A energy bill credit can occur during any billing period if the energy consumer has paid more to the energy supplier than the energy used. Over time, a bill credit payout can accumulate if energy consumption remains lower than the amount paid to the energy supplier.
Corporate Tax Incentives
A corporate tax incentive is a government measure that aims to encourage businesses to save money (or spend money) by reducing the amount of tax they have to pay. These can be raised at federal, state, and local government levels and can include tax credits, deductions, and exemptions. In some states, these incentives are accessible to corporations that purchase and install eligible renewable energy or energy efficient equipment, or who construct green buildings. Dependant upon the state, there are often specific regulations involved with the corporate tax incentive. Some states allow the tax credit only if a business has invested a minimum amount of funds in an eligible project; there is also usually a limit to the amount of credit or deduction supported.
Economic development is progress in an economy. The process of economic development usually includes the adoption of new technologies or green initiatives, a transition from agriculture-based to industry-based economy, and general improvements in living standards. Governments consider using public funds to help incentivize proposed private economic development projects in order to strengthen the community’s economic viability. Incentives can take a variety of forms such as tax breaks, building supporting infrastructure, or workforce development. Jurisdictions may use these incentives to pursue economic goals such as tax base diversification, job creation, housing stock creation, or business retention and expansion.
An energy assessment, or an energy audit, is the first step to assess how much energy your home or building consumes. With the data this assessment provides, you can evaluate what measures can be taken to make your dwelling or facility more energy efficient. An assessment will show you problems that may, when corrected, save you significant amounts of money immediately and/or over time.
Energy Load Curtailment
Load curtailment, or demand response, programs offered by utilities provide commercial and industrial building owners with reduced electric rates in exchange for an agreement to curtail energy use at the request of the utility. Typically, these requests come during periods of high load such as hot afternoons. Building owners or managers who have the ability to reduce loads by turning off equipment or using alternate sources of energy can realize significant savings under these programs.
Feed-in tariffs are payments to ordinary energy users for the renewable electricity that generate. Feed-in tariffs (FITs) are part of what some people call Clean Energy Cashback, a policy mechanism that pays people for their own green electricity, which in turn accelerates renewable energy technologies. FITs offer long-term contracts to renewable energy producers, typically based on the cost of generating each technology. Rates differ depending on the type of energy utilized (solar, wind power, etc.) and the amount awarded is usually measured per-kWh.
National, state, and local government entities offer a variety of grant programs to encourage the use and development of renewables and energy efficient practices. Many of the programs support a broad range of technologies, but a few programs focus on promoting a single technology, such as photovoltaic (PV) systems. Primarily, grants are available to the commercial, industrial, utility, education, and government sectors. Most grant programs are designed to pay down the cost of eligible systems or equipment. Others focus on research and development, or support project commercialization. Grants are usually competitive.
Green Building Incentives
One of the most effective strategies to encourage green building is to incentivize the market through financial or structural incentives. Both cities and counties offer financial incentives to promote green building. The most common form of incentive is a reduction waiver of a building permit fee. Several different organizations issue certification for green buildings, including the U.S. Green Building Council (LEED certification), the Green Building Initiative (Green Globes certification), and the NAHB Research Center (National Green Building certification). These green buildings are designed and constructed using practices and materials that minimize the environmental impact and/or improve human health.
Adaptive reuse, or historic reuse, refers to the process of using an old site or building for a purpose other than which it was built or designed for. This is a key factor in land and energy conservation, as well as helps reduce urban sprawl. By reusing an existing structure within a site, the energy required to create the space is lessened, as the material and waste that come from destroying old sites and rebuilding using new materials decreases.
To promote economic development, some states offer financial incentives to cultivate the manufacturing and development of renewable energy systems and equipment. Tax credits, tax exemptions, and grants are the most commonly offered incentives. In some cases, the amount of incentive depends on the amount of eligible equipment that a company utilizes. These incentives usually apply to several renewable energy technologies, but some states will target a specific technology, such as solar. These types of incentives are frequently designed as short-term measures to support industries in their early years. They often include a sunset provision to encourage the industries to become self-sufficient within a specified period of time.
Leasing energy-related improvements, especially the use of tax exempt lease-purchase agreements for energy efficient equipment, is a cost-effective way for state and local governments (as well as commercial property owners) to finance upgrades and then use the energy savings to pay for the financing cost. Leases often have slightly higher rates than bind financing. However, leases are faster and more flexible than many other options, and are an important tool for public entities to finance important improvements in their buildings.
Loan programs provide financing for the purchase of renewable energy or energy efficient systems or equipment. State and federal governments have offered loans and/or loan guarantees for green projects. Low-interest or zero-interest loans for energy efficiency projects are a common demand-side management (DSM) practice for electric utilities. Loan rates or terms vary depending on the program. Loan terms are generally 10 years or less. These programs are commonly available to the residential, commercial, industrial, transportation, public, and/or non-profit sectors.
