4 Ways You Can Finance Decarbonization
With increasing concerns about the environment, organizations around the country are looking to reduce or eliminate carbon emissions. Energy efficiency and renewable energy are two of the best strategies available — and they can help save you money. The trouble is the upfront costs for such projects can be substantial. Here are four ways to help finance your decarbonization efforts.
A federal tax deduction of up to $1.88 per square foot of building is available to building owners and tenants who install interior lighting, building envelope and HVAC systems that reduce building energy use by 50% or more in compared to minimum requirements set by the latest version of the ASHRAE 90.1 energy standard for commercial buildings. A partial allowance of 63 cents per square foot is available for projects that meet certain energy-saving targets for individual building systems. Your local electric cooperative also offers Power Moves® rebates for qualifying energy efficiency upgrades, which can lead to even more savings.
A federal tax credit is available for businesses that install eligible solar, wind and other renewable energy systems, as well as energy storage. The credits range from 6% to 30% of the installed costs, depending on project status as well as labor and wage requirements.
State and local incentives are also available. Search the Database of State Incentives for Renewables & Efficiency for incentives that may be available in your area.
PACE stands for Property Assessed Clean Energy. With PACE funding, building owners can implement energy efficiency upgrades or install renewable energy systems on their property with no upfront costs. The financing is repaid on the building owner’s property tax bills over a period of up to 30 years, with the assumption that the energy savings will more than offset the property tax assessment.
PACE is not a federal program. However, PACE programs are currently operating in 30 states and several more states have PACE-enabling legislation in place.
Energy Savings Performance Contracts
Energy savings performance contracts (ESPCs) use tomorrow’s energy savings to pay for today’s energy upgrades. The building owner selects an energy service company (ESCO), which then installs energy efficiency upgrades selected by the owner. The ESCO guarantees the savings from the upgrades, which are used to pay for the financing.
A variety of financing options are available for ESPCs. If you’re looking for an ESCO, the National Association of Energy Service Companies offers a directory of accredited companies. The U.S. Department of Energy also has a list of qualified energy service companies.
If installing a renewable energy system on your property isn’t an option, community solar can allow your facility to take advantage of renewable energy. Essentially, your organization would subscribe to a share of a community solar project — a solar power facility located elsewhere — and you’ll receive credit on your electric bills for your share of the energy produced. The community solar project charges you back for the credits, but at a reduced rate — so your organization saves money while supporting clean energy.
See Community Solar from the Solar Energy Industries Association for more information about how these projects work. Community solar is not available in every state. See the directory of community solar projects from EnergySage to look for projects that may be available in your area. Your local electric cooperative may even participate in a community solar program, such as Co-op Solar. You also can visit PowerMoves.com/solar for more information.