Funding Opportunities for Energy Efficiency: Utility Programs and Tax Incentives

Funding Opportunities for Energy 

Efficiency:  Utility Programs and Tax 

Incentives

Indiana Energy Efficiency

2015 & Beyond

Michael Goldenberg, Duke Energy

michael.goldenberg@duke‐energy.com

What Has Changed In Energy Efficiency  From A Commercial Customer & Utility Perspective

Automotive 

Manufacturing:  Custom 

Lighting Retrofit

Federal & State Tax Incentives for

Energy Efficiency Investments

Tim Rushenberg, Vice President, Indiana Energy Association

trushenberg@indianaenergy.org

Outline

•

Federal Tax Incentives

– IRS

– U.S. Senate Finance Committee

– U.S. EIA “Direct Federal Financial Interventions and Subsidies in

Energy in FY 2013”

•

State Tax Incentives

– Energy.gov

– Indiana Office of Energy Development

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Federal Tax Incentives

Credit for Energy Efficiency

Improvements to Existing Homes (26 U.S.C. 25C)

Tax credit 10% credit for purchase of Energy Efficiency improvements to existing homes

Limits (max credit for all taxable years is $500):

(1) $50 for advanced main air circulating fan

(2) $150 for qualified nat gas, propane, or oil furnace/hot water boiler; and (3) $300 for any item of energy-efficient building property

Windows, furnaces, boilers, furnace fans, and “building envelope components,” such as insulation, exterior windows, exterior doors, and metal or asphalt roof

Applies to property placed in service 2011-2014

Senate Finance Committee bill proposes to extend thru 201627

Credit for Residential

Energy Efficient Property (26 U.S.C. 25D)

• 30% tax credit for expenditures made in year:

(1) Solar electric systems – e.g., solar panels (2) Solar water heaters

(3) Fuel cell ($500 credit cap for each ½ kW of capacity)

(4) Small wind energy (5) Geothermal heat pump

• Existing homes and new construction qualify; both principal residences and second homes qualify, but not rentals

Tax Credit and Deduction for

Clean-Burning Vehicles (26 U.S.C. 30, 30B, C, D)

• 10% tax credit of cost of any plug-in electric car and

electric motorcycles and three-wheelers up to $2,500

• Various tax credits:

1) Fuel cell cars (before 2015)

2) Advanced lean burn technology cars (before 2011) 3) Hybrid cars (before 2010 or 2011)

4) Alternative fuel cars (before 2011) 5) Plug-in conversion credit (before 2012)

Senate Finance proposal to extend credit for motorcycles, alt fuel and fuel cell vehicles thru 2016

29

Credit for Construction of

New Energy Efficient Homes (26 U.S.C. 45L)

• Business tax credit for home builders for each qualified new EE home constructed and acquired for use as a residence

• Credit is $1,000 to $2,000 based on energy savings

requirements of the home

• New homes must achieve 30% or 50% reduction in heating

and cooling energy consumption relative to a comparable dwelling constructed w/in standards of International Energy Conservation Code

• Applies to homes constructed 2006-2014

Credit for Energy Efficient Appliances (26 U.S.C. 45M)

• Applies to manufacturers of dishwashers, clothes

washers, refrigerators

• Tax credit may be claimed on each qualifying

appliance produced by taxpayer and is based on type of appliance, its energy efficiency, and for dishwashers and clothes washers, amount of water it consumes

• $25M annual credit cap / 4% average annual gross

receipts limit for three preceding years

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Advanced Energy Manufacturing

Facility Investment Tax Credit (26 U.S.C. 48C)

• Business tax credit is 30% of qualified investment in

selected manufacturing facilities

• Re-equips, expands, or establishes mfg facility for:

o Solar, wind, geothermal energy production items

o Fuel cells, energy storage system for use with electric/hybrid cars o Electric grids to support transmission of intermittent renewables o CCS

o Renewable fuels or produce energy conservation technologies o New qualified plug-in electric cars

o Other advanced energy property designed to reduce GHG

• Ex: building a factory to manufacture solar panels

• Taxpayers must apply in advance and have their facilities

Credit for Holding Qualified

Energy Conservation Bonds (26 U.S.C. 54D)

• “Qualified energy conservation bond” issued by state or

local government for qualified conservation purpose

• “Qualified conservation purpose”:

o Reduce energy consumption in public buildings by 20% o Research to support development of ethanol, CCS o Mass transit

o Green building technologies

o Conversion of ag waste to fuel, advanced battery mfg technologies o Public education campaigns to promote Energy Efficiency

• $3.2 B national energy conservation bond limit

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Exclusion from Income of

Conservation Subsidies Provided by Public Utilities (26 U.S.C. 136)

• Payments to individual consumers from utilities

for investing in energy conversation measures are nontaxable and may be excluded from gross

income for purposes of calculating taxable income

• Does notapply to payments to or from a qualified

cogeneration facility or qualifying small power production facility pursuant to Sec. 210 of PURPA

Allowance of Deduction for

Certain Energy-Efficient Commercial Building Property (26 U.S.C. 179D)

• Deduction for amount equal to cost of EE commercial

building property expenditures made by taxpayer (e.g., interior lighting system, HVAC and hot water systems)

• Deduction capped at $1.80 per square foot for an efficiency improvement of at least 50% in comparison to reference building which meets minimum Standards

• Applies to property placed in service 2006-2014

Senate Finance Comm. proposes to extend thru 2016 35

USDA’s Rural Energy for

America Program

• Guaranteed loan financing and grant funding to install renewable energy systems or make energy efficiency improvements

• Applicants limited:

o Agricultural producers with at least half of gross income coming

from agricultural operations; or

o Small businesses in “eligible rural areas” (must be in area other

than city/town larger than 50,000 inhabitants)

• Funds may be used for installation of Energy Efficiency

improvements, such as high efficiency HVAC, insulation, lighting, refrigeration, doors/windows, etc.

State & Local Incentives

37

State & Local Incentives

• Insulation Tax Deduction (IC 6-3-2-5):Indiana

offers a tax deduction of up to $1000 for purchase and installation of residential insulation

• OED’s Community Conservation Challenge:

Non-residential entities may apply to receive $25,000-$100,000 in grants for community energy

conservation projects

• City of Indianapolis – EcoHouse Project: Energy

Efficiency loan program – up to $8,000 for 6 years – for medium and low-income homeowners

Questions?