Michael Twedt, PE



Tax Incentives, Grants and Low Interest
 Loan Programs for Energy Efficiency
   and Sustainable Facil...
Speaker Introduction
Michael Twedt, P.E., C.E.M.
  Mechanical Engineer,
  Energy Analysis and Efficiency Focus

  Director...
Energy Saving Benefits
                                         Overview
Reduction in reliance on foreign energy sources

...
Energy Issues
Energy issues in South Dakota
  • An extreme climate leads to extreme heating and
    cooling requirements
 ...
Bio & Renewable Energy Benefits
                                      Overview
Rising Energy Costs
Global Warming / Pollut...
How to Implement Energy Efficiency
Utilize savings to pay for investments
  • Perform simple payback or life-cycle cost an...
Energy Grants – REAP/9007
Rural Energy for America Program (REAP)
 Section 9007:
  • Designed to assist farmers, ranchers ...
Energy Grants – REAP/9007
Rural Energy for America Program (REAP)
 Section 9007:
  • Energy Efficiency Improvements
    • ...
Energy Grants – REAP/9007
Rural Energy for America Program (REAP)
 Section 9007:
  • Energy Efficiency Upgrades
    • Dryi...
Resources – REAP/9007

Contact you local USDA
Rural Development Office
   More Energy Efficiency Upgrades
   • Lighting
  ...
Energy Grants – REAP/9007
Rural Energy for America Program (REAP)
 Section 9007:
  • Competitive grant application
  • App...
Energy Grants – REAP/9007
3rd Party Verification – Energy Efficiency:
  • Requires energy audit or energy assessment
    •...
Energy Grants – REAP/9007
3rd Party Verification – Renewable Energy:
  • Requires business-level feasibility study
    • I...
Energy Grants – REAP/9007
3rd Party Verification – Renewable Energy:
  • Requires business-level feasibility study
    • I...
Energy Audit Objective

  The overall goal of an energy audit is to
  evaluate an individual facility for economically
  f...
Energy Audit
Steps
  •   Analyze utility usage and costs
  •   Perform site visit, collect data
  •   Identify potential e...
Energy Conservation
How Much Can You Save??????????
  • How much are you currently spending?
  • Example: a school spends ...
Energy Use Summary
                            Sample


 Phase I Energy Use
    M M Btu/yr




electricity   natural gas
Energy Audit – On Site
On site
  • Confirm utility usage and costs
  • Site visit
    • Inspect equipment and systems
    ...
Energy Audit – Identify
On site – what to look for:
  • Equipment/systems that can be shut off
    • How? How often?
  • E...
Energy Audit – Energy Use
Calculate current energy use and cost:
  • How much energy is each equipment/system
    consumin...
Computer Simulations
Provide a tool for investigating physical systems
  • Uses:
    • Forecasting/prediction
       • Ene...
Building Energy Modeling
Used to evaluate the performance of buildings
  • Evaluates energy, cost, and comfort
  • Perform...
Building Energy Modeling
Some examples of software include:
  • EnergyPlus, BLAST, DOE-2, many others

Typical modeling en...
Building Energy Modeling
Why is it important?
  • Buildings use approximately 1/3 of all energy
  • Simulation can and has...
Energy Modeling
Sample Facility Energy Usage



      $82,201/yr
Energy Audit – Savings
Calculate energy and cost savings for each
 measure:
  • Energy Savings = Current Energy Use – Prop...
Energy Modeling
Energy Savings – Increase Envelope Insulation



                       $77,749/yr
                    $4,...
Energy Modeling
Energy Savings – Geothermal



      $63,761/yr
  $18,440/yr savings
Energy Modeling
Energy Savings – Thermostat Setbacks



               $69,947/yr
           $12,254/yr savings
Energy Modeling
Energy Savings – Heat Recovery



         $65,006/yr
     $17,195/yr savings
Energy Modeling
Energy Savings – Lighting & Equipment



                $76,419/yr
            $5,782/yr savings
Energy Modeling
Energy Savings – High Efficiency (All Systems)



                        $31,506/yr
                   $5...
Sample Energy Savings
Sample Building 1 Summary
  8.5% reduction in annual energy use
  • $42,956/yr total energy cost red...
Energy Savings Summary
                           Sample Building 1


  Phase I Energy Savings
       M M Btu/yr




     ...
Energy Conservation – Measures
Additional Examples of Energy Efficiency:
  • High efficiency heating & cooling systems
   ...
Incentive Programs
EPAct 2005 Federal Tax Deduction
  • Commercial Building Tax Deduction: Provides a
    tax deduction fo...
Incentive Programs
Commercial Building Tax Deduction
  • Allows for up to $1.80/sf tax deduction
  • Fully qualifying prop...
Incentive Programs
Commercial Building Tax Deduction -
 Subsystems
  • Partially qualifying property up to $0.60/sf in eac...
Incentive Programs
Commercial Building Tax Deduction –
Lighting Subsystem Details
  • Interior Lighting Tax Deduction: Lig...
Incentive Programs
Commercial Building Tax Deduction
Provides a tax credit AND energy savings!

