2024 Compressed Air Incentives from Consumers Energy in Michigan

Jan 22, 2024

Table of contents

Compressed air users in Consumers Energy’s service area in Michigan can reduce energy costs for their systems through their Energy Efficiency Rebates and Programs for Business. Rebates through this program cover all or part of the cost of energy-saving improvements such as leak repair, VSD compressors, high-efficiency dryers and more. 

These programs include:

  • Supply-Side Standard Prescriptive Rebate Programs;
  • Demand-Side Standard Prescriptive Rebate Programs;
  • Custom Energy Efficiency Projects;
  • Small Business Program (extra incentives for companies with less than 1,200,000 annual kWh of electricity use);
  • The Electric Self-Directed Efficiency Program, targeted to the largest customers with energy use of over 1 Megawatt annually.

About the Consumers Energy Efficiency Program for Business

Consumers Energy serves 6.6 million electric customers in Michigan, including residential, commercial and industrial power users. Energy Efficiency Rebate Programs for Business are targeted to commercial and industrial power users to help them reduce their energy consumption. 

The program includes: 

  • Prescriptive incentives offer a set amount of money for specific types of projects, such as installing zero-loss drains or upgrading to a VSD compressor;
  • Custom incentives provide rebates based on the amount of energy saved.

The program includes rebates for energy-efficiency improvements including lighting, HVAC, and process electricity applications such as compressed air. Because compressed air is often one of the biggest single energy-using applications for manufacturers, it represents a significant opportunity for energy savings. Inefficiencies in compressed air systems can add thousands of dollars to the average manufacturer’s energy bill and add to the strain on the power grid. 

Why Does Your Energy Company Want You to Use Less Energy?

Reducing the overall load on the power grid helps utilities better regulate supply and demand, minimize the risk of outages due to excess demand, and reduce overall wear and tear on transmission and distribution infrastructure. It can also help them forestall expensive infrastructure upgrades. Manufacturers and other large energy users provide the greatest opportunity for energy companies to reduce the overall load on the power grid and avoid big swings in energy demand.

Who Is Eligible for Energy Incentives through the Consumers Energy Efficiency Program for Business?

The Consumers Energy incentive program is open to commercial and industrial customers in good standing. The project must be installed at a facility served by Consumers Energy. 

There is a limited pool of funds for energy rebates through the program each calendar year, which runs through November 30. Pre-approval is not required for all prescriptive rebates, but an application is recommended to ensure that funds are reserved for your project. Custom incentive projects always require preauthorization.

Applications are completed online. If you’re not sure if your project qualifies, or need some advice in filling out the application, you can talk to a program advisor at 877-607-0737

Consumers Energy Prescriptive Incentives for Compressed Air Systems

Prescriptive incentives from Consumers Energy can help companies offset the cost of energy-saving improvements to their compressed air systems — in some cases, they may cover the majority of the cost. The prescriptive incentives offer a set dollar amount for purchasing qualifying energy-saving equipment for your compressed air systems, including VSD air compressors, zero-loss condensate drains, and more. There are no caps on prescriptive incentives. 

Check the 2024 Program Catalog for details on all prescriptive incentives.  

VSD Compressor Incentives 

For many manufacturers, upgrading from a fixed-speed to a Variable Speed Drive (VSD) air compressor provides the single biggest opportunity for energy savings. A VSD air compressor saves energy by controlling the frequency supplied to the drive motor on the air compressor in response to real-time demand on the system. 

  • When demand is low, the motor will run at a reduced speed, requiring less energy to operate; 
  • When demand for compressed air is higher, the VSD will automatically increase the frequency to meet CFM demands. 

The Consumers Energy prescriptive incentive provides rebates on the purchase and installation of a new VSD rotary screw air compressor to replace an existing fixed-speed rotary screw compressor with inlet modulation or load/no load control. Pre-notification is required for all VSD upgrades. 

