Energy Rebates: Worth it in the End?

In a previous post we talked about incentives offered by utility companies, how they vary widely, and the kinds of equipment eligible for incentives, particularly rebates.

Application process is becoming more cumbersome

In the residential market, a homeowner might qualify for a $50 rebate on their $200 thermostat. They get their rebate with relatively little effort.

On the other hand, if a hotel wants 300 rebates at $50 apiece, that’s serious money. Utility companies are going to take a hard look at projection, measurement and validation before issuing that rebate. One might not think $15,000 is a big deal. As one rebate auditor recently explained, “Are you kidding? If you give out $100 to residences here and there, that’s fine, but can you imagine if we had every commercial building with 300-400 thermostats all applying for rebates, all at the same time and we didn’t audit them? We could be giving away hundreds of thousands of dollars in nothing flat.”

Application Process

Prescriptive rebates are pretty straight-forward. The parameters are clearly defined. The payout is predefined.

In contrast, custom rebates are not clearly defined. A fair amount of effort is involved in completing the application. The payout is higher than on prescriptive rebates, however.

Utilities will offer prescriptive, custom, or a combination of both.

First Hand Experience with Both Rebates

Thomas Mirante, co-founder of SmartCon Solutions, has helped his customers with both kinds of rebates. “We are not in the business of rebates and incentives but we are in the business of consulting our customers on them.” Mirante says prescriptive rebates are a slam-dunk. Custom rebates are a different story. “In some parts of the country it’s challenging to get rebates. If you’re doing custom rebates, you’re doing a lot of paperwork. You have to have a lot of engineering and pre-inspections done. It’s challenging and time consuming.”

But again, bigger payout.

Third Party Assistance

Some companies complete the application process themselves, without third party assistance. Mirante says that when he starts to investigate an application process, if he sees that the process will be incredibly detailed, if it’s going to take a lot of resources to close it, he will turn to a firm that specializes in helping companies apply for energy rebates. Mirante has relationships with a number of these third party organizations. These firms do charge a fee, perhaps 20 or 30% of the rebate itself, leaving the remainder for the customer.

Third party organizations are accustomed to working with the utilities and are accustomed to the level of detail and requirements involved.

Even if you hire a third party to complete your rebs.ate application, you will be involved to some extent, and should enter the process with eyes wide open.

Rebate Audits Becoming More Prevalent

Here’s the new trend for custom rebates: at some utilities, there are now three phases to a rebate project before funds are issued:

  1. Project (the verb “project”, as in “project your savings”)
  2. Install
  3. Prove

Do you see what’s happening? There’s a whole lot of auditing going on.

Public service commissions (independent regulatory agencies serving public interests) are requiring third party auditing before rebates are issued. What does this mean? It means the one who estimates the savings, the one who produces the savings data and the one who proves the savings on the back end must be three separate people or entities, so there is no conflict of interest. They want the utilities to be able to verify that, “yes, the money we paid out was audited”.

About Projecting Savings

Some EMS systems can do the job of producing the savings estimates. The data collection frequency is important for reporting accurate projections.  A sophisticated EMS system is able to report data every 15 minutes. An EMS that reports monthly data is not going to cut it. 

Notice that we said a sophisticated EMS can estimate savings. That’s one hurdle cleared. Validating those measurements is a different function performed by an independent auditor, and not someone working for the EMS organization.

Certified Energy Modelers

John Skibinski, Project Development Engineer at Telkonet explains, a certified energy modeler is truly becoming a new professional engineering category. They’re experts who understand how to measure energy savings and how to validate those savings.

Modelers are highly educated and have vast knowledge. It’s difficult to find certified energy modeling  partners. Part of the reason is that these modelers are contracted by utilities and can therefore not serve as auditors. Skibinski has been working with rebates for several years, and says he and Telkonet have found pockets of modeling partners around the country, but they’re hard to find.

The modeler will evaluate the data AND the method of collecting that data. If it’s an EMS system, they’ll be looking closely at the underlying analytics.

Installation

Let’s say you’ve made it this far. The next step is installing.

To be eligible for rebates, utilities can require that the installer be a “trade partner”. Equipment must be approved, too.

About Proving

So now the installation is complete. Time for the next step. You’ll need a way to collect data that shows energy savings. If you do not have an inherent monitoring measuring system, you will likely have to put in some sort of measurement to show that you are getting those savings. Revenue grade quality metering will likely be required if there’s no EMS qualified to do it. Yes, there’s an expense.

Once again, you’ll need an independent auditor to evaluate the data: not someone working for the EMS organization or the metering company. Remember, if you measure you can no longer validate.  The entity that performs the validation is an independent 3rd party, someone other than the one who audited it the first time (i.e. in the “projection” phase).

To the Victor Go the Spoils

Skibinski shares, “Some people say, ‘John, with everything you’ve told me-all the work-screw it, it isn’t worth it.’ Well, $20,000 on a $150,000 project is still a good chunk of money so I say yes, it can be worth it.”

Thomas Mirante says that in many cases, companies don’t want to get involved in incentives because it’s just not worth it; in other instances it’s worth it because it helps them to close the deal.

Rebates can mean the difference between installing energy efficient equipment, or doing nothing at all. Or, it can mean that instead of just purchasing basic thermostats, the budget can now include smart thermostats and an energy management system to boot, for even more savings.