2 tips on EPAct tax deductions
1. Some HVAC Upgrades Are Better Candidates for EPAct Tax Deductions
Today's tip from Building Operating Management comes from Charles Goulding of Energy Tax Savers, Inc.
Facility managers planning many types of HVAC upgrades should take a close look at Energy Policy Act (EPAct) tax deductions. Although Section 179(D) deductions are not limited to specific types of HVAC equipment, and any HVAC project that meets the criteria spelled out in Section 179(D) would qualify for the deduction, experience to date has shown that most deductions are for the following types of projects:
1. Geothermal (ground source heat pumps)
2. Thermal storage
3. High-efficiency package terminal air conditioning (PTAC) units in apartments and hotels
4. Centralized HVAC in apartments and hotels
5. Energy recovery ventilation
6. Demand control ventilation
7. Chillers in buildings of less than 150,000 square feet
8. Very efficient heaters in warehouse, industrial and other spaces with no air conditioning
9. VAV (variable air volume) devices in buildings of less than 75,000 sq. ft.
10. Chilled beam ceilings
11. Magnetic bearing chillers
The maximum EPAct deduction is $1.80 per square foot. To get that deduction, the building must reduce overall energy costs by 50 percent compared to a building designed to meet the 2001 version of ASHRAE Standard 90.1. If a project doesn't reduce energy use enough to qualify for that deduction, there are tax deductions of up to $0.60 per square foot each for lighting, HVAC and the building envelope.
To qualify for a deduction, an HVAC project must reduce energy costs at least 16.67 percent below the costs for a building designed to meet ASHRAE 90.1-2001. The project must use energy modeling to show the energy cost savings.
Facility managers interested in EPAct tax deductions should act soon. The deduction is set to expire on Dec. 31, 2013.
This has been a Building Operating Management Tip of the Day. Thanks for listening.
2. With HVAC Upgrades, Reduce Loads First to Maximize Energy Savings
Today's topic is the importance of trying to reduce loads before replacing HVAC systems..
HVAC equipment is expensive and long-lived. What's more, these systems are sometimes so large that it is difficult to get new units into place without significant construction costs. So it's no surprise that decades may elapse between the time a boiler, chiller or air handler is installed and the day it is replaced.
The demands on an HVAC system depend to a considerable extent on the performance of other building systems. A one-story building in Texas, for example, will cost considerably more to cool if it has a conventional black roof than if it has a reflective roof. The same building in Minnesota will cost more to heat in the winter if it doesn't have adequate roof insulation.
The roof isn't the only part of the building that has an effect on HVAC loads. Solar gain through windows, air infiltration, heat load from lighting systems – all have some effect on HVAC loads. So does equipment from computers to coffee makers. And improvements can be made in all areas.
The time to consider building system improvements and other load reduction measures is before a major capital investment in new HVAC equipment. If the load on a system can be trimmed, it may be possible to reduce the size of the HVAC unit as well. Optimizing the performance of the air distribution system may provide an opportunity for further reductions in chiller or boiler size. And the savings provided by the smaller units can be used to help pay for the load-reducing measures, or for more efficient HVAC equipment.
More widespread use of energy modeling software makes it possible to evaluate what-if scenarios more easily than in the past. Although energy modeling adds cost, that cost may be justified by the savings available from load reduction and HVAC savings. What's more, if energy savings are great enough, the project may qualify for federal tax deductions under IRS Section 179 (D), widely known as EPAct tax deductions.
By looking at load-reduction measures in conjunction with HVAC system replacements, facility executives may find cost effective ways to lock in lower energy consumption for several decades.
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