Energy Incentives – How to Capitalize on Government & Utility Funding

Energy-Management-Series-LogoBy: Peter Rowles

Ronald Reagan, former President of the United States once said: “The nine most terrifying words in the English language are: ‘I’m from the government and I’m here to help.'” Unfortunately, many energy end users have the same feelings about government and utility incentive programs. Despite these feelings, energy incentive programs abound.

If you take a look at the NRCan or Depart of Energy websites you will see there are many incentive programs available in both Canada and the United States. These programs provide financial incentives to reduce electricity, gas usage or both. Others are available to encourage renewable energy sources such as solar, wind biomass and geothermal. There are also programs that try to reduce demand or provide back-up supply to offset shortages or high costs of imported power.

Why do government agencies and utilities give away money for these programs? First thing to understand is it’s not their money – it’s your money. Government agencies are using tax revenues or, borrowing money against future taxes, to fund programs. Utilities, on the other hand are allowed to increase their rates to pay for energy programs, which they offer.  In either case, it is the end user that is ultimately paying for the incentives which are being doled out, although the elected officials or utility companies are quick to take credit for their generosity with our money.

This article is not really the place to argue the pros and cons of government and utility incentive programs. However, a good organization has to be aware of their existence and take all necessary steps to ensure that the company’s energy management program receives every dollar it is entitled to.

Incorporating Energy Incentives into the Program

Sounds simple, but it is easier said than done. The main obstacle, in my experience, is that the incentive provider (government or utility) and the applicants (end users) do not speak the same language. Most applicants have difficulty understanding the objectives of these programs, interpreting all the rules and understanding all the application requirements. In most cases the application process requires technical assistance to ensure all the paper work is completed to the satisfaction of the incentive provider. My recommendation is to have someone who is experienced with the specific program, or with incentive programs in general, assist you through the process. Most applicants get only one opportunity to apply for funding from a particular program and it’s not worth the intellectual capital to learn all the ins and outs of a program for just one application. Chances are you will miss something and jeopardize the funding.

Another good rule is not to design your projects around incentive programs. Instead match the incentives to your energy management program. Your program should first and foremost address the needs and objectives of your company.  With this objective in mind don’t be afraid to shop your program around to the various incentive providers. They will be more than happy to tell how their programs fit yours and may, in some cases, be able to modify their plans to fit your requirements

Application Process

Applying for incentives can be a long process. In many cases it is necessary to get approval form the incentive provider before starting the project. Therefore, consideration of incentives needs to be included from the start of the project planning process to allow sufficient time to get applications prepared, submitted and approved. In many cases the application requirements force you to accurately estimate the cost and benefits of the project as well as prepare a plan for verifying the savings. In some cases these requirements can be excessive, but in principle this type of analysis and follow-up should be a part of every project.

Once the application is approved and the project is implemented it is a good idea to track costs and savings on an ongoing basis. This information is usually required by the incentive provider and is good practice for your own purposes. Early indications that energy savings are not being achieved will provide an opportunity to take corrective actions and not jeopardize incentives that are based on actual savings. Again this is just good practice whether incentives are involved or not. In any event the worst case scenario is to find out, after a year of operation, that no energy savings were achieved especially if it was due to an operational oversight.

When all is said and done and you have successfully completed a project with the assistance of a government or utility incentive, don’t overlook the photo opportunity. The incentive provider will want to demonstrate to the world that the money they are providing is being spent wisely. In many cases your project will be used to encourage others to become more energy efficient. This publicity is good to promote the success of your energy management program within the company and also enhance the image of your company within the community. 

In addition to having the financial resources, the success of any energy management program is highly dependent on the involvement of employees. In many cases this requires a change in corporate cultures and attitudes. Mahatma Ghandi once said: “You must be the change you wish to see in the world.” In the next article I’ll discuss energy awareness programs and how these changes can be implemented to ensure the success and sustainability of your energy savings initiatives.

Peter is entrepreneurial energy engineer with over 20 years of experience in the energy industry. Peter is a principal at ICF Marbek.

Leave a Reply

Your email address will not be published.