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Energy Tax Savers’ EPAct and Tax Incentives Presentation

Energy Tax Savers’ EPAct and Tax Incentives Presentation. Energy Tax Savers, Inc. Jacob Goldman Jacob.Goldman@energytaxsavers.com. Presentation Index. EPAct Pre-Solar Planning Alternative Energy Bonus Depreciation. Energy Policy Act of 2005 (EPAct) . Extended through 12/31/13

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Energy Tax Savers’ EPAct and Tax Incentives Presentation

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  1. Energy Tax Savers’EPAct and Tax Incentives Presentation Energy Tax Savers, Inc. Jacob Goldman Jacob.Goldman@energytaxsavers.com

  2. Presentation Index • EPAct • Pre-Solar Planning • Alternative Energy • Bonus Depreciation jacob.goldman@energytaxsavers.com

  3. Energy Policy Act of 2005 (EPAct) • Extended through 12/31/13 • Benefits available from 1/1/06 thru 12/31/13 • Incentivized areas: • Lighting • HVAC • Building envelope • Available for New Construction and Existing Buildings • Also available for tenant owned lease-hold improvements • Benefit available for Primary Designers on Government Projects jacob.goldman@energytaxsavers.com

  4. Who’s using EPAct? jacob.goldman@energytaxsavers.com

  5. What’s it Worth? *Note – with government buildings, the benefit goes to the primary designer jacob.goldman@energytaxsavers.com

  6. How do you Qualify? • Mechanics • Deductions based on improvements over ASHRAE 90.1 2001 • Energy efficient improvements must be depreciable assets • Converts 39 year depreciation to current deduction • Available for installations completed between 1/1/06 & 12/31/13 • Can begin in prior years • Deduction amounts: • Lesser of total cost or: • $1.80/sq.ft. Whole Building • $0.60/sq.ft. Individual Systems • Lighting • HVAC • Building Envelope jacob.goldman@energytaxsavers.com ASHRAE (American Society of Heating, Refrigerating and Air-Conditioning Engineers) HVAC (Heating, Ventilation & Air Conditioning)

  7. 8 Ways to Capture Tax Deduction 7 • (1)Whole Building ($1.80/ft2) • 50% Energy Cost Reduction below standard • Permanent Rules partial deduction ($0.60/ft2) • (8)Interim Lighting Rules ($0.30/ft2-$0.60/ft2) • 25% to 40% prescribed Light Power Density (LPD) reduction below standard jacob.goldman@energytaxsavers.com

  8. Where are the Benefits • Lighting, Lighting, Lighting • Lighting Controls • Specific Types of HVAC • Geothermal • Thermal Storage • Central Chiller plants with small buildings(<150,000sq.ft.) in Campus • LEED Buildings jacob.goldman@energytaxsavers.com

  9. Interim Lighting Rules • Meet W/ft2 targets • Add’l Requirements • Bilevel Switching • Meet ASHRAE 90.1 Requirements • Meet IESNA minimum light levels jacob.goldman@energytaxsavers.com LPD (Light Power Density)

  10. Definition of Bi-Level Switching • A room, as defined by floor to ceiling walls, must have at least two light levels other than on and off. • This can be met in a number of different ways: • Dimming ballasts create an infinite number of light levels • 50% of lights in a room on one switch, 50% on another or 60/40, 70/30… • Occupancy controls on separate lighting circuits • Even lights on at least 2 separate circuit breakers would technically qualify • Exceptions • Storerooms, Restrooms, Lobbies, Hotel & Motel Guestrooms, and Garages jacob.goldman@energytaxsavers.com

  11. Benefiting from ASHRAE 2004 & 2003 IECC jacob.goldman@energytaxsavers.com

  12. Federal Building Energy Code Standards • As of 12/31/2010 all states are required to have codes at ASHRAE 2004 or better • This impacts new construction and major retrofits • This is a big change for states at no or older energy codes • The states must certify they are at this level or justify why they are not jacob.goldman@energytaxsavers.com

  13. Major Lighting Bans ¹ Residential is excluded from the ban, provided power factor is less than 0.90. • ² Permissible replacements for incandescents include: • High efficiency incandescents • CFLs • LEDs 13 jacob.goldman@energytaxsavers.com

  14. Common Lighting Retrofits Industrial/Manufacturing/Warehouse T5 HiBay Fluorescent 234 Watts Metal Halide 458 Watts Office & Retail Or 4 Lamp 4’ T12 Mag. Ballast 144→164 Watts 3 Lamp 4’ Super T-8 Elec. Ballast 72 Watts 2 Lamp 4’ Super T-8 Elec. Ballast 67 Watts jacob.goldman@energytaxsavers.com

  15. Lighting Retrofit Economics(For Existing Buildings) • Energy Savings is usually the main driver • In some states, Utilities offer Rebates for energy efficient lighting Installations • Tax Savings is the newest opportunity • Demand Response is another potential income stream • Capitalizing on all the incentives can bring payback for projects to below 2 years and in some cases less than 1 year jacob.goldman@energytaxsavers.com

  16. Retrofit Math 100,000 sq. ft. Warehouse 250 Metal Halides replaced with HiBay Fluorescents • Cost of Project = $75,000 (Assumes $300/fixture installed) • Annual Energy Savings = $26,208/yr • 250 x (0.458 kW-0.220 kW) x 12 hrs/day x 6 day/wk x 50 wk/yr x $0.13/kWh • NGRID Incentive (Product Code 57)= $22,500 • Net of 40% tax rate • Added PV of Tax Deduction = $12,299 • 40% combined tax rate, 8% discount rate, compared to 39 yr depreciation removed(expensed) in year 15 • Payback = 1.1 Years • IRR = 68% Without Rebate, Payback = 2.0 yrs, IRR = 44% jacob.goldman@energytaxsavers.com

  17. What Tends to Qualify on the HVAC side? Geothermal (Ground Source Heat Pumps) Thermal Storage High Efficiency VRF units in Rental Apartments/Dorms/Hotels Centralized HVAC in Rental Apartments/Dorms/Hotels Energy Recovery Ventilation Demand Control Ventilation Chillers in buildings < 150,000 sq ft Direct fired heaters in no AC Industrial Spaces VAV (variable air volume devices) in buildings <75,000 sq ft Chilled Beam Magnetic Bearing Chillers Gas fired chillers combined with electric chillers to peak shave jacob.goldman@energytaxsavers.com

  18. Warehouse Heater & Efficient Lighting jacob.goldman@energytaxsavers.com

  19. Pre-Solar Strategy • Put in energy efficient lighting at the EPAct level • This process will result in a large energy cost reduction • Achieves large tax deductions at the 60 cent per square foot level. • Non air conditioned buildings • Put in an energy efficient heater • Use upgrades (above) to trigger EPAct for roof improvements. • Add insulation • Certain solar systems require a white reflective roof • Move rooftop equipment, including upgrade HVAC off of the roof

  20. EPAct Opportunities • Parking Garages • Fluorescent, Induction, LED • Important in Locals with Benchmarking rules • NY, DC, LA, SF • Warehouses • $1.20 to $1.80 • Excess can be used for roof work related to Solar prep • NJ, CA, CO • Logistic & Truck Distribution • Refrigerated Warehouses & LED’s • Wal-Mart is driving Suppliers to greater efficiency jacob.goldman@energytaxsavers.com

  21. EPAct Opportunities(cont.) • Car Dealers • Restructured from 30,000 down to 18,000 • Remaining are Stronger • Engaged in major brand imaging and facilities upgrades • Hotels • Most favored EPAct category • Lighting retrofits often qualify for full $0.60/sq.ft • If Central HVAC, $1.20 or $1.80 possible • Apartment Buildings • Lighting Combined with Central HVAC great opportunity jacob.goldman@energytaxsavers.com

  22. American Recovery and Reinvestment Act of 2009Tax Credits & Grants in Lieu of Tax Credits *For the first time in U.S. Tax History 100% of the cost of an alternative energy project can be expensed for tax purposes for projects completed after September 8, 2010 and before December 31, 2011. *Also cash grants equivalent to the 30% and 10% credit amounts are available through December 31, 2011 jacob.goldman@energytaxsavers.com

  23. 100% Bonus Depreciation • Placed in Service between 9/9/2010 and 12/31/2011 • Tax Depreciation Schedules less than 20yrs • Examples • Alternative Energy(Solar, Wind, Geothermal, etc.) • Outdoor Lighting not affixed to the building • Qualified leasehold improvements • Non structural interior improvements to non residential real property pursuant to a lease. • Building must be at least 3 years old • Original use must commence with taxpayer • Consult Your Tax Advisor for More Info jacob.goldman@energytaxsavers.com

  24. What does Energy Tax Savers Deliver? • Pre-project EPAct Marketing Material • Complimentary Design Analysis • Complimentary Tax Benefit Assessment • Comprehensive EPAct Tax Package jacob.goldman@energytaxsavers.com

  25. Energy Tax Savers Inc. http://www.energytaxsavers.com/ Energy Tax Savers 144A Jackson Ave Syosset, NY 11791 Phone: 516.364.2630 Fax: 631.240.5165 Email: jacob.goldman@energytaxsavers.com jacob.goldman@energytaxsavers.com

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