Best Practices

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PROJECT-RELATED UTILITY REBATES

AUTHOR Paul Walsh, Director, Strategic Sourcing
COMPANY Gap, Inc.
AUTHOR David Ely, President/CEO
COMPANY EDSS
CHALLENGE
What can Retail Facilities Managers (RFM) do to help ensure they receive the full amount of available (project related) utility rebates?


The ability to enhance a store’s appearance and increase its return on investment at the same time is a challenge many RFMs face. For remodel projects, the resulting energy efficiency is an important financial element of the
business case. Many utility rebates are available that can help increase a project’s return on investment (ROI). However, actually receiving the full rebate from a utility is tricky. 

The Gap recently remodeled a large store (54,000 square feet) located in downtown New York. The scope of the project included removal of a mezzanine level, upgrade of incandescent and T12 fluorescent lighting, and replacement of old air conditioners with new, high-efficiency units. The project’s design did not specify one-for-one light fixture replacements and a big part of the lighting challenge was to produce a net energy reduction while maximizing the color rendering index (CRI) values and lumen output. After the project’s designs were completed and the remodel was under way, the question surfaced regarding utility rebates. Had all the available rebates associated with the project been identified and programmed for recovery? Although the local utility company normally offered them, no rebate dollars for new construction or major renovation programs were available at the time. As a result, the utility gave the Gap’s original rebate application only a token rebate.

BEST PRACTICE
The Gap hired an energy-consulting vendor to assist them. The vendor visited the project site, preformed onsite verification, and brainstorming potential energy solutions with the Gap’s executive team. The Gap engineers worked
closely with the vendor to identify and document existing lighting and HVAC units by reviewing the original as-built drawings, and completing an in-depth photographic site survey. When the initial review from the utility yielded an
unsatisfactory rebate, the vendor used utility bills, as-built drawings, and the Gap’s photographic survey to prove a net reduction of energy usage. After persistent documentation and negotiation, the utility agreed to pay roughly five
times the amount they had initially told the Gap they would pay. 

Lessons learned from the Gap’s experience on this project produced the following best practice applicable to any RFM trying to recover a utility rebate.
• Initiate the rebate process early in the project’s design phase.
• Partner with your engineering and utility teams.
• Understand the equipment associated with the project and any available rebates associated with the “technology”.
• Get the expert advice you need.
• In situations where a significant amount of work is mechanical, electrical and plumbing (MEP) based, it is critical to plan upfront with the local utility, and coordinate a pre-inspection visit and a post-inspection visit.
• Be aware that the application for some rebates (but not all) does not require an actual visit to the store.
• Follow up with the utility on a consistent basis to address any changes or errors that may be made down the line.

Generally, early planning yields higher incentive levels and will provide more time to weigh potential investments in relation to savings and rebate dollars.

RESULTS
The results far exceeded anything the Gap had received in the past related to rebates. They are now in the process of obtaining rebates for other stores in the New York area. 

By getting the expertise they need, the Gap is able to invest in technology that is more efficient and helps make their remodeled retail space more attractive to their customers.


VERIFICATION OF EFFICIENCY AND SAVINGS CAPTURED
Prior to distributing their rebate funds for the retail location, the utility required a post-construction onsite survey. The company sent their utility energy engineer to the site to verify proper installation for all energy efficient measures.
After final verification, the rebate application went through a further processing period of four to six weeks before the actual check was issued. 

The utility’s original proposed rebate was approximately $9,000. After the Gap’s energy-consulting vendor properly documented existing conditions and showed that the project’s new equipment would generate a net reduction in energy use, the utility raised the rebate offer to approximately $45,000 (a five-fold increase).