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Posted by Charley Cormany, EFCA Executive Director
Rebates can be a great tool for both homeowners and contractors to reduce costs and make home performance projects more doable. But to make the most of a rebate program, contractors need to understand the program’s goals and how it works so they can plan carefully and avoid pitfalls.
At Efficiency First California, my team and I manage one of the largest residential electrification programs in the country. Our staff process rebate applications, complete field verifications, and issue corrective actions to contractors daily.
I’ve also been on the other side. I was a partner in a home performance company that provided rebates on almost all our projects. I’ve submitted applications and had them returned. I’ve spent time on-site with rebate program verifiers during inspections and have been required to make corrections. I have experienced firsthand what happens when a rebate program drags its feet and delays payments for months.
Having seen how rebates work from both sides of the table, I’d like to share a few things I’ve learned over the years that can help you make the best use of rebates on your projects.
Motivation and Goals
Many contractors never think to ask why a rebate program exists in the first place.
Before you engage with a program, ask yourself why the utility or state is providing the funding. Are they trying to change a specific behavior, encourage the adoption of a new technology, support disadvantaged communities, reduce pollution, reduce grid loads, or something else?
I’ll give you an example. We are a program implementor for Sacramento’s Municipal Utility District (SMUD). Currently, we administer several residential rebate programs and provide software support to the commercial team. The objective of these programs is simple and well defined: to help SMUD become carbon neutral by 2030.
Most buildings in Sacramento are dual-fuel, which means they use both electricity and natural gas (or occasionally, propane). SMUD has made it very clear that converting buildings from dual-fuel to all-electric is the main way contractors can help the city achieve its decarbonization goals.
As you might imagine, the primary way to do this is to replace gas furnaces and water heaters electric heat pumps and heat pump water heaters. It should not come as a surprise that our largest incentives are for those technologies. We are making significant strides toward achieving this goal, in part because it is so clearly defined and everyone understands it.
Are you clear about the goals and objectives of the entity funding the rebates you are offering? If you want to offer rebates, it is critical that you understand the objective of the funders.
Learn the Program Requirements
Many contractors assume meeting code requirements is enough to qualify for rebates. This is not always true. Often, rebate programs use quality as a metric. This means they may require work that is significantly more stringent than what’s simply stated in the building code.
Building codes are a baseline. In the Home Performance business, we used to say that code-compliant work gets a grade of C- or less. We can do much more for our customers.
Let me give you an example. Expansion tanks for heat pump water heaters are not required by code, but are a best practice. In fact, most heat pump water heater instructions require them as part of the installation. Not installing one may limit your warranty coverage.
In the SMUD program, we not only require that all heat pump water heater installations include a thermal expansion tank, we also require them to be securely strapped in place, as we live in earthquake country. If you install a heat pump water heater in our program without a securely strapped expansion tank, you will need to return to install one to qualify for a rebate.
Learn the program requirements before you start the work, not after. Go-backs are expensive and kill profit.
Get What You Need in the Field
Rebate programs often require photographs as part of their application submission process. Make sure your crew is taking program-required pictures as part of their workflow. It pains us to send a contractor back to a finished project because they are missing a required photo. This is a costly mistake, as we all know.
Make sure you understand what is required to submit your applications. Do you have all the photos you need? Does the program require a permit number or proof that the project passed inspection? Do you need to submit an invoice for your project? Does your invoice need to line-itemize the rebate? Do you need the homeowner to sign program required documents? Do you need an AHRI certificate or a HERS inspection?
Most programs include an onboarding process that spells out what is required to submit a project. Attend the onboarding and take good notes. It will pay dividends when you go to submit your application.
Leverage the Program’s Resources
Rebate programs can’t meet their goals without contractor participation, which means good programs invest in making your life easier. Many offer Trade Ally Networks to support you. Frequently, these networks include educational materials, program documents, and guides to make submitting projects easier.
If the program has a directory that sends leads to contractors, you should learn how it works and what the ranking is based on. Is it a random selection, or do performance metrics impact your rank in the search? If there is a ranking system, what can you do to improve your ranking? Spend a little time figuring out the metrics. Getting this right may send a whole lot of work your way.
Some programs have co-branding and marketing support to help the participating contractors spread the message. Some will add backlinks to their website. Others may have marketing budgets that can help you and the program succeed. It pays to find out what is offered and take full advantage of what’s available.
