Understanding EPAct Limited Time Tax Incentives for Efficient Lighting Solutions Including Certification and Compliance

Transcription

1 Understanding EPAct 2005 Limited Time Tax Incentives for Efficient Lighting Solutions Including Certification and Compliance COMMERCIAL BUILDINGS TAX DEDUCTION Opportunity expires December 31, 2007

2 The Energy Policy Act of 2005 authorized an energy-efficient commercial buildings tax deduction for building owners equal to energy-efficient commercial building property expenditures made by the taxpayer, subject to a cap. All information contained in this document is based on the interim rules for lighting of the commercial building tax deduction. Department of Treasury notices may be viewed and downloaded at Related Rules and Links.

3 COMMERCIAL BUILDINGS TAX DEDUCTION The commercial buildings tax deduction provides key opportunities for businesses: Design new, or upgrade existing facilities with efficient lighting that qualifies for the tax deduction. Realize long-term benefits resulting from reduced energy operating expenses. Benefit from improved lighting quality. Provide more lighting flexibility with bi-level controls. Lithonia Lighting can provide many solutions that will meet the tax deduction requirements for offices, industrial applications, schools, institutional facilities and retail stores. For more details on these examples as well as solutions for other applications, go to or contact your local Lithonia sales representative. 2

4 THE TAX DEDUCTION AT A GLANCE A tax deduction up to $1.80/sf is available for buildings that achieve a 50% energy cost reduction compared to a standard reference building meeting ASHRAE/IESNA System-specific deductions up to $0.60/sf are available for interior lighting, HVAC and building envelope that achieve a 16 2 / 3 % energy cost reduction compared to the standard reference building. Interior lighting systems that have substantially lower power density than the lighting requirements for the energy standard are eligible for the system-specific deduction under the interim rules for interior lighting systems. DEDUCTION POWER DENSITY $0.30/sf 25% below ASHRAE/IESNA increasing up to $0.60/sf 40% below ASHRAE/IESNA Lighting systems that result in a power density between 25% and 40% reduction qualify for a deduction determined on a sliding scale between $0.30/sf and $0.60/sf. Note: Warehouses must outperform the standard by 50% and qualify only for a $0.60/sf deduction. 3

5 The tax deduction can apply to: New construction or lighting renovations. Buildings located in the United States that are within the scope of ASHRAE/IESNA Buildings placed in service after December 31, 2005, and prior to January 1, The deduction cannot exceed the capital expenditure for the energy-efficient lighting system, and will reduce the cost basis of the equipment for depreciation purposes. For public entities such as public schools, hospitals or government offices, the deduction may be assigned to the person primarily responsible for designing the lighting. Additional information about the commercial buildings tax deduction for interior lighting systems is available at: 4

6 REQUIREMENTS FOR LIGHTING SYSTEMS For interior lighting systems, qualification under the interim rules of the tax deduction must meet: POWER DENSITY REQUIREMENTS Lighting systems are required to outperform the power density requirements stipulated in the ASHRAE/IESNA Standard for building interiors, as shown on the facing page. LIGHT LEVEL REQUIREMENTS Interior lighting systems must meet minimum requirements for illuminance as defined in the Illuminating Engineering Society of North America (IESNA) Lighting Handbook. CONTROLS REQUIREMENTS The controls for new construction must fully comply with the mandatory and prescriptive requirements of Standard Automatic shutoff required for buildings greater than 5,000 sf. Individual space controls where each device may control up to 10,000 sf in spaces greater than 10,000 sf and up to 2,500 sf for smaller spaces. New facilities and renovations must include bi-level switching. Bi-level switching is required to provide two or more levels of lighting power within a space, not including off. Bi-level lighting can be achieved with step-level switching, switching luminaires, lamps or dimming. Lithonia Lighting provides a variety of controls solutions including occupancy sensors, dimming controls, step-level dimming and energy-management systems. Digital 5

7 POWER DENSITY (watts/sf) APPLICATION ASHRAE/IESNA watts / sf 25% Reduction watts / sf ($0.30 / sf) 40% Reduction watts / sf ($0.60 / sf) OFFICE Enclosed Open Plan Conference / Meeting Lobby RETAIL Sales Area Dining Food Preparation INDUSTRIAL Manufacturing (high bay) Manufacturing (low bay) Warehouse (medium/bulky storage)* Warehouse (fine material storage)* Not Available Not Available * 0.80* SCHOOLS Classroom Gymnasium Cafeteria Corridor HEALTHCARE Nurse Station Patient Room Corridor Exam Room Reference: ASHRAE/IESNA Standard Space-by-Space Method Table For whole building power density limits, refer to Table * Warehouses must outperform the standard by a minimum of 50% and qualify only for a $0.60/sf deduction. 6

