In the first part of our series on utility rebates, we talked about the utility industry and about why they offer rebates to customers to invest in energy efficient systems and equipment. In this second part, we’ll address how you can best use them to improve the “Energy ROI” in your facility.
It’s important to understand that many utilities offer rebates not only for actual capital investment in energy efficient upgrades, but also for studies to assess the opportunity in your building as a starting point. Utilities in some of the country’s major markets, including New York City, Chicago, Los Angeles, Dallas, and San Francisco offer these programs, so make sure you begin by learning whether an energy audit rebate program exists. Go to your utility’s website, or call your utility representative, to see if this kind of offering is available to you.
If so, it is most likely that you will get a discounted price on a comprehensive audit performed by an energy auditing firm that has been selected by the utility based on technical qualifications and experience. This is an excellent place to begin to leverage utility rebates to improve your profitability. The audit should identify both low and no cost operating improvements you can make to reduce consumption and costs, as well as energy conservation measures (EDMs) that require capital investment. You should be wary, though, if the utility’s audit program is a free audit conducted by a utility employee. Utilities are in the business of providing reliable cost effective energy, not energy auditing. If this is their offer, ask whether the utility would instead be willing to offset the cost of an audit performed by a consulting firm that specializes in them.
Most utilities use these audit rebate offerings to identify ECMs so they know exactly what they might expect in terms of energy and demand reductions associated with their implementation. That is where the next opportunity to receive rebates comes in – by investing in these capital projects. Depending on your utility, they might offer a combination of prescriptive and custom rebates. As the name implies prescriptive are straightforward rebate programs offering fixed prices for common improvements such as lighting upgrades. Custom are more interesting and potentially more lucrative as the utility is willing to provide a custom rebate for a measure or bundle of measures in order to encourage your investment. In most instances you are best served by applying for and negotiating custom rebates.
It’s important that you inform the utility that the rebates are an essential part of your evaluation of the capital investment, as this gives you the most leverage. If rebates are on the table, don’t commit to a capital investment too soon without making sure you get the best possible deal. After all, your investment is bringing to the utility valuable resources in the form of energy and demand reductions on their system. These rebates can be substantial. In some programs, utility rebates of up to a million dollars annually are available at a single customer site. In some cases, custom rebates can be used to drive down your investment to the point where it would be expected to result in a two year simple payback.
So now that you understand how valuable these rebates might be, and how to go about identifying and taking advantage of them, one big question remains: How and when do I get these rebates? We’ll address that in our next installment in this series.