The utility industry is changing fast. Communities across the country are pushing for sustainability, better service, and modern infrastructure. Utilities need more support than ever. Your budgets are tight. Your systems are aging. Your communities are watching (insert Twilight Zone music here).
As a utility, you're in a unique position to offer customer incentives as motivation to do something specific that will help everyone—switch to paperless billing, cut peak-hour usage, adopt a smart thermostat, etc.
The right incentives can strengthen partnerships, encourage modernization, promote conservation, and even help your own operations run more efficiently. They also drive down costs for everyone. It's a win, win, win.
Your budgets are often flat. Capital improvements take years to plan and fund. Staff wear multiple hats. Any program that helps you save time, money, or resources is worth a look. And offering incentives is a great place to start.
There are four major categories of utility incentives:
Energy efficiency
Water conservation
Renewable energy
Demand response
Let’s dive into the most valuable, usable incentives you can offer your public-sector customers. You’ll also see what kinds of incentive programs utilities across the country are utilizing.
Energy efficiency is where utilities and citizens find common ground. It’s not about cutting comfort or doing less. It’s about doing things smarter. Utilities promote efficiency because it helps meet state mandates (kinda important...), keeps the grid stable, and saves money over time. Every kilowatt saved is one you don’t have to generate or buy. That makes it cheaper than building new infrastructure. It also builds trust. When customers see their bills drop, they’re more likely to be an advocate and engage with future programs.
For citizens, the benefits are simple. Energy efficiency lowers monthly bills. It keeps homes more comfortable in the summer and winter. It reduces noise, air pollution, and power outages. And when the power does goes out, efficient homes stay livable longer. Programs like rebates, free audits, or discounted smart thermostats give people an easy on-ramp. They don’t have to change their lifestyle (because they don't want to). They just upgrade once and benefit for years.
You can lead the way by offering targeted programs. Rebates for LED lighting. Discounts on ENERGY STAR appliances. On-bill financing for HVAC upgrades. These are tools that help communities stretch limited budgets. And when public-sector agencies participate, those savings can ripple out across schools, libraries, and local government buildings, too.
HVAC and lighting rebates: Partner with manufacturers, distributors, or contractors to offer instant discounts or post-purchase rebates. You can pre-approve qualifying equipment and set clear rebate amounts per unit, then market the program through bill inserts, websites, and partners.
Direct install programs with little to no upfront cost: These work best when utilities contract with vetted service providers who can perform audits and complete upgrades with minimal disruption. You cover most or all of the cost up front, and may recoup a portion through on-bill charges or grant funding. This approach simplifies adoption for customers and speeds up implementation.
Custom rebates for large facilities: These require a flexible application and approval process. You can assess proposed projects based on projected savings and offer a rebate per kilowatt-hour or therm saved. Site verification and post-project measurement help validate the impact and improve future program design.
Energy audits tied to action plans: These can be offered for free or at a low cost to targeted sectors—schools, municipal buildings, or small businesses. Utilities can use internal staff or approved vendors to perform audits, then bundle recommendations with available rebates, financing options, and timelines to make upgrades easy to execute.
Ouachita Electric Cooperative (AR): Their HELP PAYS program invested $3.2M in upgrades for homes and businesses. It cut 3,200 kWh per home and slashed peak demand. Offers with no upfront cost had 80% acceptance rates.
Woonsocket Education Dept. (RI): Upgraded six schools to LED lighting. Projected $2M lifetime savings with help from the state incentive program.
City of Rochester (NY): Saved 977,000 kWh through bundled energy efficiency improvements. (NYSERDA source.)
PSE&G Small Business Direct Install (NJ): Contractors install upgrades while customers pay just 20% via on-bill financing. Scalable model for smaller utilities. (EPA source.)
Water conservation plays a critical role in how utilities manage limited resources and build trust with their communities. Programs that reduce water demand help delay the need for costly new infrastructure and keep water systems resilient and healthy, especially during drought or population growth. Utilities can turn to rebates, audits, or tiered rate structures to drive change. These programs protect natural resources (save the trees!), cut energy use from water treatment, and lower operating costs. In some cases, conservation can save hundreds of millions in capital and operating expenses. That’s real value, especially when paired with improved water quality and ecosystem protection.
For citizens, water conservation means lower monthly bills and longer-term home savings. Upgrading to water-efficient appliances or fixing leaks helps prevent property damage and reduces both water and energy use. Programs often offer rebates for toilets, irrigation controllers, and rainwater harvesting. Some utilities even mail free water-saving devices straight to residents. It’s a practical, accessible way for households to take action. And when people see those savings stack up, they’re more likely to stay engaged and support broader conservation goals.
