2023 Commercial Lighting Rebate Outlook

In 2023, commercial lighting rebates remain a strong driver for adoption of energy-efficient lighting and controls in existing buildings. Notable trends include continuing stability in LED and control rebates, imminent jeopardy for some LED replacement lamp rebates, and growth for networked lighting control and horticultural rebates. A coinciding trend with implications for lighting upgrades is introduction of substantial rebates for electric vehicle (EV) charging stations.

Rebate review

Utilities and energy efficiency organizations offer rebates as an investment in reducing electric demand, thereby avoiding the higher cost of acquiring new generating capacity. These rebates focus heavily on lighting and are primarily targeted to existing buildings. According to rebate fulfillment provider BriteSwitch, which shared its 2023 North American rebate database, nearly 80% of the United States is covered by an active commercial lighting rebate, with the strongest programs in the Northeast and Northwest.

Prescriptive (downstream) rebates are straightforward but require upfront investment and an administrative process. With this type of rebate, the program incentivizes adoption of energy-efficient lighting and controls by offering a cash amount per qualifying installed product. The rebate is typically awarded to the owner. While fairly straightforward, an upfront investment may be required, and the process of acquiring the rebate may involve pre-approval and inspection. This is the most popular type of commercial lighting rebate.

Point of sale (midstream) rebates simplify the rebate but are limited in availability. This subset of prescriptive rebates is distinguished by being realized at the point of sale, such as at a distributor. The result is an instant, relatively low-risk rebate. These programs are generally very limited in terms of geography and available product types. They have a major focus on very common LED replacement lamps and in some cases very common LED luminaires.

Custom rebates can offer big rewards but more complexity. With this type of rebate, the project team proposes an innovative design that goes beyond the prescriptive program. The resulting process is therefore more complex than with prescriptive programs. An example is a rebate based on $/kWh savings.

Regardless of approach, rebates are largely unstandardized, so if working across programs, one should gain familiarity with individual requirements.

Rebate trends

Looking at the BriteSwitch North American rebate database for 2023, we can identify several notable trends.

LED rebates continue to be stable. As rebate programs stay current with the lighting market, rebate programs have generally transitioned to LED technology, with steadily declining average rebates per product resulting from falling market costs. In recent years, however, average rebates have stabilized, which may be due to cost stabilization in the market. In 2023, average rebates in some categories have even increased, possibly in response to rising material and labor costs.

Some LED replacement lamp rebates may be getting a final push before being phased out. The average rebate for common general-service LED replacement lamps saw a significant increase for 2023, as rebate programs do a final push to get projects completed. According to BriteSwitch, many programs also announced they will be discontinuing rebates for these lamps in the second half of the year. The reason: In July 2023, the Department of Energy ruling on the Energy Independence and Security Act of 2007’s backstop energy standards will take effect, which is expected to eliminate many traditional general-service lamps from the market.

Horticultural rebates have become more standardized and continue their upswing. In 2022, the number of rebates focused on horticultural lighting tripled over the previous year, with many programs adopting a prescriptive instead of the custom approach more traditionally adopted for this category. In 2023, programs saw a more modest increase to 677 total programs, with 60% being prescriptive with an average $110 rebate per product, according to BriteSwitch.

Lighting control rebates remain stable and substantial. Rebates for lighting controls continue to be widely available and consistent. In most of the United States, if a lighting rebate is available, one is available for controls as well. This continues to position lighting controls as an attractive upfront addition to a lighting upgrade. Popular rebates include remote-mounted, wallbox, and luminaire-mounted occupancy sensors; photocells; and daylight dimming systems.

Network lighting control rebates continue to grow in availability. Networked lighting controls are intelligent systems in which devices are tied together in a network to enact control strategies. The flexibility of this type of system can produce substantial energy savings, making it attractive for adoption by rebate programs, while availability of data can produce non-energy benefits.

Traditionally, rebate programs treated networked controls as a custom option, but in recent years, a significant number of prescriptive rebates became available. This coincided with a new DesignLights Consortium (DLC) Qualified Products List for Networked Lighting Controls, used by a majority of prescriptive programs to qualify systems as being eligible for rebate. According to BriteSwitch, rebates have grown with 16% more programs incentivizing this category in 2023 over 2022, overall representing more than one-fourth of rebate programs. Approaches vary across programs, with a majority offering a rebate adder for installing LED luminaires with networked lighting controls, resulting in an average rebate of about $204 per installed and controlled luminaire. For territories where prescriptive rebates are not yet in the offing, custom rebates may be available.

Rebate programs have themselves become more stable, but many are automating. According to BriteSwitch, fewer commercial lighting rebates ran out of funding or reduced rebate amounts in 2022. However, a number of programs have begun shifting the process online to reduce costs, which can make engaging with rebate programs more difficult depending on how it is done and what human resources remain available in case of questions. If these online processes standardize across rebate programs, however, this may ultimately pose benefits.

Substantial EV charging station rebates are available. EV charging stations represent a new and rapidly expanding market for the electrical industry. According to BriteSwitch, 53% of the United States has a rebate for residential applications and 65% for commercial/public/fleet use, with rebate amounts that are quite high compared to energy efficiency rebates. The average rebate across the United States is $521 for a residential charger, $3,157 for a Level 2 commercial charger, and $27,751 for a DCFC Level 3 fast-charging station.

For lighting, electrical professionals involved in these projects can at a minimum propose lighting upgrades around places where EV charging stations will be installed, such as parking garages. Beyond that, electrical professionals can note that EV charging stations pose a cost and higher energy consumption, which can be mitigated by investing in energy-efficient lighting and controls. In particular, networked lighting controls, which not only maximize energy savings but provide management, measuring, and monitoring capabilities.

Otherwise, note that EV charging stations are typically not covered by energy efficiency rebate programs and instead have their own programs, which are offered by utilities as well as various governments.

Getting rebates

Rebates take time and effort, but the results can be lucrative as they offer a potentially substantial sweetener for lighting and control upgrade proposals. Below are several tips for accessing and managing prescriptive commercial lighting rebates. If the labor required exceeds in-house resources, consider partnering with a rebate fulfillment firm.

Consider rebates. First and foremost, evaluate the potential impact of rebates on your sales and include them in proposals if they make sense for your project.

Get to know applicable programs. Research and stay on top of rebate programs where you do business. Some manufacturers offer support in identifying rebate programs. Get educated on the process, requirements, and the amount of time various steps take from pre-approval to receiving the check.

Manage risk. Understand that rebate applications may not be approved or may award a smaller amount than expected. The customer should be educated so they have appropriate expectations. Be sure to properly complete all required paperwork to expedite the process and maximize success.

After approval, keep abreast of the program. While many programs were more stable in 2022, it is still possible in some regions that strong program participation may drain funds early. Note that some programs maintain a “reservation of funds” policy, which sets asides funds for approved projects working through the process.

Pre-approval is often required. The rebate program may require an application that must be approved before installation begins. This application may ask for information such as description of the existing lighting, hours of operation, and square footage.

Select qualified products. Many rebate programs require that qualified products be installed, basing their qualification on listing in ENERGY STAR (lamps) and the DLC’s Qualified Products Lists (solid-state lamps/retrofit kits/luminaires, horticultural lighting, and networked lighting controls). Standard lighting controls generally require minimal qualification beyond core function.

As these programs update over time, keep abreast of listing for favored products. For example, DLC recently transitioned to Version 5.1 for SSL products, which added requirements for improving lighting quality and also dimming for many products, with continuous dimming required as a capability for most indoor luminaires and retrofit kits. DLC also transitioned to Version 2.1 for horticultural lighting, maintaining energy requirements while adopting horticulture-specific metrics and establishing criteria for more product types. In 2022, DLC also introduced LUNA Version 1.0, a subset of its SSL list recognizing outdoor lighting that satisfies certain criteria—focused on targeted light distribution, control, and use of warmer shades of white light—designed to minimize “light pollution.”

Finally, DLC recently transitioned to Version 5.0 for networked lighting controls. Products are qualified and listed based on Required and Reported capabilities. Required capabilities for interior systems include networking, zoning, and individual addressability in the network in addition to continuous dimming, occupancy sensing, daylight response, and high-end trim. Additionally, compliance with at least one of several recognized cybersecurity standards is required; energy monitoring is also required if the system is not a room-based system. Reported capabilities include scheduling, luminaire-level lighting control (LLLC), device monitoring/remote diagnostics, plug load control, external systems integration, scene control, color tuning, ability of control points to execute multiple strategies at the room level (control persistence), and more.

Inspection may be required. Onsite (or virtual) inspection may be required to verify installation of the products. Some documentation detailing the installation may be required. Some programs may require measuring and monitoring to capture and validate energy savings.

Put rebates to work

For decades, commercial lighting rebates have offered a powerful incentive for buildings owners to adopt energy-efficient lighting and controls. While rebates can require effort and pose a degree of risk, numerous building owners have tapped them to help fund installation of new lighting and controls.

The overall outlook for rebates in the U.S. in 2023 is positive, with widely available rebates covering much of the country and supported by freely available, detailed listings of qualified products. They are particularly attractive for projects involving solutions adding lighting controls, including networked lighting controls.