Understanding Industrial Incentive Program Language

Understanding Industrial Incentive Program Language

Reducing your energy costs is good for everyone. Utilities benefit because there is less energy demand during peak times. For them, that means there is less of a need to spend money on expanding their energy capacity. Construction projects like that are expensive for them and the more you reduce your energy consumption, the easier you’re making it for them.

This is part of the reason utilities and other programs offer financial incentives and technical assistance for industrial facilities. They do their best to make these programs easily accessible, but the limitations in funding and administration can make it a complex endeavor.

Incentive Program Terminology

The terminology behind these utility incentives can be cumbersome if you’re not well versed in the industry. Every program works and functions at least a little differently. However, there are general formats that fall into different structures like:

  • Prescriptive
  • Custom
  • Comprehensive

Prescriptive Incentives

Specific dollar amounts are provided for completing qualified energy efficient measures. The incentives are paid out based on item installed or equipment upgrades. There are predefined payout rates, and most programs have a list of established pay rates per project. Projects in these programs are either strongly predictive outcomes or fairly standard projects in the region. Prescriptive programs are typically quicker to process but offer a lower overall incentive for a particular project.

Custom Incentives

These typically pay based on kWh and/or kW saved by the project. These programs are generally budget driven and run out of funding by the end of the year. Projects in this program vary in complexity and have wildly different timelines. That’s why the money needs to be roughly allocated to projects prior to getting started. Typically, there is a phase that allocates funds from the utility program to your project.

Then, the project is commissioned. Finally, there is the verification process. It proves the impact of the project’s saved energy. Based on that proof, you receive the actual incentive payment.

Comprehensive Incentives

This does not apply to all projects, only ones of a certain size or complexity. This minority of programs set aside funds specifically for studies. This pool of money is for trade allies to apply for. The trade allies use this money to cover the costs of doing comprehensive reporting on these larger, more complex projects.

The Language Is Complex & the Rules Can Change

Over the years, these programs have been increasingly complex. The rules can be changed frequently, and those changes are not always communicated clearly. If you’re not involved in these types of programs on a daily basis, it can be overwhelming to try and understand them on your own. The first step we recommend is reaching out to your utility representative to see what they can do for your particular project.

Air Power USA is here to provide our expertise and feedback on a particular program’s health. We also offer assistance in covering multiple utility programs for multiple facilities. We want to provide you with our insight on the best course of action for your project. Our team is ready to help you maximize your return on that project.

To learn more about these utility incentives programs and your opportunities, contact Air Power USA today.