Get to Know the Program Folks
When dealing with rebate programs, it’s easy to feel like it’s us versus them.
Applications get kicked back. Program field verifications require corrective action. Program changes have unintended consequences for your business. Rebate changes impact previously sold projects.
One of the best suggestions I can make is to get to know the folks supporting the program. Realize that they understand that some homes are harder than others. They also know that some customers are just plain difficult, no matter how hard you try to please them. Things come up, programs are not perfect, and equipment and crew issues are real.
Building a relationship with the program people is in your best interest. If they know who you are and the kind of work you do, you are better positioned to explore options. If you have a project that just does not work or is outside the program’s typical solutions, you might be able to ask for an exception.
The people supporting the rebate program have good days and bad days, too. Building a rapport with these folks is a good idea. The relationship should be a partnership that benefits both parties.
The Big Mistake
The single biggest mistake I see contractors making is building a business model entirely around a rebate program. The danger is that programs run out of funding and constantly change the rules. If your business is built on a program and they reduce the rebates by 50 percent, will you survive? What happens if you have several projects in the queue and their funding gets cut? Can you weather the losses?
Some programs use a reservation system to lock in the rebates by project, which helps. But even with safeguards, there is no guarantee that the funding will be consistent. We have heard many stories about contractors being on the hook for tens of thousands of dollars when funding is cut. In California, we have seen this happen over and over.
I can’t say it enough. Don’t build your business model based on a rebate program. We have seen some really great contractors go out of business because they relied on rebate dollars as a central part of their business model. If losing rebates eliminates your profit, you are putting yourself and your company at risk.
Rebates should be a closing tool that sweetens the deal at the homeowner’s table. They can be used to offset the cost of new or more expensive equipment or cover other expenses such as electrical work or other required measures. They may help you take your business in a new direction, but I caution you not to build your business based on a rebate program.
Conclusion
Rebates can be a valuable tool for building your business. Just remember that they can also bring you down if things go south. Use rebates to close deals and offset costs, but make sure your business works without them.
Understand why the program exists, learn the requirements before you start the work, build good field habits, and invest in the relationships on the program side. Contractors who do those things tend to get more out of rebate programs and run into fewer surprises.
Reembolsos: Cómo aprovecharlos para su éxito
Los reembolsos pueden ser una excelente herramienta para que tanto clientes como contratistas reduzcan costos y hagan que los proyectos de eficiencia energética sean más viables. Pero para aprovechar al máximo un programa de este tipo, los contratistas deben entender los objetivos y el funcionamiento del mismo; solo así podrán planificar con cuidado y evitar tropiezos.
En Efficiency First California, mi equipo y yo gestionamos uno de los programas de electrificación residencial más grandes del país. Nuestro personal procesa solicitudes, realiza verificaciones de campo y emite acciones correctivas para los contratistas todos los días.
También me ha tocado estar del otro lado. Fui socio en una empresa de eficiencia energética que ofrecía reembolsos en casi todos sus proyectos. He enviado solicitudes que me han rebotado. He pasado horas con los verificadores durante las inspecciones y me ha tocado hacer correcciones. Sé perfectamente lo que se siente cuando un programa se ralentiza y los pagos se retrasan por meses.
Tras haber visto cómo funcionan los reembolsos desde los dos lados de la moneda, me gustaría compartirles algunas lecciones que he aprendido y que los ayudarán a sacarles el mayor provecho en sus proyectos.
Motivación y objetivos
Muchos contratistas nunca se detienen a preguntar por qué existe un programa de reembolsos en primer lugar. Antes de participar, pregúntese: ¿por qué el estado o la empresa de servicios públicos está otorgando estos fondos? ¿Buscan cambiar un comportamiento específico, fomentar una nueva tecnología, apoyar a comunidades vulnerables, reducir la contaminación o la carga en la red eléctrica?
Les pongo un ejemplo: somos implementadores del programa para el Distrito Municipal de Servicios Públicos de Sacramento (SMUD). Actualmente, administramos varios programas de reembolsos residenciales y apoyamos al equipo comercial con el software. El objetivo es simple y claro: ayudar a que SMUD sea carbono neutral para el 2030.
