Today's Energy Solutions

Today's Energy Solutions

Bill McShaneSustainable Lighting Division

Confidential Sustainable Lighting Division 2

Market Size based onNorth Carolina Lamp Data*

2007 2008North Carolina 13,158,400 11,428,800

North Carolina 2007 2008Interior 193,327 200,457Exterior 128,887 133,637

400w Metal Halide

T12 Lamp Units

*based on sales of Philips lamps


NC Governor's goals:

• Focus on 6 areas for Federal Recovery Act State Energy Program:

1. Support small businesses and industry through energy savings,2. Grow NC’s green workforce via Jobs Now,3. Develop Energy Investment Revolving Loan Fund,4. Improve government energy efficiency,5. Promote residential energy efficiency and renewable energy, and6. Foster renewable energy technology and resource innovation.

NC will demonstrate its performance by tracking the jobs created, energy costs avoided, units of energy saved, increased capacity for renewable energy generation and greenhouse gas and other emissions reduced.


Main Funding Sources

• NC State Energy Program (SEP)– SEP Grant

• Improving Gov't Energy Efficiency• $9.5MM for the entire state

– SEP loan• 0% loan up to $1MM• tied to Performance Contract• Possibly combination w/Philips financing

• NC State Energy Efficiency Conservation Block Grant (EECBG)

– $7MM for municipalities under 35k in population


N.C. State Energy ProgramImproving Government Energy Efficiency

• $9,500,000 total available:– $1.95 million:

• For energy assessments to develop and implement long-term energy saving strategies and identify potential projects for federal and state Recovery funding.

– $8 million• For Energy efficiency upgrade grants to address repair and

renovation projects at state agencies, universities and community colleges that have been identified but not funded. Includes exterior lighting upgrades to LEDs


• $18,000,000-$20,000,000 available• No- and low-interest loans up to $1 million for terms of up to

ten years• For businesses, nonprofits, local governments, public

schools, community colleges and state agencies/universities

• Extends scope of federal recovery funds and ensure that these funds continue to support the state’s commitment to renewable energy and energy efficiency

• Performance Contract Term Buy-downs

Energy Investment Revolving Loan Fund


• State will issue application materials/RFPs after approval and award of funds from DOE

• State must distribute at least 60% of allocations to small towns <35,000 residents

• Remaining 40% will be distributed to K-12 public school districts, community colleges and other local public authorities which is being funded with $7,044,124

N.C. STATE EECBG Funds


• Direct allocation of EECBG funds• $2,500,000• Includes "lighting efficiency improvements"• Contact for City of Raleigh EECBG program:

Paula ThomasSustainability Initiatives ManagerCity of Raleigh919-996-3840

City of Raleigh EECBG Funding

Bill McShaneSustainable Lighting Division

EPAct 2005


Practice What we Preach

• Completed an EPAct project at our Union facility• Yielded a 48K tax deduction

– ($16,000 saving plus annual energy saving)• Ongoing project for the Fall River Plant


Overview

• The opportunity– Energy Tax Incentives Act of 2005

• Commercial building immediate tax deduction– Incentivized areas:

– Lighting– HVAC– Building envelope

– Also available for:– Tenant owned lease-hold improvements– Rental properties 4 stories or above– Primary Designers of Government Buildings


Tax Language

• Credit– A Dollar for Dollar Savings

• Deduction– To calculate your Savings you must multiply by your tax

rate– Approximately 1/3


Overview

• DOE Objectives – Make tax incentives performance based

• The more energy you save, the more taxes you save

– Maximize efficiency of conventional equipment and processes

– Encourage alternative energy equipment and design


EPAct Strengths -- Retail

• Central management of design decisions• Prototype then keep consistent through chain for easy

compliance• Majority of EPAct projects retail


Potential Tax Savings for Major Retailer X

• Assumptions: Qualifying Energy Efficient Capital improvements for each facility

