Offset costs

CEA facility upgrade projects may be eligible for various incentive and rebate projects that can offset costs for a variety of equipment — or even make those projects economically feasible.

To help understand how these programs work and their requirements and opportunities, review these tips to help you connect with utilities, as well as state and federal program administrators, to unlock rebates and incentives for energy-efficient system upgrades.

Do research on energy efficiency upgrades

When it comes to learning about, and applying for, utility incentives and rebate programs, it’s important that CEA operators not only turn to key partners, like their contractors and systems providers, but also do their own investigation into what is available to them in their states of operation.

Utility programs are typically governed by state regulators like the Public Service Commission. And sometimes, there are laws or legislation in place that are out of the utilities’ control. Contractors who have experience with generous incentive programs in certain states may not think it’s worthwhile to apply for another state’s incentive program, but that hurts the customer.

When doing your own research, it’s important to look outside of programs that are CEA-specific. CEA operators should look at not only utility programs, but also other state grants and programs that could be available through the state or through federal government agencies like the USDA.

There may be significant savings opportunities in federal programs through the USDA, REAP (Rural Energy for America Program), EQIP (Environmental Quality Incentives Program) or programs funded through the Inflation Reduction Act (IRA). For example, depending on the size of the operation, CEA facilities can sometimes qualify for small business programs, or even commercial and industrial (C&I) rebates. Depending on the rate class, it could fall into a small business program rather than a C&I program.

In certain cases, programs look at a business’ energy use (measured in kilowatts) at peak times rather than facility size. And just because you see that you don’t qualify for a C&I program, it doesn’t mean there’s not another program within that suite of utility programs for which you may qualify. The best thing to do is to call an energy adviser that represents that utility if you have any questions about those programs.

Talk to utilities and policymakers about energy efficient upgrades

Just because programs may not work for your operation or be available to your business doesn’t mean there are no opportunities. CEA operators can develop custom solutions with utility incentive program operators and policymakers. That’s particularly true if a program isn’t available due to spending caps from poor policy decisions.

Operators should come to the table, explain why the program’s not ideal and offer an example of a program that’s very successful. Show policymakers the structure and inform them why the policy should change. When a business owner is offering a solution, policymakers tend to be willing to make modifications to improve the existing program or create a CEA-specific pathway.

That said, eligibility for customized solutions or program changes is dependent on what the CEA facility wants to upgrade. For example, in states like California, where the baseline lighting technology for CEA operators is already established as high-efficiency LEDs, minimal qualifications and requirements may not make you eligible for significant funds to upgrade to LED systems.

Generally, utilities and rebate program providers are willing to look at each proposed project and add new measures by which to evaluate efficiency and sustainability. Utilities want to be proactive and to make an impact within the CEA industry. Be willing to bring up ideas and options that they could explore.

Get your paperwork in order

Unlocking rebates and incentives, whether from utility, state or federal programs, often will require businesses to submit a not-insignificant amount of paperwork. Entering into an agreement with the program provider starts with the application document.

Having accurate energy or water use measurements over varying periods will be needed on both standard and custom-designed projects. For new builds, program administrators will often want to review facility blueprints. We want to look at the plans put together by the architect and engineers so that we can compare against the state standards to see what we can help out with for improvements from an energy standpoint.

Custom project applications are more complex and take more time to complete than applications for standardized programs. It may take more than a year for operators to see a payout, as there may be some pre- and post-upgrade facility monitoring required by the incentive program provider to confirm what the actual energy savings are for that upgrade.

If it’s a custom project, you need to document a brief overview of what you want to do, including the baseline equipment in the state, what’s in the facility currently and what you want to upgrade to make efficiency improvements to the facility.

Types of upgrades that may require longer incubation periods can include new technology installs that are mostly unproven in the market or for which there are no established baselines. These programs are governed by the Public Service Commission, and we have to show and document that there are truly energy savings there. Otherwise, we’re not doing justice to the ratepayers who are funding these programs.

It’s also important to note that changes to upgrade plans can delay rebate and incentive delivery, and CEA operators could see drops in rebates if the changes result in lesser energy savings. Utilities may also only pay out a part of the promised incentive if the upgrades are completed in phases or may opt to wait until the entire upgrade project is complete to pay for rebates.

Energy efficient upgrades beyond lighting

CEA facility operators may be most familiar with incentive and rebate programs focused on LED lighting upgrades, as lighting often represents the highest energy demand (especially for indoor farms). But states and federal agencies are also looking at high-efficiency HVAC systems, combined HVAC and dehumidification units and water-saving technologies.

The biggest challenge the utilities have is proving that baseline. I encourage CEA growers not to be discouraged if it takes time to really establish that baseline.

Regional climate and industry differences can significantly alter program incentives and wait times. It sometimes takes time to have a proof-of-concept show that there’s resource savings to be had. So sometimes, it can take a bit of time to close those deals out, but it’s definitely well worth the effort. There can be financial savings of hundreds of thousands to sometimes millions of dollars, plus a lot of energy savings and a reduction in your operating costs, too.

Keep track of program timelines

Understandably, CEA operators may elect to push off efficiency upgrade projects amid the bustle of day-to-day operations. However, energy-efficiency rebate programs often operate under specific eligibility timelines, meaning pushing off projects can lead to operators missing out on thousands, or even millions, of dollars of incentives.

These utility programs are typically approved by the Public Service Commission for a certain number of years. Typically, that’s anywhere from a one-year to a five-year or more process. On average, programs operate on three- or four-year cycles.

If CEA operators apply for these programs near the end of the eligibility period, or if upgrade projects extend past those cycles, the utility can’t really make any promises, considering the programs aren’t technically approved with the Public Service Commission. So, be mindful of the dates these programs technically end and when that funding ends so you can plan accordingly and make sure that you’re taking advantage of the incentive funds.

Cody Allen is the director of ICF’s Utility Program & Services Division. Used with permission, this originally appeared on the Resource Innovation Institute (RII) blog. ICF is an RII member.