electrical substation

It may seem counterintuitive, but many utility companies offer programs that help customers save energy. This is good news for customers because it means that there are financial incentives for saving energy.

Many energy-saving home improvements require an upfront investment in more efficient appliances, LED light bulbs, home insulation, or even a solar energy system. Utility company incentive programs help offset these costs while making our homes greener. They typically have both residential and commercial incentives and are a win-win for the environment and the pocketbook. Collective energy-efficiency efforts are an excellent way to conserve resources because they can reduce the need to build new power plants.

Unfortunately, many energy-saving retrofits have an upfront cost even if they do pay for themselves with savings over time. The cost often deters people from taking the leap, even if it saves money in the long run. Utility incentive programs help reduce the required investment, shortening the payback period.

Why do many utility companies offer energy-efficiency programs?

In some states, utilities are required to invest in energy-efficiency rebates and incentives to reduce the amount of energy they deliver to customers.

Energy-efficiency resource standards (EERS) are long-term energy-efficiency targets. The most stringent require a reduction in energy demand by 2.5% annually. About half of U.S. states have an EERS, which means that utilities work with customers to reduce energy demand.

Another reason for these programs is that meeting peak energy demand is challenging and expensive. When we all crank up or air conditioning units on hot summer afternoons, the utility companies need to be able to meet this high demand. If they don’t, utilities can’t provide reliable power to their customers.

Meeting peak demand often involves turning on peaking power plants, which are frequently powered by natural gas. They fill in the gap between normal and high-demand periods, but these plants are more expensive to operate, creating an incentive to promote energy efficiency. Reducing demand overall makes a utility more profitable because they are better able to use inexpensive power or better, renewable energy sources.

What types of energy-saving incentives exist?

Programs vary widely and typically help offset the cost of energy-saving appliances and retrofits. For example, programmable thermostats are a great way to reduce energy consumption without impacting comfort. LED bulbs consume at least 75% less energy and last 25 times longer than incandescent bulbs. They have a higher upfront price but will save on energy costs in the long run. Some utilities offer rebates for installing electric vehicle charging stations, promoting the use of electric vehicles. Other programs provide incentives for weatherizing the home with rebates on insulating, air sealing, or installing high-efficiency heating and cooling systems.

These programs often have very specific requirements, so read the program details carefully. Some weatherization or renewable energy contractors may be able to explain local incentives that are available for products and services they install.

What programs are available in my area?

Energy-efficiency incentives vary widely across the country. Take the time to review your local utility’s website to understand what incentives and rebate programs they offer. Learn what documentation they need to issue rebates, such as receipts or forms required by regulators. A little homework will prepare you to take full advantage of the opportunities to save.

If you don’t know where to start in your area, the DSIRE database of state and local policies and incentives is a great place to begin. It is provided by the NC Clean Energy Technology Center. This well-maintained database can help you learn about what energy savings programs are available in your area.

This article was originally published on October 22, 2019.

By Sarah Lozanova

Sarah Lozanova is an environmental journalist and copywriter and has worked as a consultant to help large corporations become more sustainable. She is the author of Humane Home: Easy Steps for Sustainable & Green Living, and her renewable energy experience includes residential and commercial solar energy installations. She teaches green business classes to graduate students at Unity College and holds an MBA in sustainable management from the Presidio Graduate School.