  • Client qualified for $...
Incentive Programs
Business Energy Investment Tax Credit (ITC)
  • U.S. Dept. of Treasury
  • Commercial, Industrial, Agri...
Incentive Programs
Business Energy Investment Tax Credit (ITC)
  • U.S. Dept. of Treasury
  • Categories (partial)
    • S...
Energy Conservation – Summary
Best Solution:
  • No single magic bullet for total energy savings
  • Best solution: make i...
Energy Help
Resources
  • Your utility company
  • Building Energy Codes – request that your builders
    follow applicabl...
Thank You
                    Questions?

Michael Twedt, Mechanical Engineering Dept.
South Dakota State University
(605) ...
Mike Twedt on Green Energy Engineering
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Mike Twedt on Green Energy Engineering

  1. 1. Michael Twedt, PE Tax Incentives, Grants and Low Interest Loan Programs for Energy Efficiency and Sustainable Facility Projects Presentation for the Plain Green Energy Efficiency Workshop April 17, 2009
  2. 2. Speaker Introduction Michael Twedt, P.E., C.E.M. Mechanical Engineer, Energy Analysis and Efficiency Focus Director, Wind Application Center, SDSU WAC.sdwind.org Director, Energy Analysis Lab, SDSU Co-PI, CBRD & Biomass/Bioenergy Research Email: Michael.Twedt@SDSTATE.EDU Phone: 605.688.4303
  3. 3. Energy Saving Benefits Overview Reduction in reliance on foreign energy sources Reduction in energy use = reduction in greenhouse gas Energy cost savings reduce facility expenses Promotes good practices; use less, save more Energy Efficiency Grant and/or Tax Deduction
  4. 4. Energy Issues Energy issues in South Dakota • An extreme climate leads to extreme heating and cooling requirements • Limited and fixed budgets for most facilities • Rising energy costs • Limited information available for making better choices Addressing these issues • Focus on life cycle costs instead of solely on first costs • Purchase better materials, equipment, systems that will save money and energy
  5. 5. Bio & Renewable Energy Benefits Overview Rising Energy Costs Global Warming / Pollution Dependency on Foreign Energy What can we do? Decrease our energy use (increase efficiency) Increase ‘home-grown’ energy Increase cost-effective, renewable energy
  6. 6. How to Implement Energy Efficiency Utilize savings to pay for investments • Perform simple payback or life-cycle cost analysis • Consider: • Energy cost savings • Productivity/labor cost savings • Resource cost savings Utilize incentives to pay for investments • REAP/9007 Grants & Loans • Commercial building tax deductions (EPACT 2005) • Business Energy Investment Tax Credit (ITC)
  7. 7. Energy Grants – REAP/9007 Rural Energy for America Program (REAP) Section 9007: • Designed to assist farmers, ranchers and rural small businesses with energy projects • Rural SD = not Sioux Falls or Rapid City • This program provides grants and guaranteed loans for renewable energy systems and energy efficiency improvement projects
  8. 8. Energy Grants – REAP/9007 Rural Energy for America Program (REAP) Section 9007: • Energy Efficiency Improvements • Improvements to a facility or process that reduces energy consumption. Typically projects must show a 20% savings in energy audit to receive funding. • Renewable Energy - energy from: • wind, solar, biomass, or geothermal source, hydro or • hydrogen derived from biomass or water using one of the above energy sources
  9. 9. Energy Grants – REAP/9007 Rural Energy for America Program (REAP) Section 9007: • Energy Efficiency Upgrades • Drying Systems • Motor Systems • Heating/Refrigeration • Renewable Energy Projects • Wind • Solar • Geothermal • 25% Eligible Cost Grant ($250K-$500K max) • 50% Eligible Cost Guaranteed Loan • ($25 million max)
  10. 10. Resources – REAP/9007 Contact you local USDA Rural Development Office More Energy Efficiency Upgrades • Lighting • Refrigeration/Freezer Systems • Insulation (addition) • Automated Controls • Windows, Doors
  11. 11. Energy Grants – REAP/9007 Rural Energy for America Program (REAP) Section 9007: • Competitive grant application • Applicants are scored on a variety of parameters • Energy replaced, generated or saved • 20% minimum, 35%+ excellent • Simple payback period (~ 11 yr max) • Technical merit • Environmental benefits • Grant only or Loan/Grant combