Harnessing the Potential of Clean Energy and Building Performance Rebate Programs

Rebate programs are designed to encourage a specific behavior - such as solar adoption, energy efficiency, or electrification - in a state or region. To do so, they provide financial support to the people carrying out the work of decarbonization, such as paying contractors to install heat pump water heaters. They’re a great opportunity for entrepreneurs, but the world of rebates can be convoluted and confusing if you aren’t familiar with how they operate.

Charley Cormany is the executive director of Efficiency First California, a nonprofit trade organization for contractors. We sat down with him to learn how founders can make the most of these opportunities to grow their business, and the key questions you should ask about any rebate program.

Finding relevant programs

The first step to participating in a rebate program is to do some research at the city, regional, and state levels to understand what’s available to you. New York, for example, has NYSERDA, a statewide incentive program, while in California different entities - typically utilities - run separate rebate programs. These can be very siloed - utilities might run a commercial program, a residential program, and an electrification program side by side, with different funding sources, stipulations, and durations. When you’ve found a rebate program that interests you, there are some key points you should determine before you sign up.

What you need to know about rebate programs

1. Whether you’re eligible to receive the rebate.

Rebates are available for a range of stakeholders, so one of the first things to establish is whether it’s directly payable to contractors or consumers, or there’s some kind of transfer/assignment mechanism. Remember though, regardless of who the rebate is paid to, it’s still an incentive for adoption and will drive business for you as an entrepreneur.

Your business location may also be a factor. Many regional utility programs require your business to be within a specific location, such as 25 miles from the city.

2. Where the money is coming from

The source of the funding can play a major role in determining the number of strings attached, and how rigorous you have to be about reporting your spending and performance. For instance, if public funds are utilized for rebates (as opposed to utility dollars or other non-public funding), performance metrics may be involved. For example, you may need to provide one dollar of energy savings for every dollar paid out in rebates.

Knowing where the money comes from will also give you some clues about how long the rebate program is likely to last, and mean you aren’t caught off guard if the funding is cut off. State budgets, for example, are generally approved for three or five years - after that, the rebate’s future hinges on whether there’s enough political will to keep it going. Never fall into the trap of becoming dependent on a rebate program - if it disappears, you’ll risk going out of business.

3. Whether it makes financial sense

Some rebate programs require so much time and extensive paperwork that in the end, they aren’t actually worth your while. It’s up to you to make sure you understand how complex the program is and how much is being asked of you, and to decide whether to move forward or not.

It’s also worth asking: do I need, or want, the additional business that might come from participating in a rebate program?  If you already have more work than you can handle, participating in a rebate program might not be a good choice.

4. Who’s managing the program

Most rebate programs are administered by a third party, so finding out who they are and establishing a relationship with them will be immensely helpful, as they’ll be able to provide you with up-to-date, actionable information. They can answer questions about, for example, how long they see the program running, where the funding comes from, the aim of the program, and how they expect you to measure and report back. By building a rapport with them, you’ll also gain insight into what they’re like to work with and the quality of their customer service - these are critical considerations given how closely you’ll be working together.

How to make the most of your rebate program

1. See it as a partnership

The rebate program is effectively a business partnership, with both parties bringing something critical to the equation, so treat it as such. Don’t go into it blindly - make sure you have a deep understanding of the terms of the agreement and that you’re being treated fairly, as you would with any other partnership.

2. Fully commit

If you’re going to participate in a rebate program, you should take it seriously and commit to making it an integral part of your workflow. Program managers want contractors in their directory who are actually carrying out the work, and if you aren’t, you run the risk of being taken off. On the flip side, if you put a lot of work in, some programs have algorithms that will recognize this, and you’ll be more likely to get new jobs that come in.

3. Use your voice

Rebate programs are a two way relationship, and the extent to which you participate can impact how they’re run. It might be that the program manager makes a decision that will have harmful unintended consequences for your work - for example, if they’re encouraging the use of a piece of equipment that you’ll struggle to source. You’re indispensable to the program and your perspective is valuable, so they’ll listen to your feedback if you speak up.

Going the extra mile in terms of your involvement could also have substantial long term returns, because when the program is refreshed or reformed, you could have the opportunity to use your influence to shape it to your advantage.

Charley Cormany is the Executive Director of Efficiency First California (EFCA). His experience includes over ten years as a Home Performance contractor for three companies, including his own. He manages a dedicated team of professionals, providing membership support and advocating for clean energy contractors in California. Together they have created the Clean Energy Connection, a free-to-use online contractor directory tool that connects homeowners to our verified contractor base.  EFCA also provides contractor support services for utilities and is the program administrator for the Sacramento Municipal Utility District (SMUD) residential rebate programs.