Facility Square FeetLighting

DeductionHVAC

DeductionBuilding Envelope

DeductionStores 37,800,000 $22,680,000 $22,680,000 $22,680,000Owned Headquarters 1,200,000 $720,000 $720,000 $720,000

Leased Headquarters 1,500,000 $900,000 $900,000 $900,000

Leased Distribution 1,800,000 $1,080,000 $1,080,000 $1,080,000

Owned Distribution 8,900,000 $5,340,000 $5,340,000 $5,340,000

Total $30,720,000 $30,720,000 $30,720,000


Distribution Centers

• All major and minor companies have these!• Low hanging fruit….Major companies are retrofitting.• Very large square footage• Example: 80,000 sq.ft. warehouse

*2,080 hours of operation

Lighting TypeTotal Energy

Consumption* Annual Energy Cost

Metal Halide 54,600 $13,628

Pulse Start 42,630 $10,640

6-lamp T5 32,670 $8,177

6-lamp T8 26,880 $6,709


Hotels

• Easy opportunity• Compliance achieves full $/sq.ft. deduction in 30 states• Large spaces• Guest rooms

– Exempt from bi-level switching– Substantial plug-in lighting – exempt

• Franchise ownership can be a hindrance

Confidential Sustainable Lighting Division

18

Overview

• View of DOE analysis on tax area

– Difficult to reduce building envelope energy use after-the-fact

– Lighting current low hanging fruit

– Prospectively, HVAC may be biggest opportunity

Lighting22%

HVAC50%

Building Envelope

28%

Building Energy Use


Commercial Building Immediate Deduction

• Deductions based on improvements over ASHRAE 90.1 2001• Energy efficient improvements must be depreciable assets

– Converts 39 year depreciation to current deduction• Available for installations completed through 2014• Deduction amounts:

– Lesser of total cost or:• $1.80/sq.ft. Whole Building• $0.60/sq.ft. Individual Systems

a. Lightingb. HVACc. Building Envelope

ASHRAE (American Society of Heating, Refrigerating and Air-Conditioning Engineers)HVAC (Heating, Ventilation & Air Conditioning)


Commercial Building Immediate Deductions

• Architects/Engineers/Lighting Designers– DOE goal to incentivize green design in government building sector

• Benefits passed through to the primary designer of:– Federal: offices, military bases, court houses, post office,

labs etc.– State: offices, transportation facilities, state universities,

court houses etc.– County, city, town, village etc: offices, schools, town halls,

police, fire, libraries etc.


5 ways to Capture Tax Deduction

1. Whole Building ($1.80/ft2) – 50% Energy Cost Reduction below standard

Permanent Rules partial deduction ($0.60/ft2)– Overall Energy Cost Reduction of 16 ⅔% below standard for:

2. Lighting or3. HVAC or4. Building Envelope

5. Interim Lighting Rules ($0.30/ft2-$0.60/ft2)– 25% to 40% prescribed Light Power Density (LPD) reduction

below standard

Confidential Sustainable Lighting Division

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Interim Lighting Rules

• Meet W/ft2 targets

• Add’l Requirements– Bi-level Switching

– Meet ASHRAE 90.1 Requirements

– Meet IESNA minimum light levels

% Improvement 25% 26% 27% 28% 29% 30% 31% 32% 33% 34% 35% 36% 37% 38% 39% 40%

Tax Deduction $/sq.ft.. 0.30 0.32 0.34 0.36 0.38 0.40 0.42 0.44 0.46 0.48 0.50 0.52 0.54 0.56 0.58 0.60

LPD (Light Power Density)

2001 Standard

LPD, W/ft2

25% Improvement

40% Improvement

Office 1.3 0.975 0.78

Manufacturing 2.2 1.65 1.32

School/Library 1.5 1.125 0.90

Retail 1.9 1.425 1.14

Warehouse 1.2 50% required, 0.60


Bi Level switching-Tax Requirement

• Tax Explanation-not a lighting one• EPAct States –a room which is defined has having four

walls and ceiling must have two levels of light. (must have the ability to achieve)

