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Introduction
In 2007, Congress passed the bi-partisan Energy Independence and Security Act (EISA), which included higher efficiency standards for light bulbs.
The goal was to take advantage of new lighting technologies to decrease consumer bills while increasing energy security and resilience. New lighting technologies, such as LED and compact fluorescent light bulbs, last longer and use less energy than the traditional incandescent bulbs that previously dominated the market. The Act requires lighting to be at least 27 percent more efficient than traditional incandescent bulbs, which requires manufacturers to use different technologies to meet the standard, including halogen incandescent, compact fluorescent and LED technologies.
Consumers, commercial enterprises and government buildings can reduce energy and maintenance costs with compact fluorescent lamps (CFLs) and LED (light emitting diodes), which use less energy and last far longer than the incandescent bulbs they replace.
Many states have enacted legislation offering incentives to residential, government, commercial and agricultural consumers who choose energy-efficient lighting technologies. States are interested in promoting efficiency to promote economic development, since the less businesses and consumers spend on energy bills, the more they can invest in the economy.
Also, energy efficiency improvements, such as lighting upgrades, can result in large reductions in energy demand when spread across a utility’s territory, reducing the pressure to build new power plants, lowering transmission line congestion, which will ultimately be reflected in lower energy bills for ratepayer. Lighting upgrades can create savings for state and local governments, consumers and businesses money very quickly, since increasing lighting efficiency investments provides very quick payback.
Many state governments have created programs to educate consumers about the energy savings potential of lighting upgrades and to help finance the up-front costs of upgrading their old lighting systems. Since upfront costs are often the largest barrier to efficiency upgrades, rebate and financing programs enables a larger number of businesses and consumers to take advantage of efficiency’s benefits.
Lighting Options
Several new lighting technologies—including halogen incandescent, compact fluorescent and LED lighting—currently provide energy savings of up to 75 percent compared to traditional incandescent lighting bulbs.
Traditional Incandescent Lighting
Traditional bulbs produce light by using electric current to heat a wire filament until it starts to glow—90 percent of the energy used by the bulb is lost as heat, making them very inefficient.
Energy- Saving Incandescent Lighting
Energy-saving incandescent bulbs increase bulb efficiency by using halogen gas in the bulb. By law, these new bulbs must use at least 27 percent less energy and will last up to three times longer than traditional incandescent light bulbs.
Compact Fluorescent Lamps (CFLs)
CFLs are simply compact versions of the fluorescent lighting commonly founding household garages and commercial warehouses. CFLs use less electricity to produce light than traditional incandescent lighting, resulting in a 75 percent total energy savings. CFLS can also last up to ten times longer than traditional light bulbs, lowering replacement costs.
Light-Emitting Diodes (LEDs)
LEDs are a type of solid-state lighting that use semiconductors to convert electricity into light. Though LEDs have traditionally been used for traffic lights and car-indicator lights, this highly efficient technology has recently been adapted for use in a variety of other technologies.The most efficient LEDs use only 20–25 percent of the energy of traditional light bulbs and can last more than 20 years. Though this technology is not yet available for every lighting need, LEDs are rapidly evolving and are expected to represent 25-35 percent of the lighting market by 2025. Currently, they can be used to replace 40W, 60W and 75W traditional incandescent bulbs, reflector bulbs often used in recessed fixtures and small track lights, including holiday lights.They are also becoming more popular as industrial lighting. Because LED lights last so much longer than traditional lighting options, they reduce not only the cost and waste associated with traditional bulbs, but can eliminate the labor costs associated with replacing traditional bulbs in difficult to reach areas, such as public streetlights, traffic signals and commercial overhead lighting.
Energy-Efficient Lighting Incentives
A variety of different governmental and non-governmental entities offer consumer lighting incentives, often as a result of state efficiency requirements. Incentive programs are run by utilities; federal, state and local governments; and through public-private partnerships.
