A bonus program is when rebate organizations offer increased incentives for the existing rebate measures for a set period of time. The value of the bonus will vary depending on the utility. Sometimes, it's an extra 10% or 20%; other times, it can more than double the original rebate. This year, a record number of bonus programs are available for commercial lighting upgrades.
Currently, 77% of the US has an active commercial lighting rebate program, just shy of the record high of 79% we saw in 2017. 22% of that area has a bonus program available at this moment. That's the highest we've seen since we started tracking commercial lighting rebates 14 years ago.
Bonus programs typically start to appear in the Fall as utilities struggle to meet their participation and savings targets, but this year, we saw them debuting as early as March. This increase in bonus dollars reflects what we've heard from utilities. Many programs are finding it a challenge to get new energy efficiency projects. Most of the low-hanging fruit projects, such as T12 and metal halide, have already been upgraded. However, there are still many opportunities where facilities have more efficient technologies like T8 and T5HO but haven't upgraded to LED yet. These customers need increased incentives to help offset the more modest payback.
Types of Bonus Programs
Bonus programs can widely vary on how they work, but they usually fall into these four categories:
1. Bonus on specific products
Rebate programs may offer additional incentives on certain product categories to help increase participation. For example, it may be a particular product type, like a 4' LED tube, or a whole category, such as outdoor lighting. While they may be for a certain product type, they never specify that projects use a specific brand or model. An example is Xcel Energy Colorado's Instant Rebate Program, which currently provides a 50% bonus on TLED measures.
2. Bonus on certain customer categories
If a specific market segment seems to be particularly reluctant to upgrade its lighting, programs may offer a bonus for those customers. For instance, Ameren Illinois offered an additional 10% in rebates for schools or community colleges which completed their projects by 8/31.
3. Across the line bonus
This bonus type gives an additional rebate for any project, regardless of the application or product. For example, a program may offer an extra 20% for any lighting rebate it provides for the next 60 days. The benefit of these programs is that it is across the board, so virtually any lighting project will qualify for the increased payouts.
4. Trade ally bonus
Some programs find that it's more effective to incentivize the person selling the lighting instead of the end user. To receive these incentives, you typically must be a trade ally with a program. Becoming an ally can require the program administrator's approval and attending training sessions to become certified. Since these bonuses go directly to the distributor, contractor or ESCO, they instantly increase the vendor's margins.
How to Take Advantage of Bonus Programs
Since bonus programs are usually sudden and short-lived, it's a good idea to get on the mailing lists for rebate programs you work with. It's important to note that many bonus programs have specific rules and requirements. They may have strict pre-approval or final approval dates, or you may need to enter a special code on the application. Pay attention to all the fine print and deadlines, or you will miss out. Also, keep in mind that many programs still have their cost caps. While a rebate may appear to be 20% higher because of the bonus, the program may still cap the incentive at 75% of project cost.
Increase Your Sales With Bonus Programs
Typically, rebate programs have deadlines, but bonus programs create an even more urgent timeline. With shorter time periods and higher incentives, it's a great way to motivate a customer to pull the trigger on a project. Revisit past quotes that didn't go forward and let the customers know about the higher rebate and the bonus deadline to increase the sense of urgency.
Stay Up to Date on Bonus Programs With RebatePro
Subscribers to our RebatePro for Lighting tool can easily see all current bonus programs in North America by using the Bonus Program Report.