Smart irrigation controller rebates: You can pre-approve eligible controllers, offer point-of-sale discounts or post-install rebates, and partner with local landscapers to promote adoption. Tiered rebates based on property size or irrigation zone count can increase participation.
Free conservation devices for older buildings: You can mail kits to qualified homes or offer them at community events, libraries, or billing offices. Partnering with housing authorities or neighborhood associations helps reach target groups efficiently.
Incentives for leak detection and rainwater harvesting: Fixing leaks can prevent thousands of gallons in losses per year, while rainwater systems reduce strain on potable water supplies. You can provide rebates for professional leak detection services, rain barrels, or larger collection tanks. Workshops or how-to guides paired with incentives increase customer follow-through.
Commercial and multi-family retrofit support: These programs can include rebates for ultra-low flow toilets, irrigation upgrades, or plumbing retrofits. You can offer custom rebates based on projected water savings and coordinate with property managers to bundle retrofits across multiple units. Data tracking and pre/post audits help document impact and guide future investment.
Boerne Utilities (TX): Offers up to $400 in rebates for rainwater harvesting and irrigation efficiency. Nearly 50 customers enrolled in under a year.
City of San Luis Obispo (CA): Offers up to $1,000 for smart irrigation upgrades. Rebates for toilets, dipper wells, and more. One rebate alone saves 250,000 gallons/year.
Cobb County Water System (GA): After partnering with a manufacturer of high-efficiency water and conservation products, the CCWS developed a program to provide multi-family buildings a way to save money (and water) by retrofitting plumbing features with high-efficiency equipment. Edinborough Apartments saved 192,000 gallons in one month after installing ultra-high-efficiency plumbing fixtures at no upfront cost through this program.
Greeley, CO: They applied and were selected for the WaterNow Alliance’s Project Accelerator program. By offering residential audits, outdoor efficiency incentives, and educational programs, the city engaged nearly 5,000 participants. Residential audits alone saved 19.5 acre-feet of water per year.
Miami-Dade County (FL): Reduced household water use by 31% in senior and low-income homes through high-efficiency appliance replacements.
Renewable energy has become a central focus for utility companies as they modernize their grids and meet growing environmental expectations. Technologies like solar and wind are now more affordable than ever. Utilities are investing in clean energy to meet state mandates, lower emissions, and avoid the rising costs of fossil fuel infrastructure. Many also support distributed generation through programs like net metering and community solar. These efforts improve grid resilience, reduce peak demand, and build trust with environmentally conscious customers.
For citizens, renewable energy means long-term savings and more control over their power use. Homeowners and public-sector agencies alike benefit from solar rebates, battery storage incentives, and energy credits from net metering. These tools make it easier to adopt clean energy without breaking the budget. They also boost property values (yay!) and provide backup power during outages. By participating, individuals contribute directly to a cleaner grid and more resilient community.
Rooftop solar rebates for government buildings: These help reduce operational costs and carbon footprints across public-sector infrastructure. You can partner with state agencies or clean energy funds to co-fund installation costs. Prioritize high-visibility buildings—city halls, libraries, fire stations—and structure rebates based on system size or projected output.
Net metering incentives: These allow public-sector customers to earn bill credits for sending excess solar energy back to the grid. You can implement net metering by tracking incoming and outgoing energy through bi-directional meters. Publish clear guidelines and ensure interconnection standards are streamlined and well-communicated to public agencies and contractors.
Storage rebates tied to emergency preparedness: These support the installation of batteries in key facilities like shelters, hospitals, and emergency operations centers. These systems keep essential services running during outages and reduce peak demand when paired with solar. You can offer per-kWh or per-kW rebates for battery storage with resilience applications. Partner with emergency management agencies to identify critical facilities and bundle incentives with solar or microgrid projects.
Agricultural solar funding: This helps farms and rural properties offset electricity costs while supporting clean, local generation. You can provide tiered rebates based on acreage, facility type, or system capacity. Work with agricultural cooperatives, state energy offices, or USDA programs to co-promote and co-fund installations that align with rural development goals.
Ouachita Electric Cooperative (AR): Their HELP PAYS program also supported solar energy upgrades for homes and businesses. Mixed with their energy efficiency program, they saw an average energy savings by 42% and peak load reduction by 13%.
