2022 Rebate Outlook

2022 Rebate Outlook

By Craig Dilouie, LC, CLCP

The commercial market lighting rebate outlook for 2022 is even stronger than 2021, with robust rebates promoting adoption of energy-efficient LED lighting and controls in existing buildings. By reducing initial cost, rebates make upgrade investments more likely to be approved by the lighting system’s owner. As such, they are a significant market driver for energy efficiency in existing construction.

In 2022, major rebate trends include continuing stabilization of LED product rebate amounts, a surge in horticultural LED rebates, continuing substantial lighting control rebates, and expansion of networked lighting control rebates.

This article describes the current opportunity with commercial lighting rebates and how projects acquire them.

About Rebates

Many utilities and energy efficiency organizations offer rebates as a customer service and as their own investment in reducing electric demand, thereby avoiding the cost of building new power plants. According to rebate fulfillment firm BriteSwitch, which shared data from its RebatePro North American rebate database, about three-fourths of the United States is covered by a commercial lighting rebate program. And that is with Ohio, which traditionally offered rebates, discontinuing them at the end of 2020.

While custom rebates are available, the majority are prescriptive, offering a cash award per installed qualifying product.

Figure 1. Popular LED luminaire categories featured in prescriptive commercial lighting rebate programs in 2018 through 2022, with average rebate amounts per product for programs in the U.S. and Canada.

Source: BriteSwitch RebatePro North American rebate database, February 2022.

Figure 2. Popular LED lamp categories featured in prescriptive commercial lighting rebate programs in 2018 through 2022, with average rebate amounts per product for programs in the U.S. and Canada.

Source: BriteSwitch RebatePro North American rebate database, February 2022.

Prescriptive (downstream) rebates are awarded to approved projects that feature installation of qualifying energy-efficient products, which receive a $/product rebate typically awarded to the owner. While fairly straightforward, the process may require an upfront investment, pre-approval, and inspection.

Point of sale (midstream) rebates are limited in geographic availability and typically to specific products—often the most common lamps and, in some cases, common luminaires. This subset of prescriptive rebates is realized at the point of sale, resulting in an instant, relatively low risk rebate.

Custom rebates can produce substantial rewards but are relatively complex, typically claimed for innovative projects that transcend the prescriptive program. Basically, the project team is proposing a rebate to the utility. For example, the rebate may be based on $/kWh savings.

Commercial Lighting Rebate Trends

Looking at the BriteSwitch database, we can identify several significant trends.

LED product rebates continued to stabilize in 2022. Looking at the most popular commercial lighting rebates shown in Figures 1 and 2, average LED product rebates remained fairly stable in 2021 and 2022 after generally declining due to falling product costs. Rebate stabilization may be due to reduced demand for rebates during the pandemic but may also be reflective of cost stabilization. Obviously, as these numbers are averages, rebates vary by program.

Horticultural LED rebates are surging. In 2022, available horticultural lighting rebates tripled. New programs reduced average rebate amounts by roughly a quarter, according to BriteSwitch, though average rebates remained substantial at about $100/luminaire. A significant number of programs are switching from custom to prescriptive, which simplifies application.

Lighting control rebates remain robust. Looking at the most popular commercial lighting control rebates shown in Figure 3, average rebates continue to be stable and substantial. Average rebate dollars can be significant compared to cost, making controls such as standalone sensors potentially an attractive upfront add-on for an LED lighting upgrade.

Figure 3. Popular lighting control categories featured in majority of prescriptive commercial lighting rebate programs in 2018 through 2022, with average rebate amounts per product for programs in the U.S. and Canada. Networked control systems are not included, as programs are currently unstandardized.

Source: BriteSwitch RebatePro North American rebate database, February 2022.

Networked lighting control rebates grew in availability. Several years ago, some rebate programs began introducing networked lighting control rebates to increase overall energy savings. In 2022, these programs grew to now include more than one-fourth of prescriptive programs.

As this type of rebate is relatively new, programs are still experimenting with approaches, though the most common is a simple rebate adder per luminaire connected to a qualifying networked system. According to BriteSwitch, the resulting rebate is on average 30 percent higher than a luminaire without controls.

Where a specific prescriptive rebate is not available, networked lighting controls may be eligible for a custom rebate.

