LED lighting rebates are a powerful ally, helping ESCOs win more business. But they’re not always a slam-dunk: While some rebates can be simple, there are small mistakes that can jeopardize your chances of getting the rebate – and possibly the deal itself.
In the first part of this two-part series, we talked about finding and applying for rebates. We explained who offers rebates and why, and the pros and cons of each type of rebate. You can read that article here.
In part two, we’ll explore some of the most common mistakes ESCOs make with rebates. Read on to learn how you can avoid these mistakes – so you get the rebates and the deal.
1. Not Realizing You Can Get Rebates on New Construction
Utilities are the ones offering most rebate programs, with the goal of managing the demand for power and avoiding having to build costly new power plants.
Some contractors or ESCOs mistakenly think these rebates only apply to retrofits, but that’s not the case.
Retrofits are only part of the power use picture for a utility. Utilities also need to be concerned about new construction happening in their service area. Offering LED lighting rebates for new construction ensures that the new energy demand is kept to a lower, more efficient level.
This opens a whole new market for ESCOs.
2. Not Accounting for Taxes
Smart ESCOs offer customers multiple ways to make an LED lighting project financially viable. One seemingly attractive option is using rebate dollars to cover all the upfront costs of materials and installation. The customer simply signs over the rebate to the ESCO.
But here’s the catch to look out for: When you accept a rebate as compensation for your work, it will be taxed as income. If you haven’t planned ahead for a bigger tax bill at the end of the year, it can come as an unpleasant surprise.
3. Not Knowing You Can Partner With Solar Contractors
Any customer interested in an LED lighting retrofit is likely open to additional options to save on energy costs. That’s why LED light retrofitting plus solar is such a natural fit.
The order of projects is critical, however.
If the retrofit is done first, the facility will require less energy to power its lighting. The solar contractor can then engineer and build out a solar system based on the lower energy demand.
Do it the other way around, however, and the customer could end up producing excess electricity from their solar install.
This is a problem for the client because utilities only allow net metering credits (where they pay the customer for the energy they send back to the grid) for up to 100%—and no more—of total usage. Anything over 100% and the customer can’t “sell” that energy back to the utility for credits.
When done wisely, a bundled approach can offer customers a one-two punch of savings. Working with solar contractors to bundle a project can be a great way to offer the best value (and savings) to your customer.
4. Starting a Custom Rebate Without Proper Preparation
As we discussed in part one, rebates come in two types: prescriptive and custom. Custom rebates are normally called for when a project is large, unique or complex. (Learn all about the two types of rebates, here.)
With a custom rebate, you submit an application with all your calculations to the utility. The detailed planning and paperwork required for the customer rebate application can be extensive, often requiring a lot of time and effort to pull together. From there, the utility will have an engineer review your application to calculate what the rebate would be.
Only when the project is approved can you order fixtures.
This extended process can turn into a major problem if it’s not taken into consideration when planning project timelines. So, make sure your application is flawless, to avoid any additional (and unwelcome) delays.
5. Having to Reapply for Expired Rebate Programs
Some utility rebate programs only run for a specified period of time. Or they might run for a year and are then renewed as a new program for the next year. In those cases, the utility may require that the fixtures be hung before the rebate expiration date.
In other words, the clock is running.
If project delays cause you to fail to meet the rebate program deadline, you may have to find and apply for a different rebate or reapply for the same rebate under the new program.
If you’re depending on rebates to make the math of an LED lighting project work, you can save yourself a lot of aggravation by keeping a close eye on any expiration dates.
6. Not Confirming That a Product Is DLC Listed
Many utilities require that LED fixtures be listed through the Design Lighting Consortium to qualify for energy rebate programs. That’s because DLC listed LED luminaires deliver a high level of both quality and energy efficiency.
If you’re purchasing your product from a reseller, be sure that the fixtures you're submitting are truly DLC listed. There are horror stories about online sellers showing a fixture in their catalog as DLC listed when it actually isn’t – and losing out on LED rebates as a result.
To be certain you’ll qualify for a rebate, you may have to track down the DLC number of the original manufacturer instead of relying on assurances from the reseller.
7. Talking to the Wrong Person
With commercial and industrial customers, the decision to approve an LED lighting project is rarely made by just one person. Building engineers, health and safety officers, factory floor managers, and others may have their own concerns and priorities.
Among these people, make a point of speaking with the person who is familiar with the current cost of energy for the facility, and who understands the value of rebates.
This may be a chief financial officer or even the CEO, if you can reach them. If you’re struggling to get an audience with them, consider enlisting the controller or head of accounts payable – they get a front-row view of the facility’s utility bills and may be happy to champion the idea of a utility rebate among higher-ups.
The End of LED Lighting Rebate Mistakes
Now that you have the essentials on LED lighting rebate programs from part one of this series, along with the solutions to common mistakes in this part, you’re in a great position to secure the best rebates for your customers.
While rebates are one sure way to close deals and guarantee your profitability, there are other speed bumps that can get in the way of a smooth project quote, prep and install. Learn what they are, and how to solve them, in our article: Profit-Draining Problems That Slow Your Lighting Business Down, here.
By: David Wilson, President and Owner, Tri-Lite Sales