Energy efficiency upgrades often come with a significant upfront cost, but rebate programs can offset those expenses and shorten payback periods. Two of the most common utility-funded incentive paths are Prescriptive Rebates and Custom Rebates. While both can be valuable tools for commercial facilities, they are designed for different types of projects. Understanding the differences can help building owners, facility managers, and energy decision-makers maximize savings and avoid missing opportunities.

What Are Prescriptive Rebates?

Prescriptive Rebates are the most common type of incentive program. These rebates are designed for straightforward, standardized energy-efficient upgrades, projects where energy savings are predictable and easily measured.

In most cases, prescriptive programs assign a fixed dollar amount for qualifying equipment once it’s installed and verified. For example, swapping fluorescent fixtures for high-efficiency LED lighting may qualify for a flat incentive of $20 per fixture. Because the energy savings are well documented, these programs are relatively easy to apply for and do not always require pre-approval.

However, there are limitations. Funding for prescriptive programs can be capped or run out quickly, and qualifying products are usually limited to utility-approved catalogs. Still, if your building needs a quick, standardized upgrade, prescriptive programs provide a fast and simple way to earn back some of your investment.

Examples of Projects Suited for Prescriptive Rebates

• LED lighting retrofits (fluorescent, halogen, or incandescent replacements)
• Lighting controls such as occupancy sensors or daylight sensors
• HVAC unit upgrades (packaged rooftop units or high-efficiency furnaces)
• Refrigeration equipment improvements, including ENERGY STAR walk-in coolers or freezers
• Variable frequency drives (VFDs) for motors and pumps
• High-efficiency commercial appliances (ice machines, ovens, dishwashers)

These projects are ideal for prescriptive rebates because the efficiency gains are widely recognized and easy to measure.

What Are Custom Rebates?

Custom Rebates are designed for projects that fall outside the standard prescriptive lists. These programs reward savings based on actual energy performance, offering flexibility for complex or innovative projects.

With custom incentives, the utility provider evaluates the specific project, calculates anticipated savings, and assigns an incentive rate, often expressed in dollars per kWh or therm saved annually. Because results vary by building type, operation, and existing systems, the process requires more detailed documentation, pre-approval, and often utility inspections both before and after installation.

Although the application process is more complex, custom rebates often deliver higher incentive amounts than prescriptive programs because they are directly tied to energy reductions.

Examples of Projects Suited for Custom Rebates

• Advanced building automation and energy management systems
• Large-scale HVAC upgrades, such as converting pneumatic controls to direct digital controls
• Custom chiller or boiler retrofits
• Compressed air system redesigns for industrial facilities
• Building envelope improvements, such as insulation or specialized window upgrades
• Industrial process optimizations or custom motor drive applications

These projects don’t fit neatly into pre-determined categories, but they can deliver substantial energy savings and qualify for significant incentives.

Key Differences Between Prescriptive and Custom Rebates

The most important distinction comes down to simplicity vs. flexibility. Prescriptive Rebates are straightforward, quick to apply for, and ideal for standardized upgrades. Custom Rebates, on the other hand, are more complex but reward projects that go beyond cookie-cutter solutions.

Another major difference is the timing of approvals. Prescriptive incentives often allow installation before paperwork is finalized, while custom projects almost always require pre-approval to confirm eligibility. Additionally, prescriptive programs provide fixed-dollar payouts, while custom programs base incentives on actual energy savings.

For many organizations, a combination of both is the best approach. A facility may implement prescriptive upgrades for lighting and appliances while pursuing custom incentives for more advanced system-wide projects.

Which Path Is Right for Your Building?

The choice depends on the scope and nature of your project. If you’re replacing existing equipment with widely available energy-efficient alternatives, prescriptive rebates are likely your best fit. If your project involves system-level changes, unique technologies, or process-specific improvements, then custom rebates can provide greater financial rewards.

Working with a trade ally or energy solutions provider can simplify the process. Programs like the New Jersey Clean Energy Program (NJCEP) offer both prescriptive and custom incentives, allowing mid-size and large organizations to maximize savings by tailoring rebate strategies to specific facility needs. Many utilities also provide 0% on-bill financing to further reduce the upfront burden.

Final Thoughts

Both Prescriptive Rebates and Custom Rebates can make energy efficiency projects more affordable. Prescriptive rebates are quick, predictable, and ideal for common equipment replacements. Custom rebates require more effort but provide flexibility and higher payouts for innovative or complex projects. By understanding the differences and aligning your building’s upgrades with the right incentive type, you can significantly reduce costs, improve efficiency, and move closer to your sustainability goals.

Incentive Rebate360 can assist with the application process for both custom and prescriptive rebates.  To contact us, call 480-653-8180, email [email protected], or schedule a call that fits your needs by clicking the button below!