Federal Government Incentives
In 2014 the Department of Energy established the Better Buildings Outdoor Lighting Accelerator (OLA) as a means of providing technical assistance to municipalities and other public agencies, in order to overcome the particular set of barriers each faced in upgrading their street lights to modern, high-performance systems. Partners included states, cities, and regional energy networks that have upgraded street lighting systems or at minimum assessed the feasibility of a conversion project. The goal of the OLA was to work collaboratively with partners and other stakeholders to mitigate or remove technical, financial, and regulatory or utility tariff barriers to broad scale deployment of the preferred high performance technology using light emitting diode (LED) street lighting systems and controls. A compendium of tools and resources to help municipalities with street lighting conversion planning and implementation can be found in the OLA Toolkit. The OLA concluded in December 2016, and partner profiles briefly describe conversion experience and reports on the progress of these efforts to date. A summary of the OLA Accomplishments describe what partners were able to achieve during the OLA period and a more detailed assessment of barriers have been captured in The Outdoor Lighting Accelerator: Lighting the Way Forward.
The Federal National Mortgage Association provides a financial incentive through the Fannie Mae Multifamily Green Financing Business by including financing for energy and water efficiency property improvements in mortgage financing for multifamily properties and cooperatives.
State Government Incentives
Thirty-six states have incentivized the use of energy efficient lighting through rebate, loan or tax-incentive programs. These programs generally take the form of energy efficiency incentives that cover lighting among a broad array of efficiency approaches. States have enacted legislation authorizing programs that provide low interest loans for energy efficiency projects or offer grants or rebates. For example:
- Alabama’s Local Government Energy Loan Program offers zero-interest loans to public schools and universities for energy efficiency improvement projects that will pay back in utility savings. Upgrades eligible for funding include heating and cooling equipment, insulation improvements, water-saving efficiency measures and energy efficient lighting upgrades.
- Illinois offers a variety of lighting incentive programs, including an energy efficient living grant that provides low-income housing residents and public housing authorities efficiency upgrade grants and a public sector energy efficiency program that provides rebates for public sector entities that install energy-efficient equipment and lighting for in their buildings.
A few states offer lighting-specific incentives in the form of consumer rebates or tax holidays for the purchase of certain energy efficient lighting products.
The following map shows which states currently have energy-efficiency incentive programs that include lighting incentives:
Additionally, most states have implemented energy efficiency standards for public buildings, requiring them to use energy efficient lighting.
Public Benefit Funds
Many states have public-benefit funds dedicated to promoting energy efficiency. These funds are usually funded through a mandatory service charge on consumer electricity bills or through mandatory contributions by utilities. The funds are then used for energy efficiency purposes, including lighting rebate and efficiency loan programs. In some states, like California, the funds used to finance energy programs are administered by investor-owned utilities and regional energy networks. Other states, including Maine and New Jersey, use the money collected by the public-benefit program to operate state efficiency programs run by non-utility entities. Thirty states have public-benefit funds that support energy efficiency programs. Many programs have found that for every dollar invested by their public benefit fund, two dollars or more are returned in savings and other benefits.
Local Government Incentives and PACE programs
Many local governments offer grants, loans or other incentives to encourage consumers to upgrade to energy efficient appliances and lighting; for example, the City of Winter Park in Florida offers rebates to residential and commercial customers who upgrade to energy efficient technologies, including indoor lighting improvements. Many states have also authorized Property Accessed Clean Energy (PACE) financing, allowing property owners to finance energy efficiency upgrades through assessments on their tax bill.
Utility Incentive Programs
Many local and regional utilities offer incentive programs to their customers who upgrade to energy-efficient technologies, including lighting technology, offering consumers product rebates or low-interest loans. These programs may be authorized or mandated by the state, such as through an Energy Efficiency Resource Standard, and may be funded through public benefit surcharges or directly by the utility.
Enacted Legislation
The following chart displays enacted energy-efficient lighting legislation from 2013 to 2016. Legislation from 2013-2104 reflected requirements for energy efficiency for outdoor lighting, specifically in regards to state-owned or state-funded outdoor lighting and sales tax exemptions for energy efficient light bulb purchases on designated days. States enacted four bills in 2015 and one Executive Order. One state enacted legislation in 2016. Noted trends are energy efficiency financing programs and state efforts to encourage energy efficiency.
