Beginning next year, building owners will be eligible for a credit of 30 percent of the purchase cost of solar power systems — up from the current 10 percent credit — and a deduction of as much as $1.80 per square foot if the building exceeds by 50 percent energy-efficiency standards set for the construction industry. But to keep the bill's price tag down, Congress restricted the credits for companies and developers who complete their projects between Jan. 1, 2006, and Dec. 31, 2008.
As a result, developers say they expect companies will take advantage of the credits on small-scale projects that can be turned around rather quickly, such as bank branch offices, chain stores and restaurants and strip malls. Companies planning urban office buildings and other longer-range projects, on the other hand, could be left out.
Steve Budorick, executive vice president Trizec Properties Inc., a Washington-based real-estate investment trust, said the credits are generous, but the target and time limit for exceeding current standards to qualify is too strict.
The efficiency standards companies must beat by 50 percent are set by the 2001 guidelines of the American Society for Heating, Refrigeration, and Air-Conditioning Engineers, a nonprofit organization that writes energy standards for the government, publishes technical information, and sponsors research. The standards require 80 percent efficiency for furnaces and 75 percent for boilers. An average office building uses $2 to $2.50 of energy per square foot a year, and to reduce that to 50 percent of the minimum ASHRAE standards would be difficult, according to Larry Spielvogel, an engineering consultant in King of Prussia, Pa., who participated in establishing the ASHRAE standards.
Commercial buildings can qualify for a partial tax deduction of 60 cents per square foot if they increase the energy efficiency of only one of the following three categories: the building's walls, windows, floor, and roof; the heating, cooling, ventilation and hot water systems, or the interior lighting system.
Budorick said Trizec has spent $18 million on energy efficient upgrades and equipment on its buildings in 2004, with an estimated payback of $9 million a year in energy savings. The company hasn't calculated the possible benefits it could receive under the energy bill, but he said three years might not be enough time to further upgrade all of its building systems, due to the requirements for planning and engineering them.
Companies that are in the midst of building energy-efficient facilities are better positioned to take advantage of the provisions.
Pittsburgh-based PNC Financial Services Group Inc. built 10 branches in the past three years using energy-saving devices and designs, and officials plan to build 90 more over the next three years.
