How Lighting Rebates Work

Strange but true: your utility company may pay you to buy less electricity from them.  Among the many energy efficiency regulations that have gone into effect over the past decade are state mandates requiring utilities to reduce energy consumption. This is due in part to environmental concerns, but it’s also because the utilities are having an increasingly difficult time meeting the growing demand for electricity, and it’s cheaper to curb that demand than to build new power plants and transmission lines. One way the utilities have complied with these mandates is to incentivize customers, through generous rebates, to switch out old, energy-hungry light fixtures for newer, more efficient technology.

In other words, just for replacing those old high-pressure sodium high bays with new LED lighting, you could be eligible for a utility rebate that could significantly offset the price of those new lights. The challenge is that every utility has its own set of eligibility requirements and each application process is slightly different and fairly complex. Also, some rebates are only available until the funding for them runs out, so they generally operate on a first-come, first-served basis.  

You can often find guidance through this maze from your lighting distributor or the retrofit company you hire to install the new lighting. There are also consulting firms that specialize in rebate facilitation. Without this expertise, applying for rebates for an industrial lighting project can be a daunting process. There is very little uniformity from one rebate program to another. They differ in terms of the size of incentives for various types of upgrades, the procedures for calculating them, and the eligibility requirements – and all of this is subject to change at any time.

Rebate Rules & Regulations

Many rebate programs divide incentives into two categories, prescriptive and custom. Generally speaking, custom rebates are made available for retrofits that save energy but don’t fit under a specific measure in the prescriptive list.  A prescriptive rebate is usually a fixed amount per lamp or fixture, while custom rebates are usually based on the actual energy savings (although this too may differ from one utility to the next). 

For example, California-based Pacific Gas & Electric (PG&E) runs a custom program that awards cash payments based on actual annual KWh or therm savings achieved. “Targeted lighting,” which includes all LED lighting retrofits and comprehensive, multi-measure control systems, are awarded $.08/kWh, while “basic lighting” (non-LED lights, basic controls) are awarded $.03/kWh.

PG&E also has a prescriptive program. For example, replacing a 750-watt pulse-start metal halide high bay with an LED high bay earns a rebate of $250 per fixture. The LED fixture must meet minimum requirements concerning lumen levels and wattage, and all fixtures or retrofit kits must be on the utility’s list of prequalified fixtures.  PG&E’s rebates for high-performance linear fluorescent fixtures range from $17.50 to $20 per fixture or kit. Their efficiency must meet or exceed 80 percent, they must use advanced optical design, the lamps must be high-performance or Super T8s, and they must be rated for 20,000 hours or more.

Complex Qualifiers

PECO, the largest utility in Pennsylvania, also awards some rebates based on a fixed dollar amount per fixture or lamp, while others are based on energy savings. For example, the utility is currently offering an incentive of $1.00 for replacing an incandescent lamp with a screw-in CFL. But for new T5 and T8 fluorescent fixtures with electronic ballasts, the rebate is $.30 per watts reduced, capped at $200 per fixture.   As in other rebate programs, there are all kinds of qualifiers. CFL’s must be 115 watts or less; those lamps less than or equal to 30 watts must be Energy Star rated or meet Energy Star criteria. Those greater than 30 watts must be Energy Star rated or have a minimum luminous efficiency of 65 lumens per watt.  High performance fluorescent lamps and ballasts must meet the specifications of the Consortium for Energy Efficiency (CEE) to qualify. Interior LED fixtures and lamps must appear on Energy Star or Design Lights Consortium qualified products list. You can usually find this information on the product cut sheets – if you can find the right cut sheet. 

In Colorado, XCel Energy offers the usual array of rebates as well as an additional benefit: it will help fund lighting redesign studies aimed at determining the proper lighting levels for a facility. And if customers make the recommended changes, they can earn rebates of up to $400 per kW saved. The rebate is available only to Xcel Energy electricity business customers in Colorado, and only if the utility has preapproved the study application.

Pre-Approval Required

Many other rebate programs require pre-approval as well, especially for custom measures.  In New Jersey, for example, where all utility rebates are administered through the state Clean Energy Program, customers must submit an application form and applicable worksheets and receive an approval letter from the program before any equipment can be installed. If they install any equipment before the date of the approval letter, or if they purchase equipment that is not covered in the letter, it may not be eligible for an incentive.

New Jersey applicants must also fill out a tax clearance form showing their tax affairs are in order before they can be awarded any type of business assistance or incentives.  Another requirement for eligibility is that the applicant must receive electric or gas service from one of the regulated utilities in the state. This is because New Jersey utility customers basically fund the incentive program through a surcharge on their bills, called a “societal benefits charge.” A customer who does not pay into the program cannot benefit from it. In states where the utilities fund these programs internally, through their own revenues, this may not be an issue.

Deadlines: A Moving Target

Despite your best efforts at assuring that your retrofit qualifies in every way for a rebate, this may only be true for a limited time. For example, since federal regulations recently banned the import and manufacture of T12s, they will no longer be available for purchase once current inventory runs out. Therefore, some utility companies no longer feel it necessary to incentivize customers to switch them out – eventually they’ll be forced to do so anyway.  Of course there are exceptions to every rule. In New Jersey, for example, incentives for T-12 to T-5 and T-8 lamps and fixtures were discontinued effective March 1, 2013 - except for buildings impacted by Hurricane Sandy.

Another incentive soon to be discontinued is PG&E’s rebate for occupancy sensors and photo cells. After June 30, 2014, they will drop off the list of qualified retrofits due to new Title 24 regulations (California’s Building Standards Code).  

Finally, be aware that rebates are only available until funding for the program runs out, which can happen at any time. So if you are considering a lighting retrofit, and you know there are hefty rebates available for the type of lights you plan to install, you might want to do this sooner rather than later. And you might want to solicit the help of a lighting professional to make sure you get all the incentive money for which you are eligible.