to evaluate building another power plant. This approach is costly to begin with, plus there’s the excess demand issue. A power plant runs 24/7. Maybe the utility only needs a small percentage of a new plant’s capacity—just enough to handle the overdemand from the existing plant. In that case, they are generating excess electricity they can’t charge for.
- Another option is for the utility to buy power from the electric grid to meet the demand over 80%. Purchased electricity is more expensive than self-generated. The utility loses money with this option, too.
- The third option is to reduce overall energy consumption, and that’s where rebates come in.
Utilities get permission from Public Service Commissions to offer rebates. It’s one way to keep their power capacity in check (and avoid having to build a new power plant). Rebates are funded by tacking a fee onto their customers’ electric bills, creating a fund from which the rebates can be drawn.
That means commercial lighting customers are already paying to fund these rebates through current electricity rates. But without energy efficient lighting, they aren’t reaping the benefits in lower energy costs. In essence, they’re turning away free money—a point you can’t make strongly enough!
Where Can I Find Rebates?
First, talk to your distributor, especially if the distributor has a lighting department. They will already be very familiar with the rebates local utilities offer in their area and can advise you on the process.
Utilities have their own lighting rebate departments, making them a good source of information as well. Remember, utilities incentivize the use of energy efficient lighting because it helps them manage their capacity load—so the staff should be happy to assist either the distributor, the contractor, the agent, or the end user in securing rebates.
For a fast and convenient self-serve option, Litetronics provides a Rebate Finder tool on their website. The tool is prepopulated with utility programs and Litetronics’ LED products. You can search for fixtures that will qualify for the rebates and incentives in your area. You can easily share or download the results. And, with one click, you can transfer the product information into their Payback Calculator.
Can I Apply for Any Kind of Energy-Efficient Lighting Rebate?
It’s important to understand the type of rebate program the utility is offering. There are pitfalls to selecting the wrong one for the project. Here are some pros and cons to consider:
Prescriptive rebates are simple, and the payout is predefined. They are also widely available.
The rebates are based on installing approved energy-efficient lighting fixtures that meet defined criteria—for example, being DLC or Energy Star listed. The utility may say something like, “If you install this DLC listed LED lighting fixture, we will give you $100. Install this Energy Star listed lighting control, and we will give you $50.”
Because the rebate amounts are predefined, the total rebate calculation is straightforward and so is the application process.
Some utility companies will assign a program manager to your retrofit project. They will be your guide throughout the process to ensure you get the correct rebate value and will also conduct any required inspections.
If the rebate amount exceeds a certain dollar figure (for example $5,000), the utility may require pre- and post-installation inspections. This is to ensure they will see the lowered energy consumption they are ‘paying for’ with the prescriptive rebate.
Another factor to consider: a pre-approval requirement before installation can delay the purchase of materials and stretch out your project timeline. In some cases, you may be able to apply for the rebate after the fixtures are installed. This can help speed up the project considerably (just make sure you apply properly so you’re not left in the awkward position of promising a rebate that doesn’t materialize.)
Some projects don’t fit into the prescriptive rebate mold. In that case, you will need to apply to the utility for a custom rebate.
Projects that call for a custom rebate tend be very large, unique or complex. A perfect example is an enterprise-wide energy upgrade. It may include lighting, HVAC pumps, motors, etc. But be forewarned: if even ONE fixture needs a custom rebate, the whole project must be custom quoted.
Custom rebates are a double-edged sword. They can sometimes be lucrative, but at the same time, the paperwork and manhours involved can be a burden and slow down the process.
Unlike the prescriptive rebate programs, the expected energy savings isn’t as easily calculated. The utility will expect you to present a formulation of expected energy savings in kWh—and just like in 11th grade algebra, you’re going to have to show how you arrived at those numbers.
From there, the utility will evaluate your calculations and decide if your data is correct. Only then will they determine the incentive to be paid and pre-approve the project.
You should also expect pre- and post-installation inspections. The utility will want to confirm that you are working to the plan submitted. As with prescriptive rebates, the utility will assign a program manager who will guide you through the process step-by-step and conduct the inspections.
The Right Energy-Efficient Lighting Rebates—For You and the Customer
Rebates and incentives are the lifeblood of energy efficient lighting upgrades. Finding and selecting the right ones can put you on the road to an easier sell and a more profitable project.
In an upcoming second part of this series, we’ll cover common rebate mistakes and how to avoid them. Stay tuned!
By: David Wilson, President and Owner, Tri-Lite Sales