La mayoría de los edificios en Sacramento funcionan con dos tipos de energía (electricidad y gas natural). SMUD ha dejado claro que la conversión de gas a sistemas 100% eléctricos es la forma principal en que los contratistas pueden ayudar a alcanzar la meta de descarbonización.
Como imaginarán, la clave está en reemplazar calderas y calentadores de agua de gas por bombas de calor eléctricas. No es de sorprender que los incentivos más altos sean para estas tecnologías. Estamos avanzando mucho porque el objetivo está bien definido y todos lo entienden. ¿Tiene usted claros los objetivos de la entidad que financia sus reembolsos? Entender esto es fundamental.
Conozca bien los requisitos del programa
Muchos contratistas asumen que cumplir con el código de edificación es suficiente para calificar. No siempre es así. A menudo, los programas de reembolsos usan la calidad como métrica, lo que significa que pueden exigir estándares mucho más estrictos que el reglamento básico.
Los códigos son el estándar mínimo. En este negocio, solemos decir que un trabajo que apenas cumple con el código tiene una calificación de “panzazo” (apenas suficiente). Podemos ofrecer mucho más a nuestros clientes.
Por ejemplo: los tanques de expansión para calentadores de agua con bomba de calor no siempre son obligatorios por código, pero son una buena práctica. De hecho, la mayoría de los fabricantes los exigen para validar la garantía. En el programa de SMUD, no solo pedimos el tanque, sino que debe estar bien sujeto con correas debido a que estamos en zona sísmica. Si no lo instala así, tendrá que hacer una visita de garantía para corregirlo si quiere el reembolso. Conozca los requisitos antes de empezar, no después. Los errores cuestan caro y matan la utilidad.
Documente todo en campo
Los programas suelen exigir fotografías como parte del proceso. Asegúrese de que su cuadrilla tome las fotos requeridas como parte de su rutina de trabajo. Nos duele mucho tener que regresar a un contratista a una obra terminada solo porque le faltó una foto. Es un error costoso que se puede evitar.
¿Tiene todo lo necesario? ¿Número de permiso? ¿Factura desglosada con el monto del reembolso? ¿Firma del cliente? ¿Certificado AHRI o inspección HERS? La mayoría de los programas ofrecen una capacitación inicial (onboarding). Vaya, tome notas y ponga atención; le ahorrará muchos dolores de cabeza al subir su solicitud.
Aproveche los recursos del programa
Los programas necesitan de los contratistas para tener éxito, por lo que suelen invertir en recursos para facilitarles la vida. Muchos ofrecen Redes de Aliados Comerciales con materiales educativos, guías y documentos.
Si el programa tiene un directorio de contratistas que genera prospectos, averigüe cómo funciona el ranking. ¿Es al azar o depende de su desempeño? Si hay un sistema de calificación, haga lo necesario para estar en los primeros lugares. Esto puede traerle mucho trabajo nuevo.
Conozca personalmente a la gente del programa
Es fácil sentir que es una pelea de “nosotros contra ellos” cuando rebotan una solicitud o cambian las reglas a mitad del camino. Mi mejor consejo es: conozca a las personas que operan el programa.
Ellos saben que hay casas difíciles, clientes complicados y que los equipos pueden fallar. Construir una relación con ellos le conviene. Si saben que usted trabaja bien, será más fácil pedir una excepción en un proyecto que se salga de la norma. Al final del día, esto debe ser una sociedad donde ambos ganen.
El error más grande
El error más común que veo es construir todo un modelo de negocio basado exclusivamente en un programa de reembolsos. El peligro es que los fondos se acaban y las reglas cambian. Si su negocio depende del subsidio y este se reduce al 50%, ¿podría sobrevivir?
En California hemos visto a contratistas excelentes quebrar porque dependían totalmente de estos dólares. Los reembolsos deben ser una herramienta para cerrar la venta, un beneficio extra para el cliente, pero su empresa debe ser rentable por sí sola. No arriesgue su negocio por depender de recursos externos.
Conclusión
Los reembolsos son valiosos para crecer, pero pueden hundirlo si no se manejan con cuidado. Úselos para cerrar tratos y mitigar costos, pero asegúrese de que su negocio funcione sin ellos. Entienda el propósito del programa, domine los requisitos, cree buenos hábitos en su equipo y cultive relaciones con los administradores. Quienes lo hacen así, obtienen mejores resultados y se llevan menos sorpresas.