Table 1: Enacted Legislation, 2013-2016 (As of May 23, 2016)
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State
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Bill (Year)
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Summary
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Alabama
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Senate Bill 220 (2015)
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This bill enables Property Assessed Clean Energy (PACE) financing, allowing counties and municipalities to issue financing for energy-efficient improvements through assessments on a building owner’s property tax bill. Lighting efficiency projects qualify under this bill.
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Arkansas
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Senate Bill 869 (2015)
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This bill provides enabling legislation for a municipality or a county to issue energy efficiency project bonds. The bonds may be used to finance energy efficiency projects that provide savings by reducing energy consumption or operational cost, and to purchase and install energy efficiency projects. Lighting projects are included under the bill.
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Kentucky
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House Bill 100 (2015)
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This bill enables Property Assessed Clean Energy (PACE) financing, allowing counties and municipalities to issue financing for energy-efficient improvements through assessments on a building owner’s property tax bill. Lighting efficiency projects qualify under this bill.
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Maryland
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House Bill 786 (2014)
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Legislation adds LED light bulbs to the list of Energy Star products exempt from the sales and use tax during President's Day weekend each year. Act also automatically expires the tax holiday after three years, in 2017.
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Nebraska
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Legislative Bill 1012 (2016)
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This bill enables Property Assessed Clean Energy (PACE) financing, allowing counties and municipalities to issue financing for energy-efficient improvements through assessments on a building owner’s property tax bill. Lighting efficiency projects qualify under this bill.
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Rhode Island
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House Bill 5935; Senate Bill 836 (2013)
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Legislation created the Municipal Streetlight Investment Act, which authorizes municipalities to purchase street lighting from electric distribution companies. Benefits stated in the legislation include cost reduction and increased access to energy-efficient lighting technology.
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Rhode Island
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Executive Order 15-17 (2015)
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This Executive Order establishes a renewable energy and an energy efficiency goal for state facilities. The order directs the state to procure 100% of its electricity consumption from renewable sources by 2025, and reduce energy consumption by at least 10% below 2014 levels by 2019. The executive order was directed in accordance to the Resilient Rhode Island Act, which includes a voluntary goal for the state to reduce greenhouse gas emissions to 45% below 1990 levels by 2035 and to 80% below 1990 levels by 2050. Lighting efficiency projects qualify under this order.
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| Rhode Island |
House Bill 5900 (2015) |
Legislation extends an existing public benefits charge to fund renewable energy and energy efficiency programs by an additional five years, through 2017. |
State-by-State Lighting Incentives
The following table displays current programs in 36 states incentivizing the purchase and installation of energy efficient lighting. Twenty-seven states have enacted state loan programs that offer low or zero interest loans for lighting and other energy efficiency improvements; 12 have enacted rebate programs to reimburse consumers for energy-efficient lighting upgrades; eight have grant programs that give money to state and local government agencies, non-profits and other entities for lighting improvements; and five states have sales tax exemptions or “holidays” for the purchase of energy efficient appliances, including lighting.
For an update on 2015 state action, please visit our 2015 Energy Efficiency Legislative Update. For an update on 2014 state action, please visit our 2014 Energy Efficiency Legislative Update.
The box below allows you to conduct a full text search or use the dropdown menu option to select a state.
Sources
- Database of State Incentives for Renewables and Efficiency, Incentives/Policies for Renewables & Efficiency. (Raleigh, NC: North Carolina State University, 2013).
- Database of State Incentives for Renewables and Efficiency, PACE Financing (Raleigh, NC: North Carolina State University, 2013).
- Glatt, Sandy, Public Benefit Funds: Increasing Renewable Energy & Industrial Energy Efficiency Opportunities (Washington, D.C: U.S Department of Energy, 2010).
- U.S Department of Energy, Energy Incentive Programs (Washington, D.C: U.S Department of Energy, 2014).
- U.S. Department of Energy, Lighting Choices to Save You Money (Washington, D.C: U.S Department of Energy, 2014).