Free Money for Energy Efficiency Upgrades

Most small-business owners want to become more energy efficient – they just can’t spare the cash for big upgrades or to replace older equipment.

But some good news: Utility companies will actually help businesses pay for their upgrades, and thus recoup the initial investment much faster.

Many public and municipal utilities are now required under state regulation to spend money to help business customers cut energy consumption. Reducing energy output may actually save the utilities money, too, by preventing them from having to invest in new facilities.

Many utilities now offer financial incentives, such as rebates, grants and low- or no-interest loans, to companies that make energy upgrades. This might include installing high-efficiency lighting, buying a solar water heater or installing motion detectors. (Your state and local governments likely also provide similar incentives that are definitely worth checking into. Some money will also be flowing out of federal stimulus funds given to states to pay for energy efficiency initiatives.)

California’s Pacific Gas & Electric Co. offers rebates ranging from $10 to $125 per fixture – depending on the lighting upgrade — when a business replaces lower-efficiency light bulbs with more-efficient ones. PG&E also has a variety of other incentives. Duke Energy offers Indiana small businesses up to $50,000 in annual rebates for installing high-efficiency cooling systems, lighting, pumps and motors. Xcel Energy in Minnesota covers up to 75% of the cost of a business to get a heating-system optimization study performed, among other rebates.

Though the payoff of energy upgrades varies greatly depending on a variety of factors, utility incentives can sometimes make a big difference. One San Francisco nightclub I interviewed for a Wall Street Journal article in 2008 expected a $17,000 rebate from PG&E after replacing all light bulbs in its four-story building with energy efficient CFL and LED lights. That was on top of its more than $3,000 in expected annual energy-bill savings.

So how do you find out what incentives are available to you? A helpful state-by-state database is available at dsireusa.org that lists incentives offered by both federal, state and local governments and utility companies. You can also contact your utility directly for help: Many now provide free or low-cost energy audits to small-business customers.

Some organizations specializing in energy-efficiency programs can also help make the process easier and less time-consuming for businesses. Energy Smart (full disclosure: it’s the nonprofit I work for) provides site visits and helps Minnesota businesses line up audits and find out what financial incentives are available to them. Energy Trust of Oregon offers a similar service.

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About the Author: Kelly Spors is a former small-business reporter and blogger for The Wall Street Journal and has also freelanced for Yahoo! and The New York Times. She is now communications and outreach coordinator for Energy Smart, a Minnesota nonprofit helping businesses save money through energy efficiency. Follow Energy Smart on Twitter @mnenergysmart.

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