Rebates are a financial incentive used to encourage the purchase of efficient equipment, materials, or appliances by reducing upfront capital costs, which are generally higher for more efficient products. Rebates are also offered to encourage building efficiency, for example through retrofitting existing buildings. Criteria for determining which products or projects are eligible for rebates should be regularly updated to drive continuous improvement. Similarly, rebates should reward performance, not investment, to ensure that products actually achieve the savings they are designed for.
Rebate programs work best as a complement to building codes and appliance standards. Standards set the minimum efficiency level, and then rebates can help stimulate innovation from manufacturers and sales of more efficient products for energy-conscious consumers by reducing the high upfront costs of more efficient appliances.
For new buildings, rebates can be offered to developers that meet energy efficiency criteria, such as a certain level of insulation or installation of high-efficiency equipment. For existing buildings, rebates are typically offered to help offset the costs of a retrofit or renovation. The rebate value is often based on the anticipated amount of energy savings, and may have a tiered, fixed, or continuous structure. In some cases, rebates can also be a fixed amount per unit of updated equipment (e.g. dollars per lightbulb).
The best rebate programs provide a continuous incentive for increased savings and pair an upfront installation-based rebate with a post-installation performance-based rebate.
For appliances, rebate programs offer either a point-of-purchase or a redeemable incentive for purchasing qualified energy-efficient products. Qualification is based on exceeding labeling or minimum efficiency criteria.