Maximize Incentives for Energy Efficiency
Thinking about energy efficiency upgrades? Let your local utility company – or Uncle Sam – foot the bill.
By Dan Parsley, EES Consulting
Originally posted on Furniture World
Often retailers’ first question about energy efficiency isn’t what solutions to select – it’s who will pay the bill. There are federal, state and local rebates and tax incentives that can maximize energy savings while minimizing out-of-pocket expenses by up to 70 percent!
Not taking advantage of rebates and incentives is like throwing away money every month. Here are the most common sources of “house” money.
You’re paying for it. Take advantage of it.
With electricity rates rising across the country, many commercial customers are rightfully skeptical: why would utility companies take money from their own pockets to fund a hefty rebate program? It seems like a bad business move – the more energy you use, the more they get paid. Right?
In fact, offering incentives and rebates for reducing demand is the easiest and most cost-effective way to avoid costly and controversial new capacity construction and maximize existing, profitable generation capacity. Building new from the ground up or adding to existing generation plants can cost billions and take years to get through the red tape.
For example, CPS Energy in San Antonio has an efficiency program called CPS Energy Savers that aims to save 771 megawatts of consumption by 2020 and avoid constructing a new plant of equal capacity. CPS Energy, like many utilities, funds these incentives by adding a very small fee to their customers’ utility bills – usually a fraction of a cent in the ancillary charge.
Free money from Uncle Sam
If you made energy efficiency improvements to your commercial building between Jan. 1, 2006, and Dec. 31, 2014, you may be retroactively eligible for the Energy Efficient Commercial Buildings Deduction, or Section 179D. This federal tax incentive grants deductions of up to $1.80 per square foot for energy efficient improvements that meet or surpass the American Society of Heating, Refrigerating, and Air-Conditioning Engineers (ASHRAE) 2001 standard.
Essentially, you can qualify for the full $1.80 per square foot or partial deductions for energy efficient improvements to indoor lighting, HVAC systems and building envelope components like the roof, windows and siding. A qualified expert can advise you on the different variations of these rules.
As you prepare your 2014 tax return, think back on any improvements you’ve made since 2006. You don’t need to re-file any back taxes, so now is the time to claim your savings.
Pick up the PACE on energy efficiency
The Property Assessed Clean Energy Act, or PACE, is a unique financing option to encourage commercial and industrial property owners to make significant infrastructure upgrades. These improvements, such as HVAC systems, water use reduction measures and solar energy generation, have lengthy paybacks (10-20 years) but measurable reductions in energy and water consumption. PACE financing allows property owners to treat these upgrades as an expense versus a capital budget item.
In areas with PACE legislation – currently 31 states and counting – municipal governments offer long-term loans to fund energy efficiency upgrades, which business owners pay back via an annual assessment on their property tax bill. PACE financing terms can be structured such that you enjoy immediate cash flow benefits for your business.
How do I get started?
Start by identifying what rebates and incentives are available in your area by visiting the Database of State Incentives for Renewables and Energy at www.DSIREUSA.org. Next, check out your local utility provider’s website and search for “commercial incentives” or “rebate programs.”
An energy efficiency consultant can also help you identify the programs applicable to your business and navigate the complexities of securing available rebates and tax incentives. We all want to reduce costs – why not get paid to do it?
Contact us today to find out how EES Consulting can help you secure incentives for your energy efficiency upgrade.