It may sound too good to be true, but the money you can save through tax credits, utility company rebates and energy savings by switching to LEDs can more than offset the cost to replace your lighting system. And, continue to provide savings over the years. Really!
Are you taking advantage of every green building incentive available to your business?
The section 179D tax deduction (also known as the Energy-Efficient Commercial Building Deduction) was originally passed by Congress as part of the Energy Policy Act of 2005. According to data released by the U.S. Department of Energy, buildings are responsible for 73% of all electricity consumption in the U.S., with about half coming from commercial buildings.
Although it was originally set to expire in 2017, this deduction has been extended in an effort to encourage broader energy efficiency. The deduction allows qualifying building owners and businesses to receive up to $1.80 per square foot in tax deductions for energy-based improvements made to the HVAC or interior lighting systems. The amounts vary depending on building size and the energy efficiency criteria that your project meets. In some cases, an energy consumption cost reduction of as little as 10% can result in very substantial tax savings!
Buildings that qualify include retail, office, industrial, apartments, and warehouses, as well as a long list of government-owned buildings, such as universities, libraries, airports, courthouses, K-12 schools, town halls and more.
To find out if you qualify, you can consult www.energy.gov, your tax specialist or a professional LED lighting installation firm.
Utility Company Rebates
You might ask, why would a utility company pay me to use less energy and lower my bill? It may seem strange that a company would want you to consume less of the service it provides. However, both utilities and consumers can improve their bottom line with new initiatives offered by power companies. Let’s look at the reason behind these initiatives…
First, there has been a strong push toward energy efficiency both here in the U.S. and around the world. Increasing sustainability and reducing emissions have prompted governments, businesses and citizens to lower electric consumption. To stay competitive in today’s “green market,” businesses have had to respond.
Second, utility companies are striving to meet new government regulations and incentives. For over 20 years, state- and federal-level regulations have mandated that utilities charge a small percentage (approximately 1%) on consumer bills. This fee contributes to a variety of energy efficiency programs. So, consumers are already paying for these plans. This is one of the reasons utility companies offer rebates to upgrade or replace inefficient equipment. In addition, utility companies are highly regulated, and there are measures in place that allow them to charge consumers a small percentage for fixed costs, such as maintenance and operation fees. If the utility company accrues too much income from fixed costs, it must send customers a refund. If the company does not accrue enough, the government will cover their losses. There are also service fees that allow the utility to generate profits.
Finally, generating electricity is very expensive. As a growing society that is becoming more connected, we are consuming more and more electricity. This may sound like good news for utility companies – they’ll be able to make more money, right? Not necessarily. To meet this increased demand, utilities need to have power plants, generators and other infrastructure in place and fully operational. As mentioned earlier, we are already paying for these fixed costs. However, if demand for electricity continues to increase, utility companies will be forced to build new plants and make huge investments in upgraded equipment, which will result in rate increases.
Again, a rate increase may seem like a good thing for utilities, but there a few reasons why they do not want your rates to go up: 1) They will lose government incentives. Utility companies are mandated to lower electric consumption or face fines; 2) The higher your rate increases, the more likely you are going to seek out alternative energy sources from a growing number of renewable energy choices, such as wind and solar; and 3) Extreme weather and natural disasters have increased, affecting the availability of resources. When utility companies struggle to fix problems caused by hurricanes, blizzards, tornadoes and other natural disasters, their costs are passed on to consumers.
The bottom line is when homeowners, businesses and other organizations reduce their energy bills, it’s a win-win for utilities and consumers – and our planet. And since you’re already paying for energy efficiency programs, consumers should take advantage of all the benefits utilities have to offer, including rebates.
A full-service LED lighting installation firm can help your company or organization determine what type of rebates you qualify for, as well as assist you with filling out the appropriate forms.
LEDs are an energy-efficient alternative to traditional incandescent light bulbs, which waste 90% of the energy they consume on heat. Wasting heat also affects air-conditioning costs. (Both rock stars and factory workers can attest that working under bright lights can be hot!)
In addition to lasting approximately 25 times longer, LEDs typically use 75-80% less energy than traditional incandescents. If we compare just one 60-watt incandescent bulb with an LED (kept on for only two hours per day), we find annual average savings of $3.80. Of course, the amount that you can save on your utility bills will depend on the size and type of facility, as well as the amount of lighting required. Overall, it’s possible for large facilities to leverage the cost savings of LEDs to pay for an entire retrofitting project.
Manufacturing Warehouse Case Study (based on a 100,000 sq. ft. facility)
An LED lighting retrofit can result in significant annual and lifetime savings, which translates into additional revenue.
|Quantity of Lights||Area||Existing||Replace With LED type||Daily Operation||Total Annual Savings||% Reduction||Lifetime Savings|
|75||Warehouse||400 Watt MH Highbays||Industrial HBL||18 hours||$17,474||66%||$16,020|
|75||Manufacturing||750 Watt MH Highbays||LLHP||18 hours||$30,978||67%||$283,680|
|50||Offices||4 lamp T8s||LLT||18 hours||$3,325||73%||$30,447|
|15||Lobby/Conference room||75 Watt incand.||LB6||18 hours||$3,981||98%||$36,452|
|15||Parking||400 Watt Halide||Spaulding Cimarron||12 hours||$1,660||71%||$22,800|
|10||Wall||175 Watt wall packs||Laredo||12 hours||$1,205||82%||$16,546|
|8||Docks||300 Watt Halogen||Industrial Dokstar||12 hours||$1,798||97%||$24,701|
|Total Fixture Energy Savings||$60,420||69%||$574,645|
Another factor to consider is that recent advances have reduced the costs of LED lights to within competitive ranges of traditional lighting. When you combine these lower costs with the potential energy/cost savings, longer life, and brighter, more versatile lighting, it’s no wonder LEDs are steadily increasing in popularity.
From car headlamps to city streetlights, and from factories to schools, LEDs are lighting the way to lower energy costs. If you’re ready to take advantage of these benefits, schedule a free audit with an LED lighting professional.
For a turnkey LED solution – from consult and design, to financing and installation – rely on Woodward Energy Solutions. We can streamline the process of retrofitting your facilities with LEDs, saving you both time and money. Call us today at (866) 967-4533 for a free audit. We think you’ll be pleasantly surprised by the results! To learn more and view some of our projects, visit www.woodwardenergy.com
“How Energy-Efficient Light Bulbs Compare with Traditional Incandescents,” Energy.gov
“179D Tax Deduction,” KGKB -Solutions for Tax Professionals and Businesses -www.kbkg.com/179d
“179D Commercial Buildings Energy Efficiency Tax Deduction,” Office of Energy & Renewable Energy – www.energy.gov/eere/buildings/179d-commercial-buildings-energy-efficiency-tax-deduction
“Why Your Utility Wants to Lower Your Energy Bill,” Prism Energy Services -www.prismenergyservices.com/utility-wants-lower-energy-bill/