Other things to know: 

  • Eligible VSD air compressors must have an annual operating period of at least 2,000 hours per year and must be of equal or greater HP than the compressor(s) being replaced; 
  • Backup or redundant systems are not eligible; 
  • In some cases, when upgrading from an existing VSD compressor to a larger VSD compressor, the difference in HP may qualify for the subsidy; 
  • Purchase of a VSD compressor for a new build may also qualify. 

Want to retrofit your existing air compressor with a variable speed drive motor? Consumers Energy covers VSD retrofits for multi-compressor systems between 50 and 300 HP. The compressor must have annual runtime of at least 6,000 hours to qualify. 

Aire Tip: Switching from a rotary screw air compressor to a VSD air compressor could save 30-70% on energy consumption for compressed air. Read more: Why Choose or Upgrade to a Variable Speed Drive Air Compressor?

Summary of 2024 Supply-Side Prescriptive Incentive Programs for Compressed Air from Consumers Energy

Program Number Description 2024 Incentive Limit Pre-Notification Required?
CA101 VSD Air Compressor, 50-500 HP, Single Compressor Systems, Minimum 6,000 annual operating hours $170/HP Yes
CA102 VSD Air Compressor, 50-500 HP, Single Compressor Systems, Minimum 2,000 annual operating hours $100/HP Yes
CA103 VSD Air Compressor, 50-500 HP, Multiple Compressor Systems, Minimum 7,200 annual operating hours $200/HP Yes
CA104 VSD Air Compressor, 50-500 HP, Multiple Compressor Systems, Minimum 4,000 annual operating hours $150/HP Yes
CA105 VSD Motor Retrofit, 50-300 HP, Single Compressor Systems, Minimum 6,000 annual operating hours $75/HP Yes
CA 106 VSD Motor Retrofit, 50-300 HP, Multiple Compressor Systems, Minimum 7,200 annual operating hours $100/HP Yes
CA107 VSD Air Compressor, <50HP
● 24/7 operation
● 3-shift
● 2-shift
● 1-shift

CA108 Variable Displacement Air Compressor, ≥50 HP $35/HP Yes
CA109 Two-Stage Rotary Screw Air Compressor, ≥50 HP (VSD/VD/LNL) $20/HP Yes
CA110 Refrigerated Cycling Thermal Mass Air Dryer $1/SCFM Yes
CA111 Refrigerated Cycling VSD Air Dryer $3.50/SCFM Yes
CA112 Refrigerated Cycling Digital Scroll Air Dryer $3/SCFM Yes
CA113 Air Dryer, Desiccant to Refrigerated $4/SCFM Yes
CA114 Heated Blower Purge Desiccant Air Dryer $4/SCFM Yes
CA115 Compressed Air Desiccant Dryer, Dew Point Sensor Control $8/SCFM Yes
CA116 Heat of Compression Air Dryer $6.50/SCFM Yes
CA117 Air Recycling Pneumatic Valve, ≥4,000,000 cycles per year $35/valve No
CA118 Air Recycling Pneumatic Valve, ≥2,000,000 cycles per year $20/valve No
CA119 Low Pressure Drop Filter $7.50/HP No
CA120 Compressed Air Pressure Flow Controllers $10/HP Yes
CA121 Compressed Air Outdoor Air Intake $14.51/HP No
CA122 Air Compressor Waste Heat Recovery $50/HP Yes
CA123 Compressed Air Storage Tank
● 1 cgal/CFM to 3 gal/CFM
● 3 gal/CFM to 5 gal/CFM
● 5 gal/CFM to 1 gal/CFM

CA124 Correct-Sizing Air Compressors (Reduction in HP for Rotary Screw Compressors) $95/HP Yes


Demand-Side Measures: Compressed Air Audits and Leak Repair

An energy audit with a leak detection survey is a great place to start your energy savings journey. Compressed air leaks can add hundreds or thousands to your annual energy bill: on average, studies show that 30% of compressed air is wasted. Finding and fixing air leaks and minimizing compressed air waste can provide significant energy savings.  

Consumers Energy covers energy audits, leak detection and leak repair through their Demand Side Compressed Air Energy Incentives. 

