Using Utility Rebates Part 1

Utility Rebates For Small Business

By Jeff Gatzow

Lighting distributors that handle commercial work, multi-family housing, or smaller office spaces can boost their business with utility companies’ funding for installing LED luminaires.

By now we’ve all heard about the myriad benefits of LED luminaires — their long life, tremendous energy and maintenance savings, and the even illumination. And yet, there is still reluctance by end-users and specifiers to make the LED upgrade from traditional fixtures. Perhaps by examining the many rebate and incentive programs throughout the country architects, specifiers, and end-users will realize there’s no reason not to implement the upgrade.

The Numbers

According to the Department of Energy (DOE), lighting accounts for approximately 35 percent of the electricity usage in the average U.S. commercial building. In addition, nearly one out of every three dollars a small business owner spends on energy today is spent on lighting.1 The DOE also estimates that by 2027, widespread use of LEDs could save about 348 terawatt-hours of electricity (the equivalent annual electrical output of 44 large electric power plants, 1,000 megawatts each).

A report by Navigant Research released in 2010 noted, “If all the commercial buildings in the U.S. that exist as of 2010 were retrofitted to be more energy efficient, the country as a whole would save over $41.1 billion a year in energy bills.” Other motivations include the federal tax incentives and local utility rebates — which can cover anywhere between 30 percent and 100 percent of the cost of LED lighting.2

And while this isn’t a statistical motivation, another advantage that a business reaps through this upgrade is the opportunity to demonstrate Corporate Social Responsibility (CSR) initiatives and a carbon reduction strategy to supply chains and customers.

If there are so many advantages, what’s holding businesses back from upgrading their lighting?

Why the Hesitation?

SMS Building Systems identified five key barriers to investing in energy efficiency:

  • Lack of awareness of opportunities for lighting energy savings
  • Lack of technical expertise for the design and completion of projects
  • Lack of certainty that promised savings and high ROI energy-efficient upgrades will be achieved
  • The inability of projects to meet the organization’s financial payback criteria
  • Lack of available capital for investment in projects

There is also the lack of incentives to support building efficiency within maintenance departments. Maintenance/facility managers are often rewarded according to whether they meet their budgets and not on total cost savings to the business. As a result of this siloed approach, these managers may opt against relatively low-cost measures, such as retrofitting current fluorescent tubes, because they don’t have the incentive to consider the benefits to the business in terms of lower energy costs and avoided disruptions from maintenance work when antiquated fixtures break down.3

Using Utility Rebates is part one of a two part series. Click here to read part two of leveraging utility rebates



3 Chuck Kanupke, “Energy Efficient LED Lighting: High ROI Energy Efficient Upgrades,”, August 4, 2014

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