Energy efficiency rebate incentive programs are the utility company’s way of encouraging customer investments in energy-saving technologies, such as energy-efficient lighting. Funding for these programs is expected to continue to grow in the coming years. To check in incentives you should consult the Database of State Incentives for Renewables & Energy (DSIREUSA.org) for the specific benefits available and guidelines set by each state.

The Energy Policy Act of 2005 (EPAct 2005) encourages energy-efficient building improvements by allowing building owners to apply accelerated depreciation for qualifying energy efficiency investments in lighting, HVAC, and building envelope. Each qualified investment is eligible for a US $0.60 per square-foot tax deduction.

The utility company typically provides direct rebate payments for each qualifying project and some also offer special on-bill, interest-free financing for the portion of the capital improvement not covered by the rebate. There are also turnkey energy services companies that will apply for the rebates on behalf of a company. Currently, many utilities are offering incentives equal to 50 percent of the entire cost of the project.

To qualify for the tax deduction, the light-power density of each newly retrofitted area must be reduced by at least 25 percent below the ASHRAE standard. Minimum recommended light levels must be met and the specific space must have bi-level switching functionality (i.e., sensors or multiple breakers). Building owners claiming this deduction need appropriate documentation confirming the reduction level from a licensed third-party certification provider and all light levels must meet the prescribed Illuminating Engineering Society of North America guidelines.

U.S. President Barack Obama is calling on Congress to redesign this tax deduction and transform it to a more generous tax credit for commercial building energy efficiency upgrades and retrofits as part of his “Better Buildings Initiative.”

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