LED Rebates and Incentives for Cannabis and Hemp Cultivators

Applying for LED rebates can be a herculean task, but the payoff and savings that result are worth the investment of time and energy. While there are options for businesses of all shapes and sizes, the nuances between each program can be difficult for the average business owner to comb through. The lengthy, multi-step process to obtain a rebate is in and of itself a time-consuming task. And that’s all assuming that a business knows that LED rebates exist in the first place: According to Cannabis Business Times, only 37% of cultivators have explored LED rebates, and out of those cultivators, only around 23% have applied for an LED rebate.

Fortunately, more businesses, including cannabis and hemp cultivators, are learning that they can take advantage of LED rebates. These rebates help offset the cost of extensive and expensive lighting installations that simultaneously turn into significant energy savings for years to come. This guide from Agrify breaks down what LED rebate and incentive programs are and the unique reasons why cannabis and hemp cultivation facilities should take advantage of these programs.

What are LED rebate programs?

LED rebate programs help businesses recoup a percentage of the amount spent on energy-efficient lighting. These rebates are significant, typically covering tens of thousands of dollars invested in these new products. These programs may also be referred to as LED incentives or utility rebates.

Rebates are a type of incentive which offers a direct dollar amount as reimbursement for money spent on eligible items. Particularly when offered by a utility, they are geared toward specific energy-saving items, such as LED lighting. In some cases, energy-efficient HVAC systems and irrigation systems may be eligible for other rebate programs offered by utilities.

Rebates are generally available in two forms: prescriptive rebates, which offer a set dollar amount per item purchased, and custom rebates or incentives. Cannabis and hemp businesses often take advantage of custom rebates, as these can take multiple items, frequency of use, and other factors into account.
Utility rebates, LED rebates, and similar programs are not a new phenomenon. Created in the 1980s to help lessen the burden on the aging power grid, issuing rebates helped ensure proper electrification throughout the power grid and a way for utility companies to help prevent blackouts and infrastructure failure when the demand for power grew. There is a sustainability component to this as well, with utilities leveraging rebate programs to encourage “green” energy use and reduce overall energy consumption.

How utility rebate programs work

Any business of any size can take advantage of LED rebate programs, including state-legal cannabis businesses and hemp businesses. While program specifics vary, a company can receive a rebate as small as 20% or less to as large as 50% or more of the investment into LED lighting, depending on the region, utility, and the program’s specifications. Businesses may apply for and redeem more than one LED lighting rebate per project.

The programs are often created and administered by the utilities themselves in partnership with regional authorities. They are available in many power grid coverage areas. Some businesses may find additional incentives available on the municipal level.

To qualify for and obtain an LED rebate, a company will undergo a pre-audit to evaluate the plan to install LEDs and other energy-efficient equipment. After installation, the company will undergo a second audit to verify that the items are indeed in use.

The initial savings are significant. For example, a company spending $100,000 on energy-efficient lighting equipment can apply for a utility rebate program and get approved for a $30,000 incentive. That 30% would have disappeared without the rebate.

The LEDs will pay for themselves in one to two years as well, thanks to the overall lower costs associated with running LEDs. LEDs can run up to 80% more efficiently than other bulb types like high intensity discharge (HID) and high pressure sodium (HPS) lights, fluorescent bulbs, and halogens. The savings start on Day One and continue for as long as the LEDs are in operation. In the case of Agrify LED grow lights, they will last up to five times longer than typical HID lighting, reducing required maintenance costs for the cultivator.

Putting LED rebate programs to work for cultivators

Cannabis and hemp cultivators are prime candidates for LED rebate programs for several reasons:

  • Cultivation facilities draw an enormous amount of power. It is no secret that indoor cannabis cultivation requires a tremendous amount of energy. In fact, some grow rooms pull more power from the grid than a 20-story building. That energy demand can put significant strain on the energy grid, causing the facility to lose power and even potentially cause damage to the utility company’s infrastructure.For example, Pacific Power in Oregon experienced seven blackouts in the summer after adult-use legalization went into effect there, all of which were traced back to cannabis cultivation facilities. As this demonstrates, cultivation facilities utilizing less power is of significant interest to the utilities reliant on aging infrastructure.
  • Many cannabis and hemp grow operations are subject to energy regulations. As an emerging industry, cannabis and hemp growers are required to adhere to energy efficiency standards that other commercial operations are not. For example, in Illinois, cannabis cultivators cannot use more than 36W of electricity per square foot.These requirements make it increasingly difficult to use older lighting types around the clock, as they simply consume way more energy than LED lighting. This effectively steers many cultivators toward LED lighting installations over other bulb types, so they can meet these requirements, whether that’s a partial conversion to use during certain flowering stages or full conversion to LEDs from seed to harvest.
  • LED installation translates to significant long-term savings: The energy bill is one of the biggest expenses a cannabis or hemp cultivation facility has to pay each month. While the LED rebate itself is a one-time payment, the LEDs themselves should shave thousands of dollars off the energy bill each year; the precise amount varies depending on the size and the complexity of the facility. That reduced spend increases capital that can be repurposed to other business needs.
  • The cannabis and hemp industries continue to prioritize energy efficiency. These industries are unique in that they are emerging and expanding during a time of heightened awareness of their impact on the environment. As a result, many cannabis and hemp cultivators are keeping a close eye on the footprint they leave behind, looking for ways to improve their impact on the environment. LED lighting is a significant part of that equation, and an LED rebate provides even more motivation to make the switch.

As seen here, cannabis and hemp cultivation facilities have many convincing reasons to switch to LED lighting and take advantage of an LED rebate program. Thankfully, a cultivation facility can make the switch – and take advantage of LED rebates – no matter its size or plans for expansion. LED rebates can be applied to new facility builds, expansions of existing facilities, or replacing lighting throughout an existing facility. Improvements made in stages from grow room to grow room are each eligible for an LED rebate as well.

This means that cannabis cultivators can utilize LED rebates as part of their plans to renovate or expand, knowing that the rebate can be reinvested into the expansion or continued conversion of a facility. For example, if a cannabis cultivation facility plans to add 20,000 square feet of grow space in four stages over two years, an LED rebate can be planned for each 5,000-square-foot stage. This can help facilities plan where they can potentially optimize savings.

How Agrify helps clients secure LED rebates and incentives

Identifying a LED rebate program, assembling the paperwork, and going through the audits and inspections is a complicated and dizzying process. At Agrify, we want to make sure that you are applying to receive maximum rebates for the investments you make in our energy-efficient LED grow lights.

At Agrify, our experts work closely with you to ensure each step of the process, from the initial analysis until your rebate check is in hand. Our staff has decades of experience navigating the ins and outs of LED rebate programs throughout the U.S., and their knowledge is put to work for all Agrify clients.

What is Agrify’s process for LED rebates and incentives?

Agrify’s experts get involved early in the process. The first step is to determine if your facility is eligible for a rebate, and if so, which rebate or incentive you may be eligible to receive. Agrify will verify with the utility on your behalf and review preliminary utility incentive estimates with you.

Once eligibility is determined, clients answer some basic questions about their facility, what they plan to do in their facility, and how Agrify LED grow lights and other qualifying products fit into the picture. This information is then relayed to the utilities, who work with Agrify’s experts to fill in all the details necessary to evaluate the rebate or incentive application, including the number of units to be replaced and the current baseline of power usage. This helps Agrify and the utilities calculate the estimated rebate or incentive you can expect to receive.

The application process often involves two audits: a pre-audit so the utility can see how equipment is currently being used in your facility, and an audit after installation to confirm that the eligible LED lights and other energy-efficient products are in use. Depending on the utility offering the rebate or incentive and the COVID-19 protocol in that region, this audit may be in-person or some photographs may suffice. Agrify will learn the requirements for you. All in all, expect the process to take several weeks from start to finish.

When all is said and done, is it worth the time and effort to apply for the LED rebates and incentives? To put that question into perspective, let’s take a look at the real results experienced by a recent Agrify client based in Washington State. This cultivation facility in the Pacific Northwest installed LED lights totaling $93,986. They applied for an LED rebate program through which they received more than $48,000 back, a capital expense reduction of more than 45%. Those same lights are expected to save this facility between 40% and 50% off their monthly energy bill, compared to when the facility relied on HPS lighting.

Saving on energy with Agrify

The savings for switching to LEDs are twofold: the immediate, one-time amount received through the LED lighting rebate or incentive program, and the long-term monthly savings shaved from the electric bill.

As an Agrify customer, you won’t go through the LED rebate process alone. With our guidance, we will ensure that your savings will be maximized. Your cultivation facility can receive tens of thousands of dollars back just for investing in energy-efficient equipment and reap the rewards for years to come. Contact Agrify for more information or to get started.