Farmers Electric Cooperative (IA): They developed a feed-in tariff to help encourage their customers adopt solar. They buy the customer-produced power at around $0.06 per kWh, which provides a 5-7 year payback, when mixed with tax incentives. Households installing a 9-kW system expect around a 40% reduction in their total electricity cost.
City of Palo Alto Utilities (CA): They provided technical assistance and Electric Vehicle (EV) charger rebates to a multi-family residential building. This program resulted in the installation of 17 Level 2 EV chargers, with residents receiving a total of $80,000 in incentives
Eau Claire Energy Co-op (WI): This cooperative offers its members shares in an 872-kW off-site shared solar system. Members can purchase solar panels at cost, securing rates as low as $2.10 per watt for a period of 20 years, directly benefiting from the electricity their portion of the system produces.
Demand response programs help utilities manage peak energy use while building a more flexible, efficient grid (so the lights don't go dark...). These programs reward customers for reducing electricity use during periods of high demand or limited supply. That might mean cycling HVAC systems, shifting water pumping schedules, or adjusting lighting. Utilities benefit through improved grid stability, fewer outages, and reduced need for expensive peaker plants. Demand response also supports the integration of solar and wind by aligning demand with fluctuating supply.
For customers, demand response brings real savings. Participants often receive bill credits or direct payments. Programs can be automated through smart devices, giving users more control with less effort. Businesses and local governments can create revenue streams or offset operational costs. And by participating, they help reduce pollution and keep energy prices stable for their community.
Successful strategies include:
Bill credits for reducing usage during peak hours: These credits help reduce strain on the grid and are especially valuable during heat waves or supply shortages. You can enroll customers in a critical peak rebate or time-of-use plan. Credits are applied automatically when usage drops below a baseline during peak events.
Smart thermostat incentives for public buildings: These help automate load reduction in offices, schools, and community centers. You can offer rebates or fully fund thermostats in exchange for demand response enrollment. Thermostats adjust automatically during events, making participation seamless.
Curtailment agreements for water or wastewater utilities: These give large users structured incentives to reduce consumption during high-demand periods. These facilities often have flexible schedules and can shift pumping or processing times. You can develop load-reduction targets and compensate agencies based on verified performance. Agreements can be seasonal or year-round, depending on grid needs.
Automated controls through SCADA or energy management platforms: These allow facilities to respond instantly to Demand Response (DR) signals without manual intervention. You can offer grants or rebates to upgrade control systems and integrate DR software. These investments pay off through consistent savings and improved grid coordination.
Real-World Examples:
Westerville Electric Division (OH): 1,000+ customers (of 15,000 served) enrolled in a Nest thermostat program. They offered customers a one-time rebate for enrollment. They cut 1 megawatt (MW) of peak reduction per event—nearly 1% of their peak consumption.
Shrewsbury, MA: Their connected homes program allows for load shedding of connected devices (smart thermostats, water heaters, EV chargers, batteries) up to five times per month. It saves $91,000/year in peak events, with 70% participation and 493 kW load shed per event. It also avoids 4.5 tons of carbon emissions.
Oklahoma Gas & Electric (OK): While a larger utility, their "SmartHours" program combines time-of-use pricing with smart thermostats to reduce residential peak demand. Participants save an average of $200 annually while helping OG&E achieve peak reductions of up to 137 MW. The program boasts a 99% customer satisfaction rate.
National Grid, Eversource, and Unitil (New England Utilities): These utilities have successfully deployed the "Connected Solutions" demand response program since 2019, paying participants a flat rate per kW curtailed. In Massachusetts, an estimated 10% of peak load hours account for roughly 40% of the grid's operating cost.
Not every incentive program stops at issuing a rebate check. Some of the most effective programs involve adjacent measures—ones that build trust, support long-term change, and add real value without draining your budget.
Free trials for software or smart meter tools let public-sector customers test out technologies before committing. Whether it’s leak detection software, demand forecasting platforms, or AMI dashboards, a 90-day trial gives them a risk-free chance to explore features and see how the tech fits into their workflow. It removes hesitation and accelerates adoption—especially for smaller towns that may not have budget flexibility.
Workforce training for water or electric staff helps local teams upskill, comply with new regulations, and maintain systems more efficiently. Utilities can offer scholarships to industry conferences, cover certifications, or partner with tech schools for ongoing training. That investment doesn’t just build capacity—it builds loyalty.
