I recently had the pleasure of interviewing Leendert Jan Enthoven, President of BriteSwitch, a utility rebate fulfillment company. The topic: lighting product rebate trends. I’m happy to share his responses with you here. The interview informed an article I wrote for the April feature article for the Lighting Controls Association.
DiLouie: How would you characterize the current lighting rebate opportunity in the United States in 2016? What is the current overall trend in funding?
Enthoven: Rebates for commercial lighting are as strong as ever. While funding overall has remained strong, we did notice that in 2015, more rebate programs than ever ran out of funding due to increased levels of participation.
DiLouie: What is the typical impact of a lighting/control rebate on a retrofit project? What percentage of the product and/or installed cost does it typically cover?
Enthoven: Rebates typically improved the payback of a project by 20-25% so a project that used to have a 2 year payback could come in around 1.5 years. In some areas, rebates can cover up to 70% of the cost of a product but that is far from the norm. You really have to know your local programs.
DiLouie: What are the top 3-5 trends in lighting rebates and what impact are they having on demand for energy-efficient lighting?
Enthoven: In 2016, we saw a lot of rebate programs start to shift their focus away from screw in LED replacements to LED tube replacements for fluorescents. While these types of products may have been covered by custom rebates in the past, the new prescriptive amounts are typically higher.
Rebate programs have continued to require Energy Star or DLC approved products, which drive the demand for high quality LED products
Rebates for LED lighting have continued to decline to match the shift in prices but not as much as previous year. Last year, rebates went down 20-30%, this year was a more modest 5% decrease.DiLouie: What are the top 3-5 trends in lighting control rebates and what impact are they having on demand for lighting controls?
Enthoven:With lighting controls, we’re noticing more programs focusing on integrated fixture sensors since they work so well with many LED products.
What’s very interesting is that rebates for lighting controls have remained remarkably stable. Over the last 5 years, the rebate amounts have only decreased by 10% which is unheard of in any other lighting category.
Wireless control products continue to gain acceptance in more rebate programs. Up until a few years ago, program rules required that lighting controls were hardwired, but with the advancement in wireless technology, many rebate programs have removed this requirement.
DiLouie: What is the overall trend with non-LED energy-efficient rebates (such as low-wattage and high-performance T8)?
Enthoven: Incentives for non-LED lighting products are still offered by many rebate programs but they’re not as highly publicized as LED products. There are still a ton of rebates out there for T8, fluorescent highbays, and induction fixtures. The rebates have gone down a bit over the years, but they still cover a good portion of the cost of these solutions. Customers really have to weight their options, with a lower cost and solid rebates, some of these more traditional technologies will have a much better payback than the more trendy LED solutions.
We have noticed that many programs are changing how they view upgrades from T12 lighting. Since the programs feel customers have no choice but to upgrade from T12 lighting, they’re providing reduced incentives, or using T8 as a baseline for the energy savings to calculate the dollar amounts.
DiLouie: How would you describe the growth in utility rebates promoting LED lighting technology? How many states and programs are available, what is the total funding in 2016, and how does that contrast against previous years?
Enthoven: LED technology has come to be a favorite with rebate programs. Most rebate programs have added prescriptive rebates for many categories of lighting such as screw in lamps, LED tubes, high bays, exterior lighting, etc. Currently, 64% of the US is covered by a commercial lighting rebate which is down from 71% last year.
DiLouie: How would you describe the growth in utility rebates promoting lighting control technology? How many states and programs are available, what is the total funding in 2016, and how does that contrast against previous years?
Enthoven: Lighting controls rebates have remained remarkably consistent over the years. The rebates still cover a very significant portion of the cost of controls and, along with the energy savings, make it a great opportunity to sell to customers. Most commercial lighting rebate programs provide incentives for controls.
DiLouie: Is there anything significant to report about incentives other than product rebates, such as demand response, rebates based on kWh and kW reductions, etc.?
Enthoven: Demand response and other such programs vary greatly by area and year. We haven’t noticed anything notable about these programs this year.
DiLouie: What are the obstacles to obtaining rebates, and how can lighting professionals overcome them?
Enthoven: Probably the biggest obstacle that prevents customers from getting rebates is not pursuing pre-approval prior to installation. A lot of people will install their new lighting and then try to file for rebates, but in reality most rebate programs have a pre-approval requirement where you must file paperwork before installation in order to get money.
Another obstacle many people face is not using the right products. Most programs have requirements that products must meet in order to qualify for rebates. For example, if a customer used a non-Energy Star listed LED lamp, they would be automatically excluded from 94% of the prescriptive rebate programs currently available. Other solutions may need to be on the DLC or CEE approved lists. For lighting controls, they may specify number of fixtures or watts controlled in order to qualify for rebates.
Also, if you don’t fill out the application paperwork properly, you may get stuck in a very time consuming, administrative application process where many people eventually give up out of frustration.
DiLouie: What are the top three things lighting professionals need to know about when helping their customers capture rebates?
Enthoven: When suggesting products to customers, make sure they meet the requirements of the rebate programs. Just because a spec sheet says a product is Energy Star or DLC listed, it is not always true. The exact product must be actively listed on the EnergyStar or DLC website.
Pre-approval is needed in about 80% of programs. If a customer removes the old lighting before pre-approval is received, they will miss out on that rebate.
Rebate programs receive thousands of applications a year. Be prepared for a lot of follow up to make sure your application makes it through.
Rebate programs can change or run out of funding at any moment. Make sure you check them frequently so you don’t overpromise rebates to your customers.
DiLouie: What is the biggest mistake owners and/or lighting professionals make when trying to gain a rebate? What should they do to avoid it?
Enthoven: The biggest mistake people make when trying to get rebates is not getting pre-approval before ordering or installing the new lighting. People will spend months debating a project and then once they decide to pull the trigger, they forget they need pre-approval. Pre-approval takes 31 days on average and is often required. If the work begins before pre-approval is granted, the rebate is usually forfeited.
DiLouie: What are the major qualifying organizations—such as DLC Qualified Products List, ENERGY STAR, CEE—and the latest requirements? How are they setting the bar for products being installed in retrofits?
Enthoven: Rebate programs often specify 3rd party qualifying organizations to ensure that products meet certain technical requirements. Energy Star, Design Lights Consortium (DLC) and CEE are the biggest, but this year we saw several programs start requiring products to be on the Lighting Facts list as well.
While DLC has recently created a “premium” category for products, right now there are very few programs that require or provide an additional incentive for products in this new category.
DiLouie: If you could tell all lighting professionals only one thing about lighting rebates, what would it be?
Enthoven: Lighting rebates are one of the best sales tools you have to help convince customers to go through with an upgrade. It helps decrease the cost to the custom without reducing your margin. The key is to always focus on the price after the rebate.
DiLouie: Is there anything else you’d like to add about this topic?
Enthoven: Because the rebate process can be so time consuming and complicated, many contractors and distributors work with rebate processers to help get rebates and incentives for their customers. By partnering with these rebate processors, the contractors are able to provide accurate rebate estimates to the customer and have the whole handled with no hassle. We regularly partner with contractors and distributors who want to help their customers offset the project costs with rebates but can’t dedicate the time and resources pursuing rebates for the customer.