Utilities set annual energy savings goals, which they then strive to meet. Offering incentives to end users is an energy-saving alternative to the greater capital expense of expanding power plant capacity. It is often cheaper for utility companies to pay for rebates than to build a new power plant and deal with increased infrastructure maintenance.

There are over 3,000 utility companies across the nation, each with their own rebate programs. Rebates are available for lamps, ballasts, fixtures and controls. For example: T8, T5, T5HO, CFLi, LED, CDMi, Allstart, Sensors and Controls, RDL. For detailed information on opportunities in your area, visit the Database of State Incentives for Renewables & Efficiency.

There are currently two different kinds of rebates, Custom and Prescriptive.
Prescriptive Rebates provide a specific predetermined dollar amount for each fixture or lamp replaced, for example: save $12 / lamp.Custom Rebates are based on the total energy savings of a specific project, for example, the amount of kWh saved from switching to one technology over another ($0.12 / kWh saved annually).
The typical Custom Rebate process works as follows (please contact your local utility for further details):

1. Pre-approval Paperwork: The measures you are going to implement usually have to be approved by the utility or incentive management company prior to inspections and purchasing.
2. Pre Audit: Often times the utility, or someone they contract with, will walk through the space to perform an audit on current lighting and determine the different measures that can reduce energy within the given space.
3. Install: Either done internally, through a utility approved contractor or another certified installer, the light measures are implemented.
4. Final Paperwork: Submit the final application with the included measures to the utility or implementing body for final approval.
5. Post Inspection: Similar to the pre audit, a walk-through will be done to ensure all the measures in the paperwork were carried out and correctly installed; the implementer of the energy saving project can often be subject to multiple post inspections to ensure the measures remain in place.
6. Payment: The utility or implementer will release payment for the energy saving measures conducted by the end user.