Rebate Rx: Incentives influence product development, drive toward energy-efficiency

Chart showing average 2020 rebates for various LED solutions and lighting control upgrades. Source: Briteswitch.

Commercial lighting rebates remain a popular, enduring incentive for nonresidential upgrades. The majority of rebates are prescriptive, offering a cash rebate per installed product from a utility or energy-efficiency organization rewarding conversion to qualifying energy-efficient lighting. The rebate outlook for 2020 is very positive, with 76% of the country covered by lighting rebates for LED products, lighting controls and networked lighting controls, according to rebate fulfillment firm BriteSwitch, Princeton, N.J.

Rebates influence the lighting market in two ways. First and foremost, they drive demand for energy-efficient lighting and controls by reducing initial cost by an estimated typical 20–25%, shortening paybacks. They also influence product development by establishing technical requirements that qualify products for rebate eligibility. The most notable product listings are ENERGY STAR and the Medford, Mass.-based DesignLights Consortium’s (DLC) Qualified Products List and Qualified Products List for Networked Lighting Controls.

As the industry underwent a major shift to controllable and potentially connected LED lighting, rebate programs kept pace, resulting in interesting trends that are still taking shape in 2020.

The most popular rebates continue to target LED luminaires and replacement lamps covering a majority of nonresidential applications. Average per-product rebates declined to reflect falling product costs before leveling out in 2018 and then declining again. In 2020, BriteSwitch reports average rebates declined 12% across all product categories, with the biggest drop—27%—in screw-in LED replacement lamps. Most rebates are paid directly to the customer, though some, called midstream rebates, are available for very common luminaires and replacement lamps at the point of sale by participating distributors. Most rebates also cap the maximum rebate amount per installed product as a percentage, so it’s rare a rebate covers the entire product cost.

While some programs require ENERGY STAR listing for residential products, about 80% of rebate programs use DLC listing to qualify products for nonresidential projects. In 2020, Version 5.0 of DLC’s technical requirements will go into effect, which will result in products being delisted by DLC by the end of the year and possibly no longer eligible for certain rebates. In 2017, the DLC launched the DLC Premium classification in its Qualified Products List to identify products that operate at a higher efficacy (at least 15 lumens/W) than products in its standard listing. Some rebate programs require DLC Premium across the board, while others recognize it with a bonus rebate, usually $10–25, according to BriteSwitch. Overall, however, DLC Premium is currently promoted in a minority of programs.

Regarding lighting controls, rebates continue to be widely available in lighting rebate programs, with rebate amounts being potentially substantial and remarkably stable. Popular rebates include remote-mounted, wallbox, and luminaire-mounted occupancy sensors; photocells; and daylight dimming systems. Along with average LED product rebates, these are shown in the table, courtesy of BriteSwitch, but it does not show networked control rebates, as these remain varied in approach. DLC 5.0 and 5.1 require all lighting be capable of continuous dimming, suggesting that control rebates will endure.

Meanwhile, the number of programs promoting networked lighting controls grew to 95 in 2020, with the large majority of qualifying systems based on the DLC’s Qualified Products List for Networked Lighting Controls, which it launched in 2016. Since then, program managers have experimented with a number of incentive approaches, with the majority offering a rebate adder for each luminaire connected to a qualifying networked control system. Some base it instead on energy reductions or power savings.

By reducing initial cost, rebates can sweeten payback and increase the likelihood of acceptance for upgrade proposals, but administering the rebate takes time and effort. According to BriteSwitch, the process can take an average of 22 to 30 weeks between application and payment. Learn the program and its requirements. Pre-approval, which takes time, is often required before installation begins. All forms must be properly completed. In some regions, participation may drain funds early, making it worthwhile to check on rebate availability. If DLC listing is required, ensure the exact model number for a selected product is listed. On-site inspection may be required to verify installation of the products. Rebate fulfillment firms may be of help.

To determine local rebate availability, contact your utilities and energy efficiency organizations, or visit dsireusa.org, which maintains a database of energy-efficiency incentives across the United States.

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