Grant-writing help for federal or state programs is a game-changer for resource-strapped communities. Many small towns don’t have grant writers on staff, which means they miss out on funding they could easily qualify for. If you offer templates, sample language, or even one-on-one consulting, it can unlock millions in capital improvements and put your utility at the heart of their success.
Recognition programs for sustainability milestones—like awards, badges, or press releases—cost almost nothing but go a long way. A framed certificate for water savings, an energy-efficiency award for a city hall retrofit, or a spotlight on your website makes customers feel seen. It also gives local leaders something to take back to their councils or boards when they’re pushing for more upgrades.
These tools build partnerships. And they deliver impact at a fraction of the cost of most traditional programs. Here is a list of incentive formats that can be explored:
Rebates
Bill Credits
Discounted Equipment or Installation
On-Bill Financing or Repayment
Grants or Cost-Share Agreements
Performance-Based Incentives
Direct Install Programs
Free Trials or Demonstrations
Tiered or Time-Based Rates
Recognition and Awards
Free Technical Assistance
Pilot Program Enrollment
Subscription-Based Services
Data Access or Reporting Tools
Training and Workforce Development Vouchers
Even the best incentive programs can hit speed bumps (or a wall). Utilities face constraints that most private businesses often don’t. Their timelines are longer. Their budgets are tighter. And their staff are juggling everything from procurement to public works. Here’s how to turn common roadblocks into opportunities for better engagement.
Not enough staff - Most small towns and utility departments are short-handed (duh). One person might be handling billing, meter reading, and grant applications—all before lunch. Expecting them to research rebate programs or fill out long forms isn’t realistic. Assign a dedicated rep who knows their account, follows up personally, and walks them through the process. Even better—bundle programs so they can make one decision instead of ten.
Budget restrictions - A new HVAC system or smart water controller might make perfect sense. But if it’s not in the current year’s budget, it’s a non-starter. That’s why messaging matters. Don’t lead with cost. Lead with ROI. Show how much they’ll save on operations, maintenance, or energy bills over the next three to five years. If you can offer on-bill financing or phased-in options, even better. Emphasize cost avoidance—not just out-of-pocket expense.
Risk aversion - Local governments are cautious for a reason. They answer to councils, boards, and taxpayers. If something goes wrong, it’s not just inconvenient—it’s public. Help stakeholders feel confident by sharing real examples from other similar-sized communities. Show the impact, not just the technology. If a neighboring township saved 20% on lighting costs or avoided a $400,000 infrastructure project, that story builds trust faster than any product sheet.
Slow decision cycles - Procurement takes time. Council meetings happen once a month (-ish). And nobody wants to rush into a project they can’t explain or defend. Build your programs with that in mind. Offer long enrollment windows, extend rebates over multiple years, and keep the paperwork light. Provide clear, step-by-step implementation plans you can include in board packets. When you make it easy to say yes, you get advocates.
Make it easy. Use short and digital applications. Offer help from a dedicated representative or group.
Use instant discounts. Avoid mail-in rebates or complex claims. If something is difficult, participation will be low.
Give long windows. Governments need more lead time. Give the public more time to adopt programs.
Bundle incentives. Combine audits with upgrades and financing. Or combine different incentive types to encourage participation.
Pre-approve vendors. Help agencies bypass long procurement by pre-approving a list of vendors.
Partner locally. Use school, municipal, small businesses, and associations to spread the word.
Track and report. Share kWh saved, water conserved, and dollars avoided. Use your utility billing software or ERP software to help with reporting and forecasting.
Incentives don’t have to come entirely out of your utility’s operating budget. A smart funding strategy blends local resources with federal and state programs, energy office partnerships, and even third-party platforms. Whether you're running a rebate program, planning a smart thermostat rollout, or launching a solar push, the dollars are out there—here's where to look.
Department of Energy (DOE)
The DOE offers grants, tax credits, and financing for energy efficiency and renewable energy projects. Their programs support both residential and commercial upgrades, especially those targeting underserved or high-impact areas.
Home Energy Rebate Programs (IRA-funded)
HOMES Program ($4.3B): Rebates for whole-home energy efficiency upgrades, based on energy savings. Bigger rebates for low-to-moderate income households.
HEEHRA ($4.5B): Point-of-sale rebates for electrification upgrades like heat pumps, water heaters, and electric stoves. Focused on low- and moderate-income households.
Weatherization Assistance Program (WAP)
Helps reduce energy costs for low-income households through insulation, sealing, and HVAC improvements. Funds flow through local and state agencies.
Contractor Training Grants
$200M available for states to train energy efficiency contractors—an easy win for utilities looking to strengthen their contractor networks.
