Understanding Energy Incentives and Rebates

Everyone wants to save energy in their buildings. Many projects, including new buildings and renovations, qualify for energy incentives or rebates.

 

In today’s economy, you need every competitive edge.

Saving money on energy consumption can give you that advantage. Rebate and incentive programs through your local power company can help you save even more money when you make energy conscious decisions that benefit everyone.
Many utility companies provide rebate and incentive programs for customers who install energy efficient lighting, HVAC systems, refrigeration, and kitchen equipment. These incentives can be applied to existing building with ongoing maintenance, PPI (Private Participation in Infrastructure) related projects (like a small re-roofing project, gymnasium lighting replacement project, or a boiler replacement project) to existing buildings undergoing large-scale renovations, and to new construction.
Most utility companies have two methods to apply for these types of rebates and incentives: prescriptive and custom.

The Prescriptive Method

This is applied to existing buildings in most cases, either for renovation projects or for ongoing maintenance replacement. A program under the prescriptive method typically consists of one-for-one replacement incentives. For example, through Indiana Michigan Power’s program, for every 4-foot 32-watt T8 fluorescent lamp that you replace with a 4-foot LED tube, you receive a $4 rebate. While that might not seem like big savings, over the course of a year, it adds up!
The prescriptive method does not apply when building conditions don’t fit into the required parameters, or when building a new building where there is nothing to replace. This is where the custom method applies.

The Custom Method

Utility companies vary on how they approach this method. A client should discuss this with utility providers early in the design process. Generally, most custom method programs are rewarded based on the kilowatt hours you save by implementing energy saving methods. This can be based off of two things: the most recent version of the energy code, or the building type or tariff as designated by the utility company.

Tax Incentives Programs

Additionally, EPACT (Energy Policy Act) is a tax incentive program that applies to for-profit companies. Their project or new building must meet or exceed the base requirements of ASHRAE (American Society of Heating, Refrigeration, and Air-Conditioning Engineers) 2007 90.1 energy code. Interior lighting, building envelope, heating/cooling/ventilation, and/or hot water systems that reduce the total energy and power costs by 50 percent or more than the minimum ASHRAE requirements can result in a deduction of $1.80 per square foot. Partial deductions are available if the systems meet specific target levels under 50 percent. EPACT energy savings are calculated using specific software that is approved by the DOE (Department of Energy).

 

 

It is crucial that the project design team, specifically the mechanical and electrical engineers, is engaged early when pursuing rebate and incentive programs. Most programs require rigorous documentation and some extra work to meet the qualifications.
Everyone wants to save energy in their buildings. The majority of the renovations and projects that we design qualify for a rebate; as a client, you won’t need to spend more up front to save money through these programs. If a project beats the baseline requirements and minimums, it’s likely that it will be eligible for a government rebate or tax incentive.

 

 

Can your project save through these programs?

Check available rebate and incentive programs through your local utility companies. Most utility companies have a section on their website related to saving energy.
Indiana Michigan Power
NIPSCO
Duke Energy
Wabash Valley Power Association (central and northern Indiana and Illinois REMCs)
If you'd like more information, Design Collaborative can help.
 

Kelsey Rowe, PE
Senior Associate, Electrical Engineer