Editor's Note. 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. In this article, Leendert Jan Enthoven, BriteSwitch's founder and CEO, explores the latest trends in commercial lighting rebates for 2023 and discusses how businesses can position themselves to take advantage of these trends. Electrical Wholesaling's editors thank Leendert for once again allowing EW to publish his expert commentary on lighting rebates.
Over 3/4 of the U.S. has a commercial lighting rebate program
At the start of 2023, 78% of the United States has 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 three 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 the Sunshine State, limits the program to a handful of fixture types. Also, their amounts are very low; their high-bay rebate is 10%
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 2023 and will increase the minimum efficacy requirement of many general service lamps, like A19s and PARs, to 45 lumens per watt. 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 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. 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 lumens) 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. (See chart below.)
The product categories with the highest dollar amounts are typically the lighting fixtures that offer the most energy savings, such as high-bay fixtures and pole lights. These fixtures 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 (NLC), 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 NLC to customers in a quantifiable way.
Programs are getting harder to use
A negative trend in rebate programs is that many of them have become less user-friendly. 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 to 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.
Lighting industry veteran Leendert Jan Enthoven founded BriteSwitch, Princeton, NJ, in 2008 to help businesses take advantage of the rebate and incentive programs that exist across the U.S. and Canada. The BriteSwitch database helps electrical contractors, electrical distributors, manufacturers, independent reps and end-users find lighting rebate programs in their region. Leendert was kind enough to once again provide Electrical Wholesaling's readers with the following lighting rebate update for 2023. Contact him at [email protected] for more information on BriteSwitch. You can contact the company at [email protected] or (609) 945-5349.