The world of utility rebates can be confusing if you’re just starting out.
We get it - that’s why we started UtilityGenius, after all!
If you’re just getting involved with using rebates in your energy efficiency journey, let this be your starting point on the terms and definitions you need to know. We’ll cover rebate types, requirements to qualify, technologies commonly covered, and more!
To start off, let's answer the simple question of "What are utility rebates?". Utility companies offer financial incentives to their customers who purchase and install energy efficient products. These dollars are meant to lessen the burden of the upfront costs as energy efficient products often have a higher price tag. By taking advantage of these rebates, customers are able to choose products that will save energy and have a lower impact on the environment.
Rebate Types
Utility rebate programs distribute rebates in a number of different ways. You can tell which ways rebates will be distributed based on what the program type is. There are three common types you’ll hear: prescriptive, custom, and instant.
Prescriptive rebates involve submitting an application for the rebate and receiving the money after installation is complete. You might also hear these referred to as downstream rebates. The rebate is paid out to the end user following the application’s processing.
Custom rebates are a subtype of downstream rebates. Custom programs have a specific set of requirements that a project must meet to qualify. The specifics vary between utilities, though the incentive is usually based on the energy savings provided by the equipment upgrade. This offers the greatest flexibility on what projects are eligible, though can lead to more complicated application processes and rules.
Instant rebates (sometimes called midstream rebates) differ because the rebate is received at the point of purchase. You may still be subject to an inspection to verify installation of your products. These rebates are paid out to distributors, which is what allows them to pass savings along to the end user upfront.
Programs may distribute rebate funds via all three types at the same time, or they may only focus on one. Different technologies may also qualify under different rebate types; for example, HVAC may have only a prescriptive rebate, while lighting only has an instant available. There are many sources online to keep all of these specifics straight, including the free and easy-to-use UtilityGenius.
Pre-Approval and Inspection Requirements
In some cases, utilities will require pre-approval in their downstream rebate programs. This means that the customer or service provider must apply for and receive approval on their project prior to certain project milestones. The utility program's intention is to confirm the project's eligibility, evaluate rebate metrics, and establish the potential
rebate amount. It is important to keep pre-approval top-of-mind to minimize project delays as it can take additional time for reviewal of project details and site inspections when required.
There are many times in which the utility will not require pre-approval, but when they do, there are typically 2 ways that they can require pre-approval: Before Purchase or Before Installation.
For before purchase, the pre-approval application must be submitted to the utility prior to buying any products that would potentially receive a rebate. Changes to the proposed products later in the process could impact whether or not you get the full pre-approved amount or even if the project still qualifies for rebates.
For before installation, the pre-approval application must be submitted after you purchase the products but before you install them. Installing the equipment before the pre-approval process is complete could disqualify the project.
In addition to pre-approval, some utilities will require pre and post inspection. This means a program representative would be coordinated with the customer and come on site to conduct a pre and post inspection. Pre Inspections allow the program to verify equipment, building type, hours of operation, and other project details. Post inspections verify whether the approved equipment was installed.
In short, it is very important to read and understand the utility's program details so you are compliant with their requirements and are eligible for the rebate. UtilityGenius compiles essential information in one place and directs you in the right direction to learn more!
Eligible Products and Technologies
When it comes to which products qualify for energy efficiency rebates, a wide range of technologies may be eligible. This can get confusing as eligible technologies vary between programs, or may even vary between a single utility’s prescriptive and instant programs. To determine which technologies and products are eligible, you can check on the utility’s website for program information. To make this even easier, use UtilityGenius for free to easily navigate and quickly identify eligible technologies for a program!
Some of the major technologies that may be incentivized across programs include LED lighting, controls, HVAC, fans, VFDs, or electric vehicles. Programs may also incentivize things like appliances, food service or refrigeration equipment, or plug load management measures. These offerings and their specifications can vary, so it’s very important to check your sources when you’re getting started with a project to ensure you’re securing the maximum rebates available.
How Rebates are Calculated
In addition to variations in what technologies are incentivized by a program, how a program calculates the rebate can vary, too. There are a few general ways that utilities will do rebate calculations.
Per fixture rebates are exactly what they sound like - the rebate is a fixed amount based on the kind of fixture you purchase. There may be some variation in how much the per fixture rebate is depending on the specifications of your new fixture such as proposed wattage, or your existing fixture such as existing wattage, existing equipment type, annual hours, but overall, these are more straightforward.
Rebates are also sometimes calculated based on the energy saved from a project. To calculate these rebates, the new fixture and its specifications are taken into account, as well as the existing fixture and the total energy saved by completing the project. These calculations can be more complicated.
Often programs will have rebate caps limiting the maximum rebate amount for an energy efficiency upgrade. Utilities use caps to limit the money paid out to a specific customer and/or for a specific project. The payment limit for a project can be a combination of: percentage of cost, payback requirement, or maximum dollar amount. You can learn more about rebate caps here!
If you still have questions or want to learn more about UtilityGenius, email us at hello@utilitygenius.com!