Federal Tax Credits
Residential Clean Energy Credit (30%): Covers solar, wind, battery storage, and more for homeowners.
Energy Efficient Home Improvement Credit (up to $3,200/year): For insulation, windows, and energy-efficient HVAC.
Commercial Investment Tax Credit (ITC): For businesses, including public sector projects.
Accelerated Depreciation: Lets businesses write off the cost of energy projects more quickly.
USDA Rural Programs
Great for electric co-ops and ag-based customers. Offers grants and loans for solar, energy efficiency, and more.
EPA Grants
EPA supports water conservation and clean energy projects, often through its ENERGY STAR® programs and water efficiency partnerships.
Clean Water State Revolving Fund (CWSRF)
Helps finance water conservation projects like metering, plumbing retrofits, and water-efficient appliances. Can be used to back rebate programs.
Infrastructure Investment and Jobs Act (IIJA)
Paired with the Inflation Reduction Act, IIJA sets aside $25B+ for energy efficiency, electrification, EV infrastructure, and grid upgrades. Includes both competitive and formula grants.
Energy Efficiency Resource Standards (EERS)
If your state has EERS, utilities are often required to offer efficiency programs. These are commonly rate-funded and state-supervised.
Public-Benefit Charges
Some states add a small surcharge to customer bills to fund efficiency and low-income energy programs. Utilities may administer the funds or partner with non-profits.
State Incentives
Nearly every state has its own mix of grants, tax breaks, and loan programs. Many utilities tap into these to stretch rebate dollars or co-fund projects with cities or school districts.
Renewable Portfolio Standards (RPS)
RPS laws require a percentage of electricity to come from renewables. Utilities can trade or buy Renewable Energy Certificates (RECs), and sometimes use incentive programs to meet targets.
Net Metering & Feed-in Tariffs (FITs)
These state-level policies support rooftop solar and small-scale renewables by giving customers credit or payments for excess energy sent back to the grid.
PACE (Property Assessed Clean Energy)
Utilities can partner with PACE districts to help commercial and public customers finance projects with no money down, repaid through property taxes.
Local Government Programs
Cities and counties sometimes co-fund incentive programs with utilities, especially when targeting public-sector buildings. These partnerships work best when tied to broader climate or infrastructure plans.
Ratepayer Funds
Collected through customer bills and reinvested in public-facing programs. These funds can support rebates, weatherization, or solar initiatives.
Lost Revenue Adjustment Mechanisms (LRAM)
When energy efficiency programs reduce demand, utilities may lose revenue. LRAM allows them to recoup those losses, so saving energy doesn’t cost them financially.
Performance Incentives
Some regulators let utilities keep a portion of the net benefits from successful energy-saving programs. That’s a win-win for customers and utility shareholders.
On-Bill Financing or Repayment
Lets customers pay for upgrades over time through their utility bill—typically interest-free. This model makes upgrades more accessible and avoids loan applications.
Third-Party Aggregator Partnerships
For demand response and behind-the-meter energy management, utilities can partner with aggregators who bundle customers together, bid into wholesale markets, and share the proceeds.
Green Pricing or Community Solar Tariffs
Allows customers to opt in to renewable energy for a small premium—or participate in shared solar projects. Utilities can use these premiums to fund additional clean energy investments.
Start at https://www.dsireusa.org/ to find policies and incentives by state. Come to the table with ideas and sample projects. Many local agencies are eligible, but don’t have the capacity to apply without help.
An incentive program won't launch effectively if no one knows about it. To reach all of your customers, you'll have to market your program in a variety of ways.
Promote it through:
Bill inserts and email newsletters
Local government association events
Direct outreach to public works and finance departments
Your utility’s website or customer portal
Partnerships with vendors or contractors
Social media channels, radio stations, and local news
Door-to-door flyers (internship opportunity for local teens?)
Webinars or council meetings
YouTube video announcements
Incentives are strategic tools. They help you shape demand, stretch infrastructure, and strengthen relationships with the very agencies that keep your communities running. Schools. Libraries. City halls. Parks. Wastewater treatment plants. These are mission-critical customers.
Smart incentives spark smart decisions. They reduce risk. They build trust. And they turn you into more than a service provider. You become a true partner in modernization, resilience, and cost control.
Start small if you have to. Pick one rebate. Launch one pilot. Build one partnership. Then track the wins, share the stories, and grow from there.
You already have the platform. Now build the programs that move your community forward.