Energy efficiency is a subject that has gained and lost public momentum only to gain it back again. With scientific findings that support the greenhouse gas theory squaring off against findings that don’t, the general public’s jumping on and off of the energy efficiency bandwagon is understandable. But unlike the average citizen, commercial business owners have remained interested in energy efficient (EE) design for an obvious reason: due to the high energy requirements of commercial buildings, significantly reducing those costs through energy efficient retrofitting is simply good business.

If you own a commercial building and are interested in making it energy efficient, chances are that you have heard how cost prohibitive energy efficient design can be. But today, with states issuing mandates that demand a greater percentage of energy efficient energy users, there are a variety of state sponsored EE implementation programs that offer a range of incentives to interested parties.

Many EE implementation programs are designed to appeal to small to midsize companies by offering financial incentives. But the potential drawback of EE program implementation is that, depending on the program, it may not offer the type or level of incentive that a company needs in order to make EE program implementation an option. Officially known as customer energy efficiency incentives, the incentives fall into three broad categories: direct incentives, upstream/midstream incentives and non-financial incentives.

Direct Incentives

Direct incentives refer to payments or subsidies to individual customers when they purchase or install a specific energy efficiency solution. There are three forms of direct incentives: rebates, discounts and financing. Customers receive rebates from the program sponsor after making a qualified purchase and submitting a rebate application or coupon. Discounts are offered as instant rebates, but may also be offered in the form of reductions or credits on energy bills. EE program financing often focuses on offering financing to customers that would not easily qualify for conventional financing. To this end, some EE programs offer financing through the energy efficiency provider.

Upstream/Midstream Incentives

Upstream/midstream incentives are financial incentives that offer payment to parties in the EE implementation process that are further “upstream” than the customer, and typically reach manufacturers. Midstream incentives, on the other hand, are aimed toward customer end of EE program implementation (e.g. retailers and installation contractors). Upsteam/midstream incentives allow the parties that receive them to offer their products or services to all customers instead of only those who learn of direct rebates.

Non-Financial Incentives

Like direct incentives, non-financial incentives are targeted toward the customer end of EE program implementation, and are typically offered in the form of technical services and/or information services. However, many EE programs bundle financial incentives with non-financial incentives. Technical services are designed to help customers arrive at the right energy efficiency solutions at a cost that meets their budget. Information services are designed to supply customers with basic information pertaining to the EE program process, including: how energy efficient the customer’s building is, what improvements need to be made and how the improvements can be paid for.

I’m an energy efficient retrofitting consultant who works in EE program implementation. For more about energy efficiency, visit Lime-Energy.com.

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