8 OFFICES Efficient offices require a lighting system that provides good visibility, flexibility and consumes little energy. PRODUCT FEATURES The Lithonia RT5 luminaire offers: Volumetric lighting distribution resulting in uniform brightness and superior visual comfort. Step-level dimming to adjust lighting for various tasks and integrate with daylighting. Lowest energy consumption with high efficiency T5 fluorescent lamp/ballast system. Less heat output and reduces air-conditioning load by up to 15%. Shallow 3⅛'' depth reduces interference with other building systems and uses fewer raw materials. ECONOMICS The RT5 volumetric light distribution makes it an excellent alternative to lensed or parabolic lighting systems. The Lithonia RT5 luminaire offers: 33% energy savings compared to a 3-lamp parabolic, totaling $1,170/year for every 10,000 sf. 60% energy savings compared to a 4-lamp lensed troffer, totaling $3,354/year for every 10,000 sf. Greater energy savings when step-level switching is utilized for dual-level lighting or integration with daylighting. $0.60/sf tax deduction. Accelerated depreciation from the tax deduction can reduce the payback period by more than 30%. Assumes $0.10/Kwh, 3,000 operating hours per year and 35% tax rate. 7 Note: Deduction limited to energy efficiency capital investment for the year in which the lighting system is installed.

9 Fixture RT5 2' x 4' with 2 T5 lamps Spacing 8' x 10' Illuminance Power Density Tax Deduction OFFICES 57 fc 0.75 watts/sf up to $0.60/sf $46/luminaire The savings are even more dramatic if used with step-level dimming.

10 MS8 MEGA STORES Fixture MS8 with 3 T8 lamps Spacing 10' x 8' Illuminance 51 fc Power Density 1.0 watts/sf Tax Deduction up to $0.60/sf $50/luminaire

11 MEGA STORES Efficient retail stores require a lighting system that enhances the shopping experience, provides excellent color rendition and consumes little energy. PRODUCT FEATURES Lithonia MS8 fixtures are available with high efficiency T8 lamps and feature: Superior color rendition. Uniform light throughout the store. Easy integration with skylight systems. Instant-on capability for convenience and safety. ECONOMICS The MS8 fluorescent lighting system is an excellent alternative to metal halide high bay lighting. Installing a 3-lamp MS8 fixture will provide: Operation at 1.0 watts/sf, 50% lower than standard Energy cost savings of about 10% compared to 400W metal halide, totaling more than $530/year for every 10,000 sf. $0.60/sf tax deduction. A reduced payback by 10% with an accelerated depreciation from the tax deduction. Assumes $0.10/Kwh, 5,000 operating hours per year and 35% tax rate. Note: Deduction limited to energy efficiency capital investment for the year in which the lighting system is installed. 10

12 WAREHOUSE FACILITIES Efficient warehouses or distribution centers require a lighting system that provides good visibility, flexible lighting that adjusts to activity level and saves energy. PRODUCT FEATURES The Lithonia I-BEAM system is available with high efficiency T8 or T5HO lamps and offers: Excellent uniformity. Superior color rendition. Easy integration with skylight systems. Exclusive T5HO Cool Running Technology and is listed and labeled for ambient temperatures up to 65 C. ECONOMICS The I-BEAM fluorescent high bay is an excellent alternative to metal halide high bay lighting. Installing a 4-lamp T5HO I-BEAM fixture instead of a metal halide high bay results in: More than 37% energy savings compared to a 250W metal halide high bay, totaling $1,370/year for every 10,000 sf. More than 59% energy savings compared to a 400W metal halide high bay, totaling $3,385/year for every 10,000 sf. $0.60/sf tax deduction. A simple payback in 1.2 years when replacing a 400W probe-start metal halide high bay with a 4-lamp T5HO I-BEAM fixture. With accelerated depreciation from the tax deduction, the payback is reduced to less than 10 months. Assumes $0.10/Kwh, 5,000 operating hours per year and 35% tax rate. 11 Note: Deduction limited to energy efficiency capital investment for the year in which the lighting system is installed.

13 TM WAREHOUSE FACILITIES Fixture Spacing Illuminance Power Density Tax Deduction I-BEAM with 4 T5HO lamps 22' centers 24 fc 0.47 watts/sf up to $0.60/sf $264/luminaire The savings are even more dramatic if aisles are controlled with motion sensors.

