Rebates vs. Incentives: There is a Difference

Katie Quam

June 8, 2016

EMC photo of a dictionary definition of the word "incentive"

When participating in energy efficiency programs, we often see the terms “rebates” and “incentives.” Many times, these terms are used interchangeably and it’s often assumed they share the same meaning. However, they are not synonymous and it is important you know how they differ.

A rebate is a return of part of an original payment. I think of this as going into your local retail store, purchasing a product that you intended to get, and getting money back for it.

An incentive, on the other hand, is intended to initiate action. Without it, that action would likely not occur.

Why do these meanings matter? Many programs are structured as either a rebate program or an incentive program. So just like the definitions, they are either giving you money back for an already planned project, or they are trying to entice you to move forward with something you wouldn’t have normally pursued.

Be sure you investigate how programs are structured so you avoid “free ridership.” Free ridership is taking advantage of incentives even if you would have done the project without them. Some programs will disqualify you from participating if they determine you are a free-rider.

If you have any questions on rebates or incentives or how programs are structured, EMC is here to help.


Katie Quam is Energy Management Collaborative's Manager of Customer Incentives. In this role she utilizes her knowledge of incentive programs nationwide to expedite the application process and secure maximum incentive dollars for EMC customers.