How do you get a utility rebate for your lighting project? Good question, and one that we hear a lot. We'll help you understand what it means to get a utility rebate or incentive, and how to ensure that you're getting the best benefit for your energy-efficient lighting project.
So, what is the deal with rebates?
In the most basic sense, a utility company offers rebates or incentives to their customers for taking steps to become more energy-efficient. Eligible "projects" can range from installing a high-efficiency water heater in your home to completely revamping the HVAC system in your factory. In this case, we're going to discuss rebates for energy-efficient lighting upgrades because we think they are one of the most important efficiency measures you can take.
US Small Business Administration says, “Depending on the type of business you operate, lighting accounts for 20% to 50% of electricity consumption. This means that significant cost savings can be achieved with energy-efficiency improvements, and due to continually improving equipment, lighting usually provides the highest return-on-investment of major upgrades.”
Lighting is essentially a low-hanging fruit, and one of the more instantaneous ways to reduce overhead. The benefit to businesses and residential electricity customers is obvious (save energy = save money!), but you might be wondering what is the benefit to the utility company if you use less of their product, energy.
Why do utility companies offer rebates?
Utility Companies are like most for-profit businesses and have to offer their product to you without breaking the bank. They have to generate electricity for their customers, but building new power plants is really, really expensive. Many states have some regulation against utilities raising rates at will. So, if the utility can maintain their operating costs by maintaining their overhead and investing less in infrastructure, then their costs to generate electricity will not increase exponentially.
It is less expensive for them to pay for rebates than it is to build new power plants. Enter the utility rebate, a "reward" to customers who invest in energy-saving projects and products to help the utility maintain it's infrastructure instead of grow it.
And how do I get a rebate for a lighting project?
One of the most exciting aspects of any lighting project is the potential for utility rebates or incentives. These funds, commonly provided through money contributed to a utility’s Conservation Improvement Program by fees on every monthly utility invoice, are re-distributed as incentives for individuals and businesses that invest in energy-efficient or energy saving equipment.
Lighting project incentives are usually based on watts saved by replacing your existing lighting system with a new, energy-efficient one. So, to get a rebate for your project, you must save energy. Seems pretty simple, doesn't it. Here's a quick look at how it works:
Two kinds of rebates exist, Prescriptive and Custom.
- Prescriptive Rebate amounts are based on pre-determined scenarios. [Replace Existing Fixture A with New Fixture Y and you will receive X dollars rebate].
- Custom Rebates are just that, custom. Often lighting designers will submit retrofit project plans, with watts saved, to the utility company and try to achieve a greater rebate. This method is also used for facilities and lighting types that may not be exceedingly common.
- All utilities require a fair amount of paperwork and documentation to issue these rebates. The amount available in rebate funds is usually maxed out each year, so applying early in the year for your project dollars is important. Additionally, most utilities max out individual rebate amounts at a certain percentage of total project cost.
In a nutshell: Rebate dollars are limited. You must submit proper Prescriptive or Custom rebate paperwork to achieve maximum savings, and you must provide appropriate documentation to have money issued to your project. A reputable lighting contractor is able to assist their clients with all of these items, and many times you only need to provide them with a couple of your previous utility invoices and access to your facility for a lighting study so they can get started.
If you are interested in looking up what sort of utility rebates exist in your area, here are a few examples and resources:
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