Commercial Buildings

What is the tax incentive for commercial buildings?

A tax deduction of up to $1.80 per square foot is available to owners or tenants (or designers, in the case of government-owned buildings) of new or existing commercial buildings that are constructed or reconstructed to save at least 50% of the heating, cooling, ventilation, water heating, and interior lighting energy cost of a building that meets ASHRAE Standard 90.1-2001. Only buildings covered by the scope of ASHRAE Standard 90.1-2001 are eligible. Partial deductions of $.60 per square foot can be taken for improvements to one of three building systems that reduce total heating, cooling, ventilation, water heating and interior lighting energy use by a certain percentage below ASHRAE 90.1-2001—the building envelope (10%), lighting (20%), or heating and cooling system (20%). An interim system-specific goal for lighting is provided directly in the legislation and is valid until the IRS issues a final regulation. The interim lighting provision allows prororated deductions from 30 cents to 60 cents per square foot for lighting systems as described below. These deductions are available for buildings or systems placed in service from January 1, 2006, through December 31, 2013.

The U.S. Department of Energy’s fluorescent lighting mandate is official.

As of July 1, 2010 magnetic ballasts most commonly used for the operation of T12 lamps are no longer be produced for commercial and industrial applications. Also, many other T12 lamps will be phased out of production starting July 2012.  

What should consumers be prepared for?

1. Manufacturers will be phasing out their production of T12 lamps and ballasts  
2. Progressively less availability of T12 lamps and ballasts  
3. Increased cost of T12 lamps and ballasts due to demand vs. limited supply   

Inventors may seek U.S. Department of Energy (DOE) funding for energy efficiency or renewable energy technologies through three routes: the Small Business Innovation Research program (SBIR) and Small Business Technology Transfer program (SBTR), the Advance Research Projects Agency-Energy (ARPA-E), or through an unsolicited proposal.

The SBIR/SBTR programs are operated by federal agencies that have substantial R&D budgets, through a set-aside mechanism tailored for competitions among small businesses only. For more information, see the Small Business Innovation Research Web site at Small Business Innovation Research.

ARPA-E was established within DOE under the 2007 America Competes Act. ARPA-E's mission is to fund projects that will develop transformational technologies that reduce America's dependence on foreign energy imports; reduce U.S. energy-related emissions (including greenhouse gasses); improve energy efficiency across all sectors of the U.S. economy and ensure that the United States maintains its leadership in developing and deploying advanced energy technologies. For more information see the ARPA-E Web site at Advanced Research Projects Agency – Energy (ARPA-E).

Inventors may also seek funding by submitting an unsolicited proposal to EERE. For more information, see the unsolicited proposals page on this Web site.