Utility companies nationwide, including ConEdison, offer funding to help businesses reduce the costs of energy efficiency upgrades. These incentive programs are designed to encourage businesses to integrate energy efficiency into their operations. By offering these incentives, utility companies aim to reduce energy demand and delay the need for new power generation facilities. Utilizing these programs is an economical and responsible way to postpone the construction of additional power plants. Typically, utility companies like ConEdison provide this financial assistance in the form of rebates or cash incentives for businesses.
At LC Associates, we’ve been securing cash incentives for businesses for over 18 years, backed by more than 30 years of industry experience. The process of obtaining these incentives is complex and requires substantial effort—each project demands a minimum of 200 man-hours. Many clients mistakenly believe that securing incentives is as simple as filling out a form and engaging a design engineer. This misconception often leads to overlooking the vital role of an experienced Energy Consultant. When clients rely solely on a design engineer to “chase down” incentives, it frequently results in either a minimal incentive or none at all.
Securing cash incentives for energy efficiency projects is a time-sensitive and regulated process. Utility companies, including ConEdison, distribute these incentives under strict guidelines and with oversight from multiple parties. It’s crucial that businesses submit their applications on time and ensure that incentives are used appropriately. Utility companies must verify that their return on investment—measured in energy (kWh) and demand (kW) savings—is achieved. In short, this process is far more involved than it may initially seem.
The application process for utility incentives involves thorough preparation by the business customer, including the collection of field and interval metered data. Many businesses rely on LC Associates to handle these critical tasks, ensuring a smooth and efficient application process. This due diligence also includes a detailed project write-up, covering energy savings projections, scopes of work, and estimated costs. All of this information must be compiled and submitted to the utility company for their review and approval.
There typically is a lot of time consuming back-and-forth conversations between customer and utility provider. Applications much include a project description, data, projections and a scope of work. We recommend to our Customers to provide the required information at least one to three months before the due date. By doing so, the Customer can obtain an accurate scenario, depicting in detail the benefits of the applicable rebates.
Don’t do this alone!
When you submit your application to ConEdison, it undergoes a Desk Review process where the utility company forwards your package to a third-party reviewer. These reviewers are typically experienced energy engineers who assess the project’s scope and energy projections. They meticulously evaluate the proposed energy savings and compile a detailed report on their findings. Based on this report, ConEdison will then proceed to evaluate the information and issue a Preliminary Incentive Offer Letter (PIOL).
Successful businesses partner with LC Associates to streamline their energy efficiency projects. Our firm expertly handles the entire application process, from preparing energy projections to defining the project’s scope. We ensure that every incentive application is submitted with all necessary details, presented in a clear, concise, and easy-to-read format.
When ConEdison reviews these applications, they may have questions. That’s where the expertise of a seasoned energy consultant becomes invaluable, providing prompt and accurate responses to any inquiries.
Following a thorough due diligence process, a third-party consultant issues a preliminary report, known as a “Desk Review,” along with a Measurement & Verification (M&V) Plan. Our firm conducts a peer review of the “Desk Review” to ensure accuracy and completeness. Once approved, ConEdison issues a “Preliminary Incentive Offer Letter” (PIOL), which outlines the cash incentive available for the project. This offer is contingent upon successful measurement and verification, along with a few additional terms and conditions.
May be On-site or Virtual
Once your project passes the Desk Review, the next crucial step is the “Pre-Inspection.” After the customer agrees to ConEdison’s Desk Review results and the proposed Measurement and Verification (M&V) Plan, the utility company will instruct the third-party reviewer to initiate a “Pre-Inspection” of your project.
Once you’ve passed the Desk Review, the next critical step is the “Pre-Inspection.” After you accept ConEdison’s Desk Review results and the proposed M&V Plan, the utility company will instruct a third-party reviewer to conduct a Pre-Inspection of your project.
During this phase, a third-party engineering consultant will visit your site to verify existing conditions. They will document and tag all relevant equipment and, if necessary, install temporary M&V metering equipment for up to one month to collect data.
While it might seem straightforward, the Pre-Inspection can be time-consuming and may uncover unexpected site conditions that could impact the energy projections—positively, adversely, or neutrally. If adjustments are needed, the utility company will require updates to the energy savings estimates.
Business customers should be aware that the Pre-Inspection may occur up to 30 days after submitting the original application. This does not include the additional 30 to 90 days required to prepare the application. To ensure a smooth process, engage your LC Associates’ energy consultants early in the planning stages, allowing ConEdison ample time to process your application according to program guidelines.
DO NOT START ANY WORK, INCLUDING DEMOLITION, BEFORE THE PRE-INSPECTION
Starting a project before completing the pre-inspection may lead to forfeiting cash incentives. It’s important for businesses to understand the difference between a cash incentive and a rebate. While a rebate often offers a smaller cash amount and may not require a pre-inspection, cash incentives are typically larger and involve a more detailed process. If a project begins before the pre-inspection, utility companies like ConEdison may determine that no incentive is warranted. Most utilities, including ConEdison, cannot offer incentives for projects that have already started.
Unfortunately, many businesses have forfeited incentives by beginning projects prematurely. To prevent this, our firm works closely with clients to coordinate project schedules and minimize the risk of forfeiture.
Congratulations! Now you can start your project!
