Federal EnergyStar™

Uncle Sam offers a plethora of energy efficiency programs; apart from the well-known Federal EnergyStar™ energy efficient appliance standard,the Federal government has programs that put cash directly into the coffers of commercial, industrial and institutional entities that are undertaking energy efficiency projects. These programs are sometimes in force or suspended depending on congressional approvals for the extant years in question. Generally the programs available include.

Corporate Energy Efficiency Tax Deductions

The federal Energy Policy Act of 2005 established a tax deduction for energy-efficient commercial buildings applicable to qualifying systems and buildings placed in service from January 1, 2006, through December 31, 2007. This deduction was several times through 2013. A tax deduction of $1.80 per square foot is available to owners of new or existing buildings who install (1) interior lighting; (2) building envelope, or (3) heating, cooling, ventilation, or hot water systems that reduce the building’s total energy and power cost by 50% or more in comparison to a building meeting minimum requirements set by ASHRAE Standard 90.1-2001. Energy savings must be calculated using qualified computer software approved by the IRS. Deductions of $0.60 per square foot are available to owners of buildings in which individual lighting, building envelope, or heating and cooling systems meet target levels that would reasonably contribute to an overall building savings of 50% if additional systems were installed. The deductions are available primarily to building owners, although tenants may be eligible if they make construction expenditures. In the case of energy efficient systems installed on or in government property, tax deductions will be awarded to the person primarily responsible for the system’s design. Deductions are taken in the year when construction is completed.

Corporate Accelerated Depreciation

Under the federal Modified Accelerated Cost-Recovery System (MACRS), businesses may recover investments in certain property through depreciation deductions. The MACRS establishes a set of class lives for various types of property, ranging from three to 50 years, over which the property may be depreciated. A number of renewable energy technologies are classified as five-year property, often known as the energy investment tax credit or ITC to define eligible property. In a simplified sense, such property currently includes:

  • A variety of solar-electric and solar-thermal technologies.
  • Fuel cells and microturbines.
  • Geothermal electric.
  • Direct-use geothermal and geothermal heat pumps.
  • Small wind (100 kW or less).
  • Combined Heat and Power (CHP)

Corporate Tax Credits The federal business energy investment tax credit was expanded significantly by the Energy Improvement and Extension Act enacted in October 2008. This law extended the duration — by eight years — of the existing credits for solar energy, fuel cells and microturbines; increased the credit amount for fuel cells; established new credits for small wind-energy systems, geothermal heat pumps, and combined heat and power (CHP) systems; allowed utilities to use the credits; and allowed taxpayers to take the credit against the alternative minimum tax (AMT), subject to certain limitations. The credit was further expanded by the American Recovery and Reinvestment Act of 2009, enacted in February 2009.

Federal Grant Programs The U.S. Department of Energy’s (DOE) Tribal Energy Program promotes tribal energy sufficiency, economic growth and employment on tribal lands through the development of renewable energy and energy efficiency technologies. The program provides financial assistance, technical assistance, education and training to tribes for the evaluation and development of renewable energy resources and energy efficiency measures

Only the summary points are reviewed here, the Federal government may offer other energy efficiency programs across our service territory each with specific rules and qualification requirements, contact us today to begin exploring the unique options for your business and locations.