Rebates have been a staple in the commercial lighting marketplace for decades, helping millions of customers transition to more efficient lighting at a reduced cost. Each year, these programs adjust their offerings, evolving to match the current market needs.
What are the latest trends in commercial lighting rebates for 2023? BriteSwitch, a firm specializing in capturing local, utility, state, and federal rebates/incentives for business, explores some of the key developments in this space and discusses how businesses can position themselves to take advantage of these trends.
Over 3/4 of the United States has a commercial lighting rebate program
At the start of 2023, 78% of the United States had a commercial lighting rebate program available. That’s consistent with the past few years and just shy of the record of 79% we saw back in 2017.
Looking across the country, we haven’t seen any dramatic change in areas discontinuing or starting new programs. As we’ve seen in the past, the most robust programs are still in the Northeast and Northwest, while states like Ohio, Kansas, and North Dakota offer no rebates.
It’s interesting to see that the top 3 most populated states (California, Florida, and Texas) also have some of the lowest rebate potential. While all three states appear green in the Map below, the programs there are so restrictive that they offer little value for most projects. For example, Florida Power & Light, the largest utility in Florida, limits the program to only a handful of luminaire types. Also, their amounts are very low. For example, its high-bay rebate is 10% of the national average.
See the current rebate climate map and how it has changed over the past 15 years
A big change for screw-in/general service lamps
The most significant change for rebate programs in 2023 is in response to the Energy Independence and Security Act (EISA). Phase 2 of that legislation will go into full effect in July and will increase the minimum efficacy requirement of many general service lamps, like A19s and PARs, to 45 lm/W. That significantly changes the marketplace and has created two big changes with rebate programs.
With this upcoming change, programs are pushing hard to complete projects with these lamps in the first half of the year. Many of these programs are offering bonuses or increased dollar amounts in an effort to capture the savings while they still can. In fact, with this increased push, the average rebate for a screw-in/incandescent replacement lamp shot up an impressive 71% from last year to $7.66 per lamp (see Table). Projects at hotels, multi-family buildings, restaurants, and other businesses that often use these lights should plan their projects in the first half of this year while the higher funds are still available.
For the second half of the year, many programs have announced that they’ll be discontinuing the rebates for general service lamps. It should be noted that EISA does not explicitly prohibit rebates for these products. However, it does mean that inefficient lighting will no longer be available for sale starting in July. Therefore, many programs question if customers still need to be motivated to make the switch.
Also, since the new baseline wattage will be much lower, the utility can claim less savings. For example, when measuring program effectiveness before EISA, a program could say a 60W A19 was replaced by an 11W LED, resulting in 49W savings. However, under the new guidelines, a 60W equivalent A19 (800 lm) would have to be at most 17.8W. So if a customer installs an 11W LED, the program can now only claim 6.8W savings.
Rebate amounts stay relatively flat across all other categories
For most other lighting types, the 2023 incentive amounts have stayed relatively consistent year-over-year. It’s the third year the rebates have remained stable, bucking the historical trend of a 10% to 20% decline each year. In 2021 and 2022, we attributed this stability to the pandemic and the need to get more projects. This year, the motivating factor is likely due to increased LED costs and inflation.
The product categories with the highest dollar amounts are typically the luminaires that offer the most energy savings, such as high-bay luminaires and pole lights (see Figure above). These luminaires have historically had the highest rebates, and the 2023 amounts are on par with their record-high levels.
Rebates for lighting controls also remain consistent over the previous year. For basic controls, like wall and remote-mount occupancy sensors, the rebates still cover a good portion of the cost, making it a great add-on to most energy efficiency projects.
More advanced controls, like networked lighting controls (NLCs), have also stayed flat for 2023 in terms of geographic availability and dollar amount. This trend is surprising, since the rebates for this category saw a good amount of growth in 2022. Programs still seem to be struggling with how to explain the benefit of NLCs to customers in a quantifiable way.
Programs are getting harder to use
A concerning trend in rebate programs is that they are getting harder to use.
Over the years, many of the incentive programs have shifted to online portals in an effort to cut costs and streamline work on their end. Those portals are usually poorly developed, full of glitches, and slow down the application process. The time spent per application increases significantly for the person entering the information. A simple pre-approval application with just one line item can easily take up to 20 minutes now, a significant change from the days of paper or PDF applications.
As programs “streamlined” their applications, they’ve also cut staff, and it’s increasingly hard to connect with someone. When there is a problem with a project or an application, reaching someone typically involves calling a general call center where an assistant with no knowledge of lighting or the rebate program takes your contact information and passes it to the utility’s staff, who can take up to a week to get back to you.
These issues make the rebate process, which was already cumbersome, even worse. As a result, people looking to file rebates in 2023 need to focus on allowing enough time to complete all the steps in the process and have a project management system in place for tracking each rebate application from start to finish.
2023 is another strong year for commercial lighting rebates
Overall, 2023 proves that commercial lighting rebate programs still have life left in them. While rebates may seem like old news, they still are a valuable tool for making projects more affordable and improving the payback period of a project. With most of the country having a program, you should research the rebates available for each and every project you do.
Randy Young is the operations manager at BriteSwitch, a company that specializes in finding and capturing rebates for businesses. He can be reached at [email protected].
