Incentives and Funding for Commercial Projects

Energy Efficient Lighting

• On average, lighting represents 40% of the average commercial building's electric bill, followed by motors and HVAC equipment (40%) and other equipment including copiers and computers (20%). On average, energy efficient lighting projects have a 45% return on investment and pay for themselves in 2.2 years. Despite advancements in lighting technology, business owners have been slow to retrofit lights in existing buildings. Therefore, the Energy Efficient Commercial Buildings Tax Deduction (CBTD) was created to enhance the financial attractiveness of energy efficient lighting technologies.
• This special tax deduction allows building owners (or tenants) to write off the complete cost of upgrading a building’s indoor lighting, HVAC/hot water and building envelope in the year the new equipment is placed in service, capped at $1.80/sq.ft. Alternately, the owner (or tenant) could upgrade one of these three systems to earn the CBTD capped at $0.60/sq.ft. In short, with the CBTD, the cost of new lighting or other building systems can be claimed in a single tax year instead of amortized over a period of years.
• The CBTD can be claimed for qualifying projects completed before January 1, 2014.
• For More Info: Commercial Lighting Tax Deduction

USDA Rural Energy for America Program (REAP)

REAP/EA/REDA Grant Program: Provides grants for energy audits and renewable energy development assistance

How much are the grants?
The grants are awarded on a competitive basis and can be up $100,000. Recipients of an energy audit are required to pay at least 25% of the cost of the audit.

Who is eligible to apply?
Eligible entities include a unit of State, tribal, or local government; institutions of higher education; rural electric cooperatives; or a public power entity. The program is design to assist farmers, ranchers, and rural small businesses.

What types of projects are eligible?
Energy audits and renewable energy development assistance will allow agriculture producers and rural small businesses to become more energy efficient and use renewable technologies.

REAP/RES/EEI Grants Program: Provides grants for energy audits and renewable energy development assistance. It also provides funds to agricultural producers and rural small businesses to purchase and install renewable energy systems and make energy efficiency improvements.

How much are the grants?
The grants are awarded on a competitive basis and can be up to 25% of total eligible project costs. Grants are limited to $500,000 for renewable energy systems and $250,000 for energy efficiency improvements. Grant requests as low as $2,500 for renewable energy systems and $1,500 for energy efficiency improvements will be considered. At least 20% of the grant funds awarded must be for grants of $20,000 or less.

Who is eligible?
The program is designed to assist farmers, ranchers and rural small businesses that are able to demonstrate financial need. All agricultural producers, including farmers and ranchers, who gain 50% or more of their gross income from the agricultural operations are eligible. Small businesses that are located in a rural area can also apply. Rural electric cooperatives may also be eligible to apply.

What types of projects are eligible?
Most rural projects that reduce energy use and result in savings for the agricultural producer or small business are eligible as energy efficiency projects. These include projects such as retrofitting lighting or insulation, or purchasing or replacing equipment with more efficiency units. Eligible renewable energy projects include projects that produce energy from wind, solar, biomass, geothermal, hydro power and hydrogen-based sources. The projects can produce any form of energy including, heat, electricity, or fuel.

REAP/Feasibility Grant Program: Provides grants for energy audits and renewable energy development assistance. It also provides funds to agricultural producers and rural small businesses to conduct feasibility study for a renewable energy system.

How much are the grants?
The grants are awarded on a competitive basis and can be up to 25% of total eligible project costs. Grants are limited to $50,000 for renewable energy feasibility studies.

Who is eligible?
The program is designed to assist farmers, ranchers and rural small businesses. All agricultural producers, including farmers and ranchers, who gain 50% or more of their gross income from the agricultural operations are eligible. Small businesses that are located in a rural area can also apply. Rural electric cooperatives may also be eligible to apply.

What types of projects are eligible?
Eligible feasibility studies for renewable energy systems include projects that will produce energy from wind, solar, biomass, geothermal, hydro power and hydrogen-based sources. The energy to be produced includes, heat, electricity, or fuel.

For all projects, the system must be located in a rural area, must be technically feasible, and must be owned by the applicant.