One of our clients is an energy efficient lighting manufacturer with products that are eligible for many state and utility rebate programs. A major theme in our work together is the challenge of planning for and managing various rebate programs, or what we call “Rebate Overhead.” Every state and utility has its own program (or no program), amounting to at least several hundred possible sources of rebates.
Because the information changes frequently and is scattered across many websites, any company looking to produce, sell, and install an energy efficiency product on a regional or national scale must choose to deal with rebates in one of two ways:
- Option A: Confront Rebate Overhead: Spend money on an employee, temp, or consultant to identify rebate opportunities, develop budgets and financial plans, manage paperwork, and monitor program changes and updates; or
- Option B: Leave money on the table: ignore rebates altogether, and apply only when a customer insists or when it’s impossible to ignore the money.
Note: Third Partners provides rebate consulting to ensure that your energy efficiency projects receive the best financial outcome possible.
Three Ideas to Reduce Rebate Overhead
- 1. A Centralized Database of Rebates
- In an ideal world, there would be an updated, comprehensive, spreadsheet-friendly database of all rebates and incentives. This would be a massive public good, and would advance energy efficiency nationwide by saving companies time and money spent on Rebate Overhead.
- This does not exist right now. The best database available is the Database of State Incentives on Renewable Energy (DSIRE), produced by the NC Solar Center at NC State University. While we have not found a better database, its current format and data are not spreadsheet-friendly and not up-to-date. Many of the rebate programs we found for our client were not listed on DSIRE, and many that were listed stated inaccurate or outdated information from as far back as 2011.
- This is not meant to be a criticism of DSIRE: it remains the best (by far) database on rebates and incentives. This simply underscores the challenge of being on top of every single rebate program. We look forward to seeing DSIRE 2.0 in summer 2014, hoping they are correct in claiming that “The new version of DSIRE will offer significant improvements over the current version, including expanded data accessibility and an array of new tools for site users.”
- 2. Utilities, Consortiums, and States should use the Same Format for Presenting Rebate Information
- Finding rebate information on a utility website is often difficult and time-consuming. Some utilities provide clear and easily distilled information, such as Georgia Power & Puget Sound Energy). But the majority of utility websites are poorly designed and information takes some effort to find, like Southern Maryland Electric Cooperative, Southern California Edison, and every consortium in Michigan require significant time to unearth useful information such as rebate amount per kWh, rebate maximum, or rebate minimum.
- The problem is unsurprising given the hundreds of web developers, politicians, lawyers, and program managers that work on rebates across the country. But its effects cannot be ignored: poor access to information is a major barrier to working with rebates. Even rebate experts are often resigned to spend hours hunting for what they need.
- Utilities should follow a unified format that presents information clearly, letting the users know up front the following pieces of information: custom rebate amount per annual kWh, maximum rebate amount, minimum payback, maximum % of project costs. This information should be presented together, alongside all prescriptive rebates.
- 3. Utilities Should Not Obscure Rebate Terms
- Some utilities do not publish full information on custom rebates, with the hope of warding off folks trying to “game” the system. Examples are Duke Energy and all its subsidiaries, National Grid, and
Wisconsin Focus on Energy which covers most utilities in that state. Duke states the following and all its subsidiaries as its reason for obscuring its terms:
“Duke Energy calculates an incentive for every individual Custom Incentive application, so an exact incentive cannot be predicted without a completed application. The incentive is ultimately tied to the impact the measures have on the customer’s load profile. Past incentives have ranged from approximately 25%-150% of the projected annual electrical savings from the proposed energy efficient equipment.”
- In other words: your rebate could be basically nothing, or it could cover the cost of the project with money leftover. While it is possible that an energy efficiency company could increase the price of an installation to maximize rebate payout, obscurement of terms creates more problems than it solves. It prevents savvy ratepayers from knowing exactly how much energy efficient technology they can afford to install. It prevents installers from planning jobs, making supply chain decisions, and optimizing resources. It adds communication overhead, between the utility, customer, and installer, to determine how to proceed, and how much a rebate will be. In short, it makes energy efficiency projects more challenging, which decreases the likelihood of a project moving forward.
- The fact remains: a kWh saved is a benefit to both the utility and the public. Equipment life and warranty held equal, it should be treated with equal rebates from one project & site to the next.
Sidenote: Why couldn’t we have just one rebate program from the Department of Energy?
It could not work that way. Energy markets are fragmented for a reason, varying significantly between regions, states, and municipalities. This is because the cost and availability of fuel, fuel mix, regional competition, price to the customer, and peak seasons are not the same in, say Tempe, AZ versus Duluth, MN.
With the number of utilities and states relatively constant, there is no end in sight to the number of different rebate programs. That said, the upside of rebates—-greater frequency and implementation speed of energy efficiency projects—-certainly outweighs the downside of having the information be severely fragmented between utilities.
Third Partners is a team of creative and collaborative sustainability consultants based in New York City. If you have a blog idea, comment, or question, please contact Third Partners here.