LED Utility Rebates for Businesses: The Instant/Midstream Takeover

Instant rebates are taking over LED utility rebates for businesses! As 2024 began, several major utilities abandoned their LED prescriptive programs and moved all LED incentives into distributor-based instant rebate programs. No more PDF or portal applications, waiting for pre-approval, or waiting for checks - but you have to be able to order from participating distributors for the rebates in these utility territories.

In a different type of takeover, more and more LED product categories are moving into an instant format only as well for many programs.  For several product categories (we list a few below) you will have to purchase through participating distributors in many utility territories.

For businesses and electrical contractors, this is a big change. For LED manufacturers and distributors, this can present a big opportunity…provided they are prepared for it.

So..while utilities are still releasing their 2024 updates, we wanted to provide some initial insight into this phenomenon and cover a short list of trends, changes and action. We will provide more complete coverage in our “Utility Rebates: What's new in 2024” webinar on February 28, 2024. You can register for that webinar here.

Background: 

The Traditional Approach: Prescriptive/Downstream Rebates

Prescriptive rebates have been a staple in utility programs for decades. Under this model, utilities provided fixed incentives for specific energy-efficient measures, such as upgrading to high-efficiency lighting, lighting controls and HVAC upgrades. While effective in encouraging targeted improvements, this approach had limitations. Customers often found the process cumbersome, involving extensive paperwork and waiting periods for approval.

The Rise of Instant/Midstream Rebates:

In response to the challenges posed by prescriptive rebates, utilities have embraced instant/midstream (sometimes called upstream) rebates as a more efficient and consumer-friendly alternative. Unlike their prescriptive counterparts, midstream instant rebates focus on providing incentives at the point of purchase through relationships with distributors. 

Fast Forward to Now

Utilities have taken many paths in the design of their LED incentive programs. The landscape of prescriptive and instant rebates today falls into the following buckets:

1. LED rebates are only available through an instant program
2. LED rebates are available through prescriptive and instant for all/most categories
3. LED Lamp/Tube rebates are only available through instant, Fixtures through prescriptive
4. Other combinations of instant and prescriptive rebates
5. No LED instant rebates offered

Today’s Trends and Changes

So far in 2024, we have seen a number of large programs abandon their prescriptive programs and offer incentives for LED retrofits only through instant programs.  Some of these may also retain a “custom” program, requiring a lot more analysis and paperwork.  A sample list of these programs:

• Ontario - IESO Save On Energy
• Iowa - Mid-American 
• Iowa - Alliant
• Illinois - Mid-American
• New York - ConEdison - Taking effect in Q2

The other major trend in this takeover is where LEDs are moving to instant only by product category. Here is a sampling of a few categories and where they are in this transition: ( percentage of programs that have this category available via the instant channel only)

Impacts and Actions: 

All members of the lighting channel are affected by these trends:

Manufacturers: Make sure your distributors know which products are rebate-eligible for each program. If your channel doesn’t know that rebates are involved at the point of sale, you’ve missed your opportunity to compete against other manufacturers who know it. If you aren’t publishing DLC or Energy Star product ids with your products, you are making it very hard for your distributors and contractors to select your product.

Distributors: The pressure is on.  If you aren’t participating directly, or through a program like our UtilityGenius Storefront(ConEd, PECO), then you are behind your competitors.

Contractors: The burden of rebates has fallen on contractors for a long time now. This will, over time, reduce your paperwork burden, but make sure you are working with participating distributors for sourcing. Again our UtilityGenius Storefront(ConEd, PECO) can get you access to rebate-able products for participating distributors.

Buyers/End Users: This should be great news! But be educated about whether instant rebates are available in your territory and ask your contractors and distributors to specify rebate-eligible products.  Check UtilityGenius(link) to determine whether you are in a territory that has an instant rebate program for business.

Summary

This instant takeover is an important trend to keep track of. If you work in mostly lamps and tubes, you need to make sure you are incorporating this approach into your quotation and sourcing processes. If you are in fixtures, you need to get ready for more instant rebates and instant-only rebates coming your way. There is a precedent here.  Residential rebate programs went this way as well. Instant rebates for residential lighting were around for a long time and some are still hanging on.