In an incentive program, consumers receive a rebate in order to offset potentially higher retail prices or construction costs associated with energy efficiency measures. For example, a consumer might receive a rebate after purchasing a high-efficiency refrigerator that has a higher upfront cost than less efficient appliances on the market. An ideal incentive program provides the minimum incentive needed to drive adoption, and should not greatly exceed the amount needed to guarantee net benefits. Incentive programs lower financial hurdles in order to grow the market for very high-efficiency equipment or building efficiency measures and encourage economies of scale. Care must also be taken to minimize “free-ridership” associated with incentive programs, meaning a significant incidence of participation by consumers who would buy high-efficiency equipment in the absence of incentives. Multiple options exist for administration of incentive programs. Incentives can be paid directly to consumers or “up stream” at the point of production. They can be managed through retailers or directly from manufacturers with cash rebates, payments through utility bills, tax incentives, or green mortgages.
As in the case of bulk procurement, incentive programs require clear and consistent criteria to identify qualified products, and the technical parameters and procedures needed to establish these are an important role for technical assistance. Other important objectives for technical assistance include optimization of the incentive to be offered, assessment of impacts, and design of public awareness campaigns to encourage program participation.