Finding Rebates and Incentives for Lighting Upgrades

The allure of a lighting upgrade is simple; you can significantly reduce energy spend for something that is vital to your facility. However, as with any major energy upgrade, improvements can be expensive, and receiving a positive ROI soon enough to justify them might not be feasible.

Fortunately, a variety of incentive programs can make upgrading lighting a little more palatable to the budget-minded facility manager. How can you find incentive programs to fund your lighting project?

Incentives from Utilities

Incentives can make the change to high-efficiency lighting a no-brainer because they ease the burden of upfront costs involved in an upgrade. For example, Silver Beauty, a warehousing management company that builds and leases facilities in Chicago, was able to cut upfront costs for new lighting in a warehouse by 50% with a custom incentive from its utility, ComEd, which allowed the upgrade to move forward. Because Silver Beauty was able to leverage changes with the incentive, it could more realistically attain the 92% reduction in the facility’s annual lighting budget from $78,000 to under $6,000.

This success illustrates the most effective resource if you are looking to upgrade lighting on a budget: your utility partner.

“Facility managers should reach out to their electric utility early in the process,” explains Brian Lips, Project Manager of the Database of State Incentives for Renewables & Efficiency (DSIRE). “Many utilities have rebates for lighting, which may influence their purchasing decisions. Some utilities even provide design and commissioning assistance.”

The typical utility incentive involves rebates using ratepayer funds, according to Lips. Fixtures, troffers, controls, bulbs and other energy-efficient lighting technologies have specific rebate values, but you will need to be precise with your planning in order to capitalize optimally.

Contacting your utility directly, searching for incentives with ENERGY STAR’s Rebate Finder (www.energystar.gov/rebate-finder), looking within the Department of Energy’s Tax Credits, Rebates & Savings page (www.energy.gov/savings/search) and visiting the DSIRE database are some of the easiest methods for finding the right programs.

A New Administration and the Future of Incentives

Federal incentive programs have been limited lately, and the Trump Administration’s energy policies might continue to threaten their future viability. While the current political climate might not bode well for certain government programs, expect incentives from utilities to resist any volatility in energy efficiency decision making.

“Since most of the incentives for energy efficiency come from utilities, they are rather insulated from politics,” says Lips. “Public utilities commissions at the state level usually have oversight of the incentive programs administered by utilities, and the utilities commissions are usually a safe enough distance away from politics.”

Unfortunately, government programs at all levels do not have that kind of protection. As you look at each level’s options from local to federal, available incentives are harder to find – and are now nonexistent at the federal level.

“Generally speaking, state governments tend to operate loan programs,” says Lips. “The federal government had a tax deduction for energy-efficient commercial buildings for a number of years, but it expired at the end of 2016. With its expiration, there are no current incentives at the federal level.”

The federal incentive that Lips refers to – the 179D Commercial Buildings Energy Efficiency Tax Deduction, part of the Energy Policy Act of 2005 – had been in place since 2006 but ended last December, and its expiration has left a considerable void. Federal incentives are nonexistent for lighting upgrades and are becoming harder to find for other renewable energy initiatives.

With federal departments like the Department of Energy, the Environmental Protection Agency and the Small Business Administration no longer providing options for financial assistance, finding programs that make upgrading lighting – or any other building system – more affordable at a federal level is more or less a fruitless endeavor at this point.

State and Local

If federal options continue to be limited, you can look toward state and local governments for incentives and rebates. While you are more at the mercy of your state legislature or city council, some boast an impressive number of options to make your lighting upgrade viable.

According to the National Conference of State Legislatures (NCSL), 32 states have implemented rebate, loan or tax incentive programs for energy-efficient lighting upgrades and use in commercial or institutional facilities. For most of these programs, the incentives cover lighting as one category out of many in making buildings more energy-efficient and are broader in scope.

For example, at Argonne National Laboratory (ANL), a Department of Energy lab located near Chicago, five buildings needed lighting upgrades, and the Illinois Department of Commerce & Economic Opportunity provided incentives covering nearly 30% of the project, which added up to just under $50,000. The project saves ANL $39,000 in energy usage each year, and the incentives reduced the payback period from 4.4 years to 3 years.

However, not every state has incentive programs like that, so you are often at the mercy of what your local or state government has passed. Even if there aren’t robust incentive programs, your state might provide loans for lighting improvements.

One common method that state legislatures have pushed around the country are Property-Assessed Clean Energy (PACE) programs. These programs help property owners pay for upgrades to clean and efficient technologies through property tax assessments that local governments can finance. According to PACENation, a nonprofit organization that advocates for PACE financing, 32 states and the District of Columbia have PACE-enabling legislation. To learn more about PACE programs, visit www.energy.gov/eere/slsc/property-assessed-clean-energy-programs.

The process of finding incentive programs for your lighting upgrade project can be frustrating because of the ever-changing nature of financial programs and their inconsistency based on location. However, detailed project planning and a diligent overview of appropriate agencies, departments and databases are the most effective actions you can take.

Justin Feit [email protected] is assistant editor of BUILDINGS.

Database of State Incentives for Renewables & Efficiency (DSIRE)