A few things to know: 

  • Compressed air systems must have a rated HP of 50 HP or above and an annual runtime of 2,000 hours or more;
  • The incentives are available to eligible business customers every two years; 
  • The energy audit and leak repair must be completed by a qualified third-party contractor with at least five years of experience; 
  • At least 50% of identified air leaks (by volume) must be repaired to qualify for the incentive; 
  • Consumers Energy will cover up to a maximum of $20,000 or 100% of the project cost.
Program Number Description 2024 Incentive Limit Pre-Notification Required?
CA201 Compressed Air Energy Audit $15/HP Yes
CA202 Compressed Air Energy Audit w/ VSD $20/HP Yes
CA203 Compressed Air Energy Audit with Metered Flow $25/HP Yes
CA204 Compressed Air Energy Audit with Metered Flow and VSD $30/HP Yes
CA205 Compressed Air Leak Repair $7.50/HP Yes
CA206 Compressed Air Leak Repair with VSD $10/HP Yes


Fluid-Aire Dynamics offers compressed air studies and system audits, including data logging and leak detection. In a leak detection survey, technicians use an ultrasonic leak detector to pinpoint the location and size of compressed air leaks in your system. We can repair most leaks on the spot and will tag larger leaks for later repair. If the cost of repair will exceed the amount covered by the Consumers Energy rebate, we’ll let you know exactly what to expect. (We find the cost of repair is almost always less than the cost of leaving the leak unrepaired.) 

Aire Tip: A 1-CFM leak will add ~$35 in energy costs per shift per year. 

Custom Incentives

Consumers Energy also provides incentives for projects outside the scope of the prescriptive incentive offerings. Custom electric incentives may be reimbursed for up to 50% of the project cost for a maximum of $2,000,000 per customer across all facilities. 

Custom projects must be pre-approved by Consumers Energy prior to equipment being purchased, ordered or installed. To get started with a custom incentive, manufacturers must work with a Consumers Energy advisor to obtain pre-approval before the project starts and any purchase orders are made.

The Consumers Energy Small Business Program

Consumers Energy offers additional incentives for small businesses with annual electricity usage of up to 1,200,000 kWh. Projects must be completed by a registered Trade Ally.

The Consumers Energy Small Business Program covers: 

  • A free energy assessment and audit completed by a Trade Ally to identify opportunities for energy savings;
  • Completion of energy-saving projects identified by the audit, up to $30,000 per facility. 

There are currently no additional Small Business incentives for compressed air projects offered through the Consumers Energy program. Incentives under this program focus on projects such as occupancy sensors and lighting upgrades, door gaskets and strip curtains, and efficiency improvements for hand dryers, vending machines and water coolers. Small businesses can apply online

Electric Self-Directed Efficiency Program 

The Consumers Energy Electric Self-Directed Program is targeted to customers with annual energy use of one megawatt or greater. Self-directed programs are very open-ended, allowing large customers to identify their own opportunities for savings and create their own energy efficiency programs. Companies in the program save by having most of the electric efficiency surcharges removed from their energy bill. 

  • Projects must produce annual energy savings of at least 1% to qualify; 
  • Participants must submit a plan to Consumers Energy prior to starting the project and file annual reports by March 1 of each year to verify energy savings achieved; 
  • Companies may be required to work with an Energy Optimization Service Company (EOSC) approved by the Michigan Public Service Commission; 
  • Companies participating in the Self-Directed program no longer qualify for prescriptive or custom incentives under the standard programs. 

Getting Started with Consumers Energy Incentives for Compressed Air Systems

Fluid-Aire Dynamics makes it easy to qualify for compressed air energy incentives through Consumers Energy. We can even fill out the paperwork for you and provide all the required documentation to make participation as easy as possible.

We can:

  • Identify your greatest opportunities for energy savings and incentives;
  • Install qualifying equipment and upgrades;
  • Conduct compressed air audits and leak detection surveys and fix compressed air leaks.

Contact us to learn how we can help you improve the energy efficiency of your compressed air system. The sooner you get started, the sooner you can start saving money on your energy bill! 


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