Net metering is a billing mechanism that credits solar energy owners for the electricity that they add back to the grid. This allows residential and commercial customers who generate their own electricity from solar power to feed electricity they do not use back into the grid. Many states have passed net metering laws. In other states, utilities may offer net metering programs voluntarily or as a result of regulatory decisions. As such, the benefits of net metering can vary widely for solar customers in different parts of the country.
Property-Assessed Clean Energy (PACE) financing allows property owners to borrow money to pay for renewable energy and/or energy-efficiency improvements. The amount borrowed is typically repaid over the course of somewhere between 5 and 25 years via an annual assessment on the individual’s property bill tax. In general, local governments (such as cities and counties) that choose to offer PACE financing must be authorized to so so by state law.
Performance-based incentives (PBIs) are incentives that are paid based on the actual energy production of a solar system. Typically, these are paid based on an energy ($/kWh) basis over a period of time. This is different from the approach where a one-time rebate is provided on a $/kW basis at the time the system is installed. A feed-in tariff (FIT) is a common type of PBI. Payments based on a system’s actual performance are generally more accurate than those based on a system’s rated capacity.
Personal Tax Incentives
Personal tax incentives include income tax credits and deductions. Many states offer these incentives to reduce the expense of purchasing and installing renewable energy or energy efficiency systems or equipment. Eligible technologies, and the percentage of the credit/deduction, varies by state. A credit may include carryover provisions, or it may be structured so the credit is spread out over a set number of years.
Privately-funded incentives may take the form of rebates, loans, grants, or bonds for energy efficiency improvements. These incentives are funded by private capital and/or from privately held organizations (like Volkswagen or Intel), and help cover the costs of green components in developing projects.
Property Tax Incentives
Property tax incentives include exemptions, exclusions, abatements, and credits. States, localities, and counties can offer property tax exemptions for renewable energy systems. Most property tax incentives provide that the added value of a renewable energy system is excluded from the valuation of a property for taxation purposes. For example, if a renewables-run heating system costs more than a conventional heating system, the additional cost of the renewable energy system is not included in the property assessment.
States, utilities, and some local governments will offer rebates to promote the installation of renewable energy and energy efficiency projects. Rebate programs provide a cash rebate for customers planning to install energy efficient technology or systems in their commercial or residential properties.
Renewable Energy Credits (RECs)
Green tags, or Renewable Energy Credits (RECs). Are tradable, non-tangible energy commodities that represent proof that 1 megawatt-hour (MWh) of electricity was generated from an eligible renewable energy resource and was fed into the shared energy grid. Since renewable electricity fed into the electric grid is distributed according to the physical laws rather than contractual agreements, RECs help account for who can claim the use of renewable electricity. A State Renewable Portfolio Standard (RPS) usually requires the utilities to procure a certain amount of RECs to demonstrate compliance with their renewable energy requirement.
Sales Tax Incentives
Sales tax incentives usually provide an exemption from, or refund of, the sales tax (or sales and use tax) for the purchase of a renewable energy or energy efficient system. Some states even have an annual, established “sales tax holiday” for energy efficiency measures; during this holiday, the state will allow a temporary exemption from the state sales tax, typically for one or two days.
Solar Renewable Energy Credits (SRECs)
Solar Renewable Energy Certificates (SRECs) are a solar incentive that allows homeowners to sell certificates to their utility. A homeowner will earn one SREC for every 1,000 kWh produced by their eligible solar panel system. A SREC can be worth as much as $300 in some markets. Renewable Portfolio Standards (RPS) in certain states include a special solar “carve out” provision, which mandates utilities to achieve a certain amount of electric generation through solar energy. Utilities usually meet this requirement by procuring the required amount of SRECs. SRECs can be bought and sold as commodities in the market, and are issued and tracked by different Generation Information Systems (GIS) that operate within the US electric grid.
Tax Increment Reinvestment Zone
A Tax Increment Reinvestment Zone (TIRZ) is a political subdivision of a municipality or county in the state of Texas created to implement tax increment financing. TIRZs help finance costs of redevelopment and encourage development in areas that would otherwise not attract sufficient market development in a timely manner. Taxes attributable to new improvements (tax increments) are set-aside in a fund to finance public improvements within the boundaries of the zone.
Water conservation refers to the preservation, control, and development of water resources, both surface and groundwater, and prevention of pollution. Water conservation can be incentivized by utilities, and local, state, and national governments. As the availability of water becomes more restricted, the costs to both the provider and consumer increase, and so water providers and the government try to offset this increased demand with water conservation programs.
Weatherization Assistance Program
The Weatherization Assistance Program, managed by the US Department of Energy (DOE), reduces energy costs for low-income households by increasing the energy efficiency of homes, while ensuring homeowners’ health and safety. Oftentimes, weatherization program technicians perform an energy assessment to determine which energy saving repair or service is most appropriate and cost-effective for each home.
Sources: Britannica; Business Dictionary; City of Houston; Collins Dictionary; DSIRE; EnergySage; Government Finance Officers Association; Internal Revenue Service; Obvius; Open Energy Information Wiki; Science; Solar Energy Industries Association; US Department of Energy; US Green Building Council; Wikipedia