Understanding Utility Incentive Programs

Utility incentive programs have come a long way in the past few years. What were once simple prescriptive rebates for upgrading light bulbs or installing a higher efficiency piece of equipment are now beginning to become customized, multi-tiered utility programs that drive incentives based on the effectiveness of the installation and upgrades. With efficiency standards rising each year, incentive programs now focus on complex and comprehensive “whole-building” approaches to maximize efficiency.

Custom, multi-tiered incentives

Although basic prescriptive rebates still exist, custom incentives bring the most savings for a customer. Facility-specific energy efficiency projects can lower an organization’s operating costs by more than 30%. Custom energy efficiency projects start with an audit performed by an energy engineering firm to better understand the facility’s needs. After the audit, recommendations are made based on the solutions’ cost/benefit, which includes maximizing rebate dollars.

Custom means complex

Utility companies highly value custom energy efficiency projects due to their superior energy savings than traditional one-off replacement projects. Many utility companies provide application guidelines for incentives that help organizations determine which tier a project fits in to qualify for higher incentives. Each state and program base its incentives on different metrics and requirements, but there are a few key items to keep in mind when building a custom program.

1. Make sure the data is accurate
   • Total energy reduction, decrease in load, installation cost, etc., must all accurately reflect the project outcomes. Having accurate data and creating accurate engineering models often requires a professional energy engineering audit of the facility to qualify for incentives under state guidelines.
2. Do your research
   • Do your research to determine which energy efficiency incentive is best for your organization. Make sure the project fits within your budget and consider a variety of options for your project. Any qualified energy engineering firm will work with you to help identify which projects will deliver the desired incentive levels and financial payback you are looking for.
3. Understand the small details
   • There is a lot of fine print in high incentive utility programs. Make sure your organization and/or engineering firm read the fine print on each project incentive. For example, a utility company may make a distinction between “high-performance lighting, enhanced performance lighting, and standard lighting.” Knowing which option to implement is imperative to finding the right solution operationally and determining how much money you get.