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Employ Energy-Efficient Lighting With Free Money - Part I

Commercial property and building facility managers are always facing the challenge of tackling increasing energy demand. In particular, amid today's soft commercial property market and limited budgets, managing cost is more critical now than ever before, pushing property and facility managers to actively search out any and all cost-reducing opportunities.

It is no small thing that on average one third of electricity in a commercial building/facility is used for lighting, and there are simple lighting retrofit approaches that can save lighting energy by as much as 50%. It is also possible to take advantage of federal tax incentives and local utility rebates, which may cover up to 50% of the cost of a lighting retrofit project. However, such incentives and rebates are limited in availability.

For this reason, informed property and facility managers have begun using these incentives and rebates and started their own lighting retrofit projects. If you find yourself also wanting to leverage essentially free money for lighting retrofit projects and save on your property's energy bill before the money is gone, this article, the first in its series, will show you how.

Energy-Efficient Lighting Incentives and Rebates

There are two major sources of free money. The first is the Federal EPAct (Energy Policy Act) incentive program and it offers up to 60¢ per square foot as a tax deduction for energy-efficient lighting upgrades or retrofits. To qualify for this tax incentive, two requirements must be met: 1) The energy savings of the new lamps compared to the existing lamps must be greater than 20%, and 2) The project must be completed and in operation by December 31, 2013.

The second source of free money is local utility rebates. Energy efficiency rebates may be available for commercial buildings, industrial facilities, small business offices, multi-family homes, and residential homes for both lighting retrofit and new construction. The rebate program varies greatly, depending on the company:

  • Most utilities offer different rates for different energy-efficient lighting products.

  • Some utility companies offer lighting-specific rebate programs, while others offer general energy efficiency rebate programs that include lighting products.

  • Some utility companies offer a rebate based on a fixed percentage of the project cost.

  • Other utility companies calculate rebate according to a predefined metric, such as 12¢ per KHW saving, for the first year.

  • A rebate cap is set and varies according to property type.


The website ww.dsireusa.org contains links to energy rebate programs across all U.S. utility companies. However, the information listed may not be up-to-date. We suggest that the information in that website be used as a general reference, and that you contact your local utility company for the current rebate details.

It is also advisable to check and see whether two or more rebates are available in your region. Some state and local governments (county or city) offer tax incentives for energy-efficient lighting projects. If available, they are most likely listed on ww.dsireusa.org. In addition, a temporary rebate program for phasing out T12 fluorescent linear lamps (tubes) may still be available from your local utilities. Under U.S. DOE mandate, all T12 fluorescent lamps are to be eliminated from the U.S. market beginning July 2012. Facilities with T12 fluorescent lamps will need to upgrade these lamps soon with energy-efficient alternatives. Some utility companies offer short-term incentives to accelerate the phasing out of old T12's and to promote energy conservation. This incentive will be expiring soon, so remember to call your utility concerning the T12 Conversion Program or T8 Lighting Project.

In addition to these incentives and rebates, property and facility managers can also take advantage of various financing options that are tailored to energy-efficient projects:

  • Free grants from local governments

  • Interest-free loans from local governments or utility companies

  • Low interest loans for green projects from banks or credit unions

  • Zero-down loan programs offered through lighting contractors or banks

  • Zero out-of-pocket cost financing through private funding where clients repay the loan in the form of cost savings on their energy bill.


By taking full advantage of incentives and rebates, the payment period of a energy-efficient lighting project may be reduced by as much as 50%. Moreover, lighting energy consumption may also be reduced by the same amount, leading to savings that continue to accumulate even after the payback period ends. In our next newsletter, we will explore how to select qualified lighting products and apply for rebate, as well as where to get financing for energy-efficient light projects. Don't forget: The free money won't last.

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