Businesses can begin their energy efficiency upgrades once the third-party reviewer completes the pre-inspection and the utility company issues a notice to proceed. However, during this process, changes often occur. To cut costs, businesses may value-engineer their scopes of work, which can either reduce the project’s scope or potentially increase the incentive amount.
During the implementation phase, unforeseen conditions frequently arise. These unexpected challenges can negatively impact budgets, leading businesses to consider replacing specified equipment with lower-cost alternatives.
However, opting for cheaper equipment can be problematic. Such alternatives may not meet the minimum performance criteria required by utility companies for cash incentive programs. Adhering to these standards is crucial to qualify for the incentives and ensure the long-term success of energy efficiency projects.
A good example are chillers, which must exceed the ashrae standard by 2% to qualify for an incentive payment. There have been many cases where businesses receive a PIOL and then swap out the specified equipment. The swapped equipment is typically a less efficient and cheaper model. If Businesses swap out scheduled equipment with less efficient models, they risk forfeiting their incentive. Our engineers review equipment specifications for Clients to help them safeguard their incentives.
Project Costing and Verification
Once the project is substantially complete, then it is time to call in your energy consultant. A good energy consultant will go through due diligence and M&V the performance of your project. Our Firm will install interval meters on the new equipment and verify performance and operation. We run the data from the interval meters through proprietary analytic tools to identify inefficiencies or over-performance.
Inefficiencies lower your incentive payment. Over-performance would allow us to seek a larger cash incentive. If an inefficiency is noticed then we would work with the business to help cure it and re-run the M&V effort.
Project Costing and Verification
In a notable project, a new chiller with a Variable Frequency Drive (VFD) and advanced controls was installed in a plant housing six chillers. The project also included installing VFDs on the primary pumps, with all chillers powered by electricity. The plan was to operate the VFD-driven chiller under part-load conditions. During peak design conditions, both the VFD-driven chiller and a standard efficient chiller were activated, with the VFDs on the pumps adjusting in response to the chiller’s performance.
During the Measurement and Verification (M&V) process, we monitored the chilled water plant for a month. Our analysis revealed that the actual energy savings were lower than initially projected. To investigate, our analysts developed an analytics algorithm and subjected the data to a series of tests. We discovered that the energy-efficient chiller with the VFD and controls had been taken offline halfway through the M&V period.
When our project manager questioned the engineers about the chiller’s operation, they initially denied that it had been shut down. However, after presenting the M&V data, the operating engineers recalled that the chiller had indeed been offline for “a few days” to allow an insulation contractor to complete a punch list item.
Despite this setback, the story ended on a positive note. We re-ran the M&V process, ensuring accurate data, and ultimately secured the customer’s cash incentive payment.
And Finally Getting Paid!
Our engineers will conduct due diligence to verify the project’s performance once completed and commissioned. If all is well, we notify the Utility company to schedule a third-party post-inspection. The utility company engages a third party engineering firm to visit the site and inspect the project. Pictures will be taken, M&V tasks will be conducted and PIR will be generated by the third party consultant.
The Utility company compares the two PIR reports. If the comparison is acceptable, the Utility will ask to see supporting costs. If the Utility company feels that the two PIR documents are not in sync, then they will call a meeting between the third party reviewer and the customer’s energy consultant to reconcile. It important to note that businesses who file direct with the Utility typically forego the customer sided PIR report. Relying solely on the third party consultant’s PIR is equivalent to handing over one’s bank statements to the IRS, and asking them to figure out the taxes each year. LC Associates generates a customer-sided PIR document for each project.
Save all your receipts, proposals and AIA documents!
Once the Utility company completes the post-inspection process, we move onto the project costs. It is important to note that cash incentives only cover 50% to 70% and sometimes 100% of the project costs. Predictably the Utilities will never pay out cash incentives in excess of project costs. Project costs typically include both soft and hard costs and exclude in-house labor.In layman’s terms, if your cash incentive is $100,000 with a 50% incentive cap, your project has to cost at least $200,000.
For example, if a business implements the project with in-house labor, and the cost ends up being $150,000, the Utility company may reduce the cash incentive to $75,000. Careful planning with your seasoned energy consultant would identify these opportunities to keep value-engineered items back in the project scope.
Project Cost Offsets + Energy Cost Savings = Win Win for Everyone!
Once your project successfully achieves the promised energy savings and you provide the necessary documentation to support your project costs, the utility company will issue a payment to LC Associates. We then distribute the appropriate funds to the building owner and/or contractor.
However, if the project falls short of the expected savings, the utility company may offer a partial payment. This payment is usually divided into two milestones: the first 60% is disbursed when the project is implemented, and the remaining 40% is paid after a proper Measurement & Verification (M&V) plan is completed and reconciled.
it’s always a fun day when the project is completed and the incentives are paid!
Doing business as LC Associates and affiliated with Green Apple Lighting USA!
For over 20 years, LC Associates has been New York City’s leading energy incentive expediter. With more than $200 million in incentive applications filed, we’re recognized as industry leaders. New York businesses see LC Associates as the premier choice for energy consulting services. From iconic institutions to Fortune 100 companies, our clients trust us as their go-to energy consultants and advisors. We proudly serve not only large enterprises but also small and medium-sized businesses.
Our expertise covers commercial real estate, multifamily housing, institutional, and industrial markets. Contact us today at 212.579.4236.