Getting the Rebate

Rebates can be advantageous, but the acquisition process takes time and requires administrative resources or outsourcing to a rebate fulfillment firm. Below are tips to get the best results from a prescriptive (downstream) commercial lighting rebate program.

Learn about rebate availability. Robust commercial rebates incentivize LED upgrade projects with either discrete control devices such as sensors or networked lighting control systems available as an attractive upfront add-on. Incorporating rebates into upgrade proposals can increase projected return on investment and thereby increase the likelihood of approval, so be sure to research available rebates early in upgrade planning. To determine rebate availability in your area, contact local utilities and energy efficiency organizations.

Learn the program. Rebate programs are not standardized, vary widely, and can change. Before making the application, become educated about detailed program requirements such as design specifics, pre-approval requirements, product qualification, inspections, expiration dates, and so on. For example, the rebate program may require a certain number of luminaires or watts be controlled by a control device for which a rebate is requested.

Manage risk. There may be cases of a rebate not being approved, awarding a smaller amount than planned, or being temporarily discontinued due to rebate participation draining funds early. As a result, professionals should be careful about taking the rebate amount off the invoice or otherwise word their proposals to avoid the risk of eating the difference if the rebate does not pan out.

Gain pre-approval if needed. The majority of rebate programs require application and pre-approval prior to installation. During this step, the rebate program may ask for information such as a description of the existing lighting installation, building area (sq.ft.), hours of operation, etc. Build this time into the project and ensure the paperwork is done correctly to avoid delays.

Select qualified products. Rebate programs typically involve proposal for installation of energy-efficient products that are considered eligible for the rebate through qualification. These qualifications are typically third party in the case of lamps and luminaires: ENERGY STAR (lamps) and the DesignLights Consortium’s (DLC) Qualified Products Lists (QPLs) (lamps, retrofit kits, luminaires, networked lighting controls).

The DLC maintains QPLs for solid-state lighting (SSL) products, horticultural LED products, and networked lighting controls (NLCs). These QPLs provide a valuable tool for identifying and evaluating products with or without a rebate. Standard lighting controls such as standalone occupancy sensors do not require listing. When DLC (or ENERGY STAR) listing is required, ensure the exact model for a selected product is listed. In the DLC QPLs, each product carries a unique identifier to make it easier to verify its qualification.

Note that QPLs change as new technical requirements are adopted. For example, the SSL QPL is currently transitioning to Version 5.1, which added requirements for spectral quality and light distribution in addition to dimming for a broad range of products. Version 2.1 of the horticultural technical requirements recently went into effect, recognizing three new product types. LUNA Version 1.0 recently launched as an SSL QPL subset to recognize outdoor LED luminaires that satisfy SSL Version 5.1 while also achieving added criteria aimed at minimizing light pollution. And the NLC QPL is transitioning to NLC5, which requires compliance with one of several cybersecurity standards and requires energy monitoring if the system is not a room-based system.

Stay informed about the rebate program. When applying for a rebate, check with the utility that funding will be sufficient to ensure the promised rebate will be delivered. Some rebate programs have a “reservation of funds” policy, which reserves funds for approved projects working their way through the process. It is also advisable to stay up to date on any changing program requirements.

Inspection may be required. Onsite (or virtual) inspection may be required to verify installation of the products, common when the rebate amount is significantly large. Some documentation detailing the installation may be required. Some programs may require measuring and monitoring to capture and validate energy savings.

Payment may take some time. Note it can take weeks or even months to receive a rebate check from a rebate provider after installation is complete, as the program processes the application, calculates project savings, and calculates the final rebate amount. Complete and accurate paperwork ensures the rebate travels through the process as quickly as possible.

Put Rebates To Work

For decades, commercial lighting rebates have endured as an effective policy for utilities and energy efficiency organizations to reduce demand for electrical power by incentivizing adoption of energy-efficient lighting and controls. While rebates can require effort and pose some risk, many practitioners utilize them as a beneficial tool to capture or enhance lighting upgrade projects.

The overall outlook for rebates in the U.S. in 2022 is positive, with widely available rebates covering much of the country and supported by freely available, detailed listings of qualified products. They are particularly attractive for projects involving solutions adding lighting controls, including networked lighting controls.

Craig DiLouie is education director for the Lighting Controls Association, a council of the National Electrical Manufacturers Association that educates the public about lighting control technology and application (www.LightingControlsAssociation.org).