Damage control for rebates is not fun, although we’ve been brought in many times when things go awry.
Electric utilities frequently offer cash rebates to commercial growers purchasing efficient equipment. These rebates reduce barriers to acquiring premium equipment such as Gavita fixtures or Quest HVAC units. However, when pursuing rebates, it’s easy to unknowingly reduce the amount received, add time and complexity to the process, or accidentally disqualify yourself. We’ve compiled a list of common mistakes to help growers understand how to best navigate the custom commercial rebate process. If you’re time-strapped or don’t want to dive into the nuances of energy metrics, working with an expert will vastly improve your chance of success.
Mistake 1: Unreasonable Cash Flow Expectations
Utilities pay rebates only after they are installed and operational. Retailers most often require payment before shipping equipment. This creates a time and financial gap. Growers need to cover the full price of fixtures, then wait on shipping, installation, utility inspection and accounting before receiving a check. Based on Seinergy’s project data, the average time between purchasing lights and receiving a rebate check is 84 days, or 139 days between submitting a rebate application and receiving a check. Even if the rebate process goes smoothly, a cash-flow gap of six months will exist where the grower will be out of pocket for the full equipment price.
Recommendation: Anticipate this cash gap and plan accordingly. Short term (3-6 months) financing options may be available with your retailer or other sources, especially for retrofit jobs.
Mistake 2: Thinking You’re Ready…Before You Are
As noted above, buying lights or submitting a rebate application too early can set you back. One grower bought 250 Gavita lights before their build-out and licensing was complete. As a result, the fixtures sat in a warehouse and 296 days passed before they received a rebate check. Make sure your facility is ready for lights before purchasing them. Also, your facility needs to be fully operational before your utility provider can begin the payment process. If your facility is ramping up from zero, remember to account for the ramp time. Although specific requirements vary, this may include having adequate power (such as a new transformer), control systems/timers, tables, HVAC, live plants under lights, and an active state cannabis license. Changing project scope midway will also delay or compromise a rebate.
Recommendation: Buy equipment after utility pre-approval, but only when your facility is ready. Understand your utility’s closeout expectations. Think through your project and commit to a scope of work, fixture type, and count upfront to avoid unnecessary hiccups.
Mistake 3: Misinterpreting “Baseline”
Your energy rebate is determined by the cost and energy consumption of your efficient lights compared to a standard fixture, known as “baseline.” If you already have lights hanging, these are your baseline. However, for new canopy, the utility needs a reference point to understand what lights a grower would have used without their financial influence. This can be subjective, and the baseline you identify can dramatically affect a rebate offer. To maximize rebates, the cost and wattage gap between baseline and efficient lights should be as big as possible while remaining credible and defensible. Some growers mistakenly report their 2nd choice fixtures as baseline, underestimating savings and resulting in a smaller rebate.
Recommendation: Most utilities now insist on utilizing a double ended fixture for baseline in a new canopy. Be sure to include the energy used by the ballast to determine full baseline wattage.
Mistake 4: Inaccurate Cost Reporting
Figuring out how and what to report for lighting and associated costs can be confusing. Utilities generally offer indoor grow rebates on a custom basis where a certain rate for energy savings is paid up to a cost cap. Inflating costs or underreporting costs can diminish your rebate; it’s useful to understand your utility’s specific program and to be as precise and accurate as possible. Report what you will actually pay for lights and include associated costs, such as installation, when applicable. For all projects, include tax, freight charges, and controllers. Some utilities may account for the cost of an energy efficiency consultant if you use one. If you are replacing old lights with efficient ones, include all labor and other expenses associated with removal and disposal of the old lights, or rewiring of the room. If you have a new facility, include installation costs in excess of what you would have spent for standard lights.
Recommendation: Get a final bid from your vendor and report the actual price you will pay for the equipment. Include other associated costs when appropriate.
Mistake 5: Incorrect Hours & Use
The total number of hours your lights are on each year directly affects rebate calculations; it is important to accurately report the hours your lights are on. As a cannabis grower, expect to be closely monitored by the utility for two weeks to six months after your rebate is paid. One client forgot to mention they turn off fixtures four hours each week for spraying. Utility staff identified this gap with routine monitoring and the grower was required to return $3,000 from their rebate.
Recommendation: Think through all aspects of your operations from the perspective of when your lights are actually turned on. Keep veg lights in veg and flower lights in flower. Report all aspects of light use and stick to the plan.
Takeaways:
The above pitfalls are common (and consequential) errors we’ve seen growers make when processing standard, custom commercial electric utility rebates in the United States. Because each utility creates and manages its own protocols, the nuances of rebate calculations and projections are unique. For individuals without professional electric or utility experience, or who are short on bandwidth, we recommend working with experts to ensure the largest rebate possible with the least headache.
Warning: Beware of rebate managers who are trying to “game” the system. If your rebate manager asks you to sign any documents that are incorrect (such as exaggerating the full price paid, # of fixtures or changing dates), DO NOT. If (or when) the utility double checks the application or evaluates the project, YOU will be on the hook to pay back your rebate, or lose it all together.
Seinergy originally shared this article in 2017. We’ve updated some of the info, and found most of it still relevant.