14 MANUFACTURING FACILITIES Fixture Metal halide high bay with 320W pulse-start lamp Spacing 20' x 20' Illuminance 37 fc Power Density 0.88 watts/sf Tax Deduction up to $0.60/sf $240/luminaire

15 MANUFACTURING FACILITIES Efficient manufacturing facilities require a lighting system that enhances productivity, promotes a safe environment and saves energy. PRODUCT FEATURES Lithonia pulse-start metal halide systems feature: Reliable operation in harsh or dirty environments. Multiple optical distributions between narrow and wide spread. Light output in abnormal temperatures. Equal light levels to higher-wattage, probe-start systems. Easy one-for-one fixture change-out for renovations, minimizing wiring costs. ECONOMICS Installing a 320W pulse-start metal halide in place of a 400W metal halide high bay offers: 25% energy savings, totaling $1,430/year for every 10,000 sf. $0.60/sf tax deduction. A simple payback in 2.6 years when replacing existing 400W metal halide probestart systems with 320W pulse-start systems. With accelerated depreciation from the tax deduction, the payback is reduced to 2.4 years. Assumes $0.10/Kwh, 5,000 operating hours per year and 35% tax rate. Note: Deduction limited to energy efficiency capital investment for the year in which the lighting system is installed. 14

16 SCHOOLS Efficient schools require a lighting system that enhances the learning environment, provides flexibility in lighting levels and saves energy. PRODUCT FEATURES The Lithonia RT5 luminaire features: Volumetric lighting distribution resulting in uniform brightness and superior visual comfort. Step-level dimming to adjust lighting for various tasks and integrate with daylighting. Lowest energy consumption with high efficiency T5 fluorescent lamp/ballast system. Less heat output and could reduce air-conditioning load up to 15%. Shallow depth of 3⅛'' reduces interference with other building systems and uses fewer raw materials. ECONOMICS The RT5 volumetric light distribution makes it an excellent alternative to lensed or parabolic lighting systems by providing: 33% energy savings compared to a 3-lamp parabolic, totaling $1,170/year for every 10,000 sf. 60% energy savings compared to a 4-lamp lensed troffer, totaling $3,354/year for every 10,000 sf. Greater energy savings when step-level switching is utilized for dual-level lighting or integration with daylighting. $0.60/sf tax deduction. Accelerated depreciation from the tax deduction can reduce the payback period by more than 30%. Assumes $0.10/Kwh, 3,000 operating hours per year and 35% tax rate. 15 Note: Deduction limited to energy efficiency capital investment for the year in which the lighting system is installed.

17 Fixture RT5 2' x 4' with 2 T5 lamps Spacing 8' x 10' Illuminance Power Density Tax Deduction SCHOOLS 57 fc 0.75 watts/sf up to $0.60/sf $46/luminaire The savings are even more dramatic if used with step-level dimming.

18 CERTIFICATION AND COMPLIANCE QUALIFIED COMPUTER SOFTWARE Software approved by the Department of Energy must be used to verify energy cost savings. However, when applying for the tax deduction using the interim rules for interior lighting systems, the requirement for using qualified software does not apply. QUALIFIED INDIVIDUAL A qualified individual must inspect and certify that the building meets the requirements for the tax deduction. A qualified individual is a professional who: Is not employed by the taxpayer claiming the deduction. Is an engineer or contractor who is properly licensed as a professional engineer or contractor in the jurisdiction in which the building is located. Has represented in writing to the taxpayer that he or she has the requisite qualifications to provide the certification required under this notice and to perform the inspection and testing described in this notice. 17

19 CERTIFICATION The qualified individual must provide the taxpayer with a certification statement that the building meets all the necessary requirements for the deduction under the requirements of the Code. The certification must include: A statement that a field inspection of the building has confirmed the building has met the criteria for the deduction. A declaration, applicable to the certification and any accompanying documents, signed by the qualified individual stating under penalty of perjury that the certification is true, correct and complete. The taxpayer is not required to attach the certification to the tax return, but all records pertaining to the energy efficient building installation and certification must be maintained by the taxpayer. A template certification form is available at 18

20 This information is meant to provide a general overview of the tax provisions for the interim rules for lighting systems in the Energy Policy Act of Please contact your tax advisor to determine the specific tax treatment appropriate for your company. For more details on these examples as well as solutions for other applications, go to or contact your local Lithonia Lighting sales representative. Acuity Lighting Group, Inc., Rev. 7/06 ABL6760 Form No