The State of the Rebate

By John Curran

All politics is local, and many distributors are rapidly finding that includes the funding options that they can find for their clients. Most proposals for LED retrofit projects include using rebates to reduce 10 percent of the project cost, so it remains true that the most effective RFP responses include a holistic usage of these plans to deliver maximum cost savings.

The first distinction Randy Young, at distributor support firm BriteSwitch LLC, says distributors should make is between rebates and programs for retrofits versus those provided for new construction. Various codes make it nearly impossible to consider non-LED options for newer buildings and governments and utilities feel there is little point in trying to subsidize it.

Young argues that the major market remains in retrofit projects. There, “rebates have been pretty consistent over the past three to five years,” he says. “The national budget has been coming out at about $9 billion. It has not been changing a lot in terms of overall funding.”

That doesn’t necessarily mean that it has become easier to sort out the various options available to distributors when they are pitching clients on retrofits, the most successful projects cited by distributors like Bernie Erickson, regional vice president at Facility Solutions Group.

FSG has done dozens of municipal projects of all sizes and one of their key rebate programs for clients in New Jersey has been the state’s Board of Public Utilities Direct Install program. As he walked through the program, he noted the significant benefits especially to smaller organizations:

“From a sheer magnitude of subsidy, it is hard to beat the Direct Install programs. These programs offer rebates of 70-80 percent of material AND labor,” Erickson reports. “But they often have a customer size limitation to them.  We run programs in eight states, and the limits run from 60KW-connected load all the way to 500KW.

Moreover, many times they also require the projects to be comprehensive,” meaning a distributor may have to work with HVAC and other systems installers for the client to receive the full benefit. And it’s important to note that FSG’s rebate usage in projects in New Jersey is aided in large part by the state’s willingness to fund clean energy programs and target areas of need including smaller entities. This isn’t true in many other states.

Outside of new construction, distributors are less likely to find rebates or incentives in states like North Dakota or those that border the Gulf of Mexico. Briteswitch’s Young notes that in the case of states like Louisiana and Texas, energy costs are so low that it simply doesn’t make economic sense, and so “the Southeast is one of the least active areas in terms of rebates and the excitement to push it in the area.”

The key takeaways that each of the LED experts interviewed for this story agree remain the same are:

1. Tailored rebate searches, like those that Briteswitch and in-house teams provide, need to focus on the entire system of costs for the end-user, from installation to financing to ongoing energy costs and maintenance.
2. Rebate programs can come from a variety of areas to help reduce the return on investment for the client, so it remains critical that distributors keep up-to-date on all options and what changes exist.
3. Politics does not seem to have had an impact on the total amount of money that’s available to distributors – roughly $9 billion year over year. The hard part is keeping track of the changes.