How to Make the Most of Utility Rebates Tied to Energy-Efficient Lighting and Controls

 At this moment, approximately 74% of the United States is covered by a commercial lighting rebate program. The most significant geographic change of late is that all the major utilities in Ohio discontinued their rebate programs at the end of 2020 due to new state legislation. For the most part, the rest of the United States is pretty consistent with rebate availability.

Typically, all non-residential facilities can be eligible for commercial lighting rebates, although some groups may get much better rebates than others. For example, in New Jersey, schools were eligible for so-called Enhanced Incentives, which were basically rebates twice as high as for most other end users, until they were suddenly repealed in February.

In some other regions, certain ratepayers may not be eligible for rebates at all. This is the case, for example, for large industrial end users with Georgia Power. In some other areas, like with Duke Energy in the Carolinas, large end users can opt-out from paying a society benefit charge, providing them with somewhat lower monthly energy bills, but making them ineligible for any energy-efficiency rebates. These examples show that distributors should do their homework and be very careful with looking at all rebate program details before estimating rebates for a job.

Rebate programs can run out of funding at any time, depending on the program. Therefore, it is usually best to plan projects in the first couple of months of the new program year, since there is always a risk that the funding is suddenly depleted later on.

“Most rebate programs operate on a calendar year, so typically Q4 is when we start seeing limited fund availability with some rebate programs,” said Leendert Enthoven, owner of BriteSwitch, a company that specializes in finding and capturing local, utility, state and federal rebates and incentives for commercial buildings across the United States and Canada. “That being said, many programs never run out of funding. The most we have ever seen is 11% of U.S. commercial lighting programs running out of funding a few years ago.”

 There are usually two opposite customer groups who do pursue rebates—large customers with dedicated staff that look for efficiency programs and how to save money and smaller budget-conscious customers who really need the money in order to afford the upgrade of the facility.

Enthoven said it is surprising how many customers do lighting upgrades at their facility but make no attempt to get any of the rebates. A lot of them just do not know that the money is out there and how to claim it, or simply have no time to pursue rebates. “Regularly, we see that the distributor or contractor did not provide the rebate information in those cases either, which is unfortunate since the rebates can cover 10% to 70% of the cost for some jobs,” Enthoven said. “The extra rebate money can then be used toward additional upgrades in the facility.”

In 2021, the rebate amounts for LEDs are relatively flat from 2020. This in itself is quite remarkable because for the past 10 years, rebate levels have dropped 10% to 20% each year. “Usually, the decrease we saw between years was to match the dropping prices of LED products, but a weak lighting retrofit market in 2020 and leveling out of product prices meant they didn’t have to adjust much for the 2021 programs,” Enthoven said.

 Lighting control rebates have historically been very stable, changing little over the past 12 years. So also in 2021, control rebates are similar to the previous years. For standalone sensors, the rebates are still relatively high compared to the cost, making it an easy add-on for most projects. Lastly, networked lighting control rebates have seen little change in the past year. Only three new programs started offering rebates for networked lighting controls in 2021.

Here is an overview of the average prescriptive rebates in the United States and Canada for the most commonly used LED lighting and lighting controls solutions in 2019, 2020 and 2021:

*Average prescriptive rebate across US and Canada – source: BriteSwitch RebatePro 6/2021

*Average prescriptive rebate across US and Canada – source: BriteSwitch RebatePro 6/2021

Just like the rest of the electrical industry, the COVID pandemic presented a challenge for commercial lighting rebate programs in 2020, since retrofit projects were just not happening. To overcome this lack of projects, 20% of the rebate programs had introduced bonus rebates by late 2020. Bonus programs offer a temporary incentive increase, anywhere from 10% to 100% for a short period of time, hoping that these additional monies will increase participation. “It followed a similar pattern we have seen over previous years; during periods of economic turmoil, like the economic crises in 2008, rebate programs become more attractive to stimulate more energy-efficiency retrofit projects in the marketplace,” Enthoven said.

Also, many rebate programs changed over to COVID-friendly procedures like virtual pre- and post-inspections. And, since the outbreak of COVID, the time to get rebate pre-approval and receive a rebate check increased considerably. “For lighting professionals, that means they should file for rebate pre-approval as early as possible and make sure the customer  knows that it will take quite a while before they receive their rebate check,” Enthoven said. “By tempering expectations, you can make the whole process much more smooth and hassle-free.”

The vast majority of rebate programs require a current Design Lights Consortium (DLC) listing in order to qualify for an incentive. It is really not enough just to have the DLC logo on the spec sheet; in order to be eligible for rebates, the exact model number on the invoice must appear on the DLC’s website as an active product.

This year, the DLC updated their technical specifications to version 5.0. This change created some complexity for distributors as their older in-stock products would no longer qualify for rebates once they were delisted. There will be a similar change next year when the technical requirements are updated to version 5.1. This change-over was originally planned for December but has been pushed back to June 30, 2022 due to COVID. “This is good news for distributors because it means products that do not meet the new v5.1 requirements can still receive rebates into mid-2022,” Enthoven said.

The two biggest obstacles to obtaining rebates are a lack of detailed knowledge and not having sufficient resources. There are more than 3,000 electric utilities in the United States and more than 400 different rebate programs that are frequently changing their rules. Lighting professionals who cover a vast geographic area can really struggle to understand what programs are currently available and how they work.

Estimating rebates and taking care of all rebate paperwork is also a lot of work. “Looking at the many thousands of rebate applications we have filed over the last 13 years, we have learned that it takes 12 interactions, on average, to complete the rebate process over a period of 5 months,” Enthoven said. “That really means a lot of manpower and project management skills that some distributors do not have.”

On top of that, many distributors just make more money by selling more products instead of focusing their scarce resources on rebates. “And that’s exactly where BriteSwitch as a specialized rebate company  comes in by offering two types of services,” Enthoven said.

For distributors and contractors who want to do the rebate paperwork in-house, BriteSwitch offers RebatePro, a subscription-based service through which they get access to an up-to-date online lighting rebate database so they can easily search for all rebates. “Another option is that they outsource all rebate activities to BriteSwitch: we estimate the potential rebates for each of their customer proposals and when the job has been awarded, BriteSwitch takes care of the entire rebate process and all paperwork,” Enthoven said.

Enthoven has seen some instances in which distributors get highly agitated by the actions of their local utility for severely undercutting their companies in the marketplace. “However, this is not common at all,” Enthoven said. “In the vast majority of the cases, the utilities are actually supporting distributors since they provide all these LED rebates to the end users and therefore lowering the upfront cost, which makes selling these products way easier. Without LED rebates around, market adoption of LED today would definitely have been lower. Also, some rebate programs even provide an incentive directly to the distributor when they sell LED upgrades.”

He recommends distributors become a trade ally of their local utility, attend all their webinars and subscribe to their newsletters with program updates. “Also, they sometimes organize round table sessions so they can solicit input and ideas from the industry—what works best and where they should improve their procedures or rebate offerings,” he said.

For more information, visit briteswitch.com.