Utility companies determine rebate amounts primarily through two types of programs: prescriptive rebates and custom rebates.
Prescriptive Rebates
- Criteria: These rebates are based on specific energy-efficient equipment installed, such as LED lighting or high-efficiency HVAC systems.
- Amounts: The rebate amounts are predetermined and usually offered per unit installed. For example, a utility might offer $20 per LED troffer installed.
- Application: Often, these rebates do not require pre-approval unless the amount exceeds a certain threshold and can be applied for after installation.
Custom Rebates
- Criteria: These rebates are based on the actual energy savings achieved by the installed equipment.
- Amounts: The rebate amount varies depending on the measured energy savings. This requires collaboration between the facility and the utility to establish the measurement and verification procedures.
- Application: Custom rebates often require pre-approval and are typically more complex but can offer higher rebates as they are directly tied to the energy efficiency results.
In both cases, utility companies consider factors such as the cost of encouraging energy efficiency versus the cost of expanding power capacity and maintaining grid infrastructure. By incentivizing energy efficiency, utilities reduce peak demand, which helps avoid costly infrastructure upgrades.
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