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4 Smart Building Incentives to Help You Save Money

Oct 18, 2018 8:05:00 AM

4 Smart Building Incentives to Help You Save MoneyTraditional building automation systems have been both costly and complex for the majority of commercial building owners and property managers, accounting for the fact that less than 15% of buildings have a BAS.  Misconceptions about cost often prevent the adoption of smart and sustainable buildings. 

When budgeting for a building automation system, it's important to consider both the capital expense (CapEx) or Total Cost of Acquisition (TCA) -  the initial cost for hardware, software and installation/services - as well as the Total Cost of Ownership (TCO), which is the ongoing cost to use, upgrade and operate and maintain (O+M) the system.

Newer technologies, like IoT sensors, wireless controls, and cloud computing, are helping lower the cost of building automation systems and making them more affordable and accessible to the majority of buildings that lack smart technology. Still, we know the allocating the upfront capital budget can be a challenge. Luckily, there are a variety of incentive programs on both federal and state levels, plus those from utilities and energy program partners, to make it easier on your wallet to go green.

In this post, we focus on TCA and related incentives that you might be able to leverage to lower your costs to install a smart building automation system. Here, we give you the low-down.

Value of 30% Federal Tax Credit

1. Business Energy Investment Tax Credit (ITC)

The Business Energy Investment Tax Credit (ITC) – enacted in October 2008 and most recently amended in February 2018 – is a federal, corporate tax credit for businesses which install, develop or finance renewable energy. 

Solar technologies, fuel cells, and wind turbines qualify for a 30% tax credit. Geothermal systems, microturbines, and combined heat and power (CHP) systems qualify for a 10% tax credit. Businesses must provide the IRS with the cost of the system(s), when they became operational, and demonstrate that they meets specific criteria. For additional information, check out the Solar Energy Industries Association and the Database of State Incentives for Renewables & Efficiency.

2. Sales Tax Incentives

Many states offer sales tax exemptions for energy-efficient products or renewable energy equipment. In Washington State, for example, sales of equipment used to generate electricity using fuel cells, wind, sun, biomass energy, tidal or wave energy, geothermal, anaerobic digestion or landfill gas are not taxed at all for either commercial or residential purposes. In California, renewable energy equipment, combined heat, and power equipment, and alternative transportation equipment are exempt from sales or use taxes.


CEE Center for Energy and Environment


New incentive packages continue to develop. Recently, 75F became the first company to partner with the Center for Energy and Environment (CEE) to take advantage of their new One-Stop Efficiency Shop® for HVAC upgrades. CEE designed and delivered the program for Xcel Energy Minnesota. A national leader, the CEE offering has earned the designation of “Exemplary Energy Efficiency Program” from the American Council for an Energy-Efficient Economy.

3. Energy-Efficient Commercial Building Deduction (179D) 

The Energy-Efficient Commercial Building Deduction is a federal energy efficiency tax deduction which was enacted in 2006. While the program is no longer in effect, systems and buildings that have been placed in service by December 31, 2017 are still eligible. The program offers tax deductions of up to $1.80 per square foot for energy-efficient buildings – including retail, office, industrial and warehouse buildings. Partial deductions of up to $.60 per square foot can be taken for measures affecting the building envelope, lighting, or heating and cooling systemsEnergy-efficient improvements include HVAC and lighting systems, which ultimately cut energy costs and improve a building’s value. Low-interest financing packages further facilitate such efficiency enhancements.

4. Corporate Income Tax Breaks

Many states also offer income tax credits. Utah for example offers the Renewable Energy Systems Tax Credit for installing solar photovoltaic, solar thermal, wind, geothermal, hydro, and biomass technologies in either residential or commercial buildings. The credit can be claimed for up to 10% of a smart or sustainable building's eligible cost. In addition to state tax incentives for green construction, many cities waive permit fees or help speed the approval process for the construction of smart and sustainable buildings. 

Database of State Incentives - Minnesota Policies & Incentives
No matter where you live, there are probably smart building incentive programs available to take advantage of. To find tax credit information for your state, check out the U.S. Department of Energy's DSIRE (Database of State Incentives for Renewables and Energy) website. The site includes summaries of tax incentives for each state. Or, try searching by zip code for Energy Star incentive programs on the Energy Star website.

After the BAS purchase: OpEx Reduction Strategies with Smart Building

According to the World Green Building Trends 2016 Smart Market Report, green buildings are 14% less costly to operate than traditional buildings. We see even greater savings potential in the O&M category.  In an upcoming post, we'll focus on the TCO, the many aspects of ongoing operations (OpEx) and maintenance where a smart building automation solution can continue to save resources, from property and facility maintenance efficiencies, to the equipment improved efficiencies and extended lifecycles, reduced IT equipment requirements and more. 

Interested in how automated building control solutions can save you money, while saving the planet? Download the Sustainability: Green Buildings & Beyond White Paper to learn more.Sustainability eBook Thumbnail



Sarah Baker

Written by Sarah Baker


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