EPACT AND ENERGY EFFICIENCY – CAP AND TRADE ARE ONLY HALF THE STORY

Besides the recent information posted on this blog on the reduction in CO2 production that daylighting provides through reduction of kWh energy usage, The Energy Performance Act of 2005 (EPACT) also poses a great incentive to consider daylight harvesting under the energy efficient lighting program with the inclusion of lighting controls. A tax deduction of up to $1.80/sf is available for buildings that achieve a 50% energy cost reduction compared to a standard reference building meeting ASHRAE/IESNA 90.1-2001. System-specific deductions up to $0.60/sf are available for interior lighting, HVAC and building envelope that achieve a 16 2/3% energy cost reduction compared to the standard reference building. Interior lighting systems that have substantially lower power density than the lighting requirements for the energy standard are eligible for the system-specific deduction under the interim rules for interior lighting systems.

DEDUCTION POWER DENSITY
$0.30/sf 25% below ASHRAE/IESNA 90.1-2001
increasing up to
$0.60/sf 40% below ASHRAE/IESNA 90.1-2001
Lighting systems that result in a power density between 25% and 40% reduction qualify for a deduction determined on a sliding scale between $0.30/sf and $0.60/sf.

Note: Warehouses must outperform the standard by 50% and qualify only for a $0.60/sf deduction.

The tax deduction can apply to:
• New construction or lighting renovations.
• Buildings located in the United States that are within the scope of
ASHRAE/IESNA 90.1-2001.
• Buildings placed in service after December 31, 2005, and up to December 31, 2013.

The deduction cannot exceed the capital expenditure for the energy-efficient lighting system (or combined daylighting system), and will reduce the cost basis of the equipment for depreciation purposes. For public entities such as public schools, hospitals or government offices, the deduction may be assigned to the person primarily responsible for designing the lighting.  For more information on how daylighting and the EPACT 2005 can provide your organization with efficiency incentives, visit the U.S. Department of Energy EPACT website at http://www.energy.gov/taxbreaks.htm.