• How to Satisfy this requirement:• Multiple Switches• Circuit Breakers—distribution centers• Occupancy Sensors in a perimeter offices only provide On

and Off


Free Riding

• Advanced tax planning strategy• Lowest hanging Fruit• If 40% improvement all already exist. Use the $0.60 cents

square deduction for:• Lighting Controls• Lighting portion of Building Management Systems• DayLighting design and systems


Benefiting from ASHRAE 2004 & 2003 IECC

2001 Std.

(W/ft2)

25%

Over

2001

40%

Over

2001

2004 Std.

(W/ft2)

2004

% over

2001

Automotive Facility 1.5 1.125 0.9 0.9 40% X

Convention Center 1.4 1.05 0.84 1.2 14%

Court House 1.4 1.05 0.84 1.2 14%

Bar Lounge/Leisure 1.5 1.125 0.9 1.3 13%

Cafeteria/Fast Food 1.8 1.35 1.08 1.4 22%

Family Dining 1.9 1.425 1.14 1.6 16%

Exercise Center 1.4 1.05 0.84 1 29% X

Gymnasium 1.7 1.275 1.02 1.1 35% X

Health Care Clinic 1.6 1.2 0.96 1 38% X

Hospital 1.6 1.2 0.96 1.2 25% X

Hotel 1.7 1.275 1.02 1 41% X

Library 1.5 1.125 0.9 1.3 13%

Manufacturing 2.2 1.65 1.32 1.3 41% X

Motel 2 1.5 1.2 1 50% X

2001 Std.

(W/ft2)

25%

Over

2001

40%

Over

2001

2004 Std.

(W/ft2)

2004

% over

2001

Movie Theater 1.6 1.2 0.96 1.2 25% X

Museum 1.6 1.2 0.96 1.1 31% X

Office 1.3 0.975 0.78 1 23%

Parking Garage 0.3 0.225 0.18 0.3 0%

Theater 1.5 1.125 0.9 1.6 -7%

Police/Fire Station

1.3 0.975 0.78 1 23%

Post Office 1.6 1.2 0.96 1.1 31% X

Retail 1.9 1.425 1.14 1.5 21%

School/University 1.5 1.125 0.9 1.2 20%

Sports Arena 1.5 1.125 0.9 1.1 27% X

Town Hall 1.4 1.05 0.84 1.1 21%

Transportation 1.2 0.9 0.72 1 17%

Warehouse 1.2 0.8

Workshop 1.7 1.275 1.02 1.4 18%


States with Stricter Lighting Standardsthan ASHRAE 90.1 2001

2003 IECC

Arkansas New Mexico

Colorado Nevada

Connecticut Oklahoma

Idaho Pennsylvania

Kansas Rhode Island

Kentucky South Carolina

Maryland Utah

Montana Virginia

Nebraska West Virginia

2004 IECC

Iowa

ASHRAE 04

Georgia Louisiana

Maine New Jersey

Ohio

State Specific

California Florida

North Carolina Vermont

Washington


Common Lighting Retrofits

Industrial/Manufacturing/Warehouse

Metal Halide458 Watts

T5 Hi-Bay Fluorescent234 Watts

Or

Office & Retail

4 Lamp 4’ T12Mag. Ballast

144→164 Watts

2 Lamp 4’ Super T-8 Elec. Ballast

67 Watts

3 Lamp 4’ Super T-8Elec. Ballast

72 Watts


EPAct Strategy

• Review all completed projects for EPAct Eligibility (Commercial & Government)

• Establish process to maximize EPAct• Lighting

– Design future projects to the higher of ASHRAE 2004, local energy codes or EPAct


And now a word from one of your electric utilities . . .


North Carolina Rebate Programs

4-lamp T5HO = approx $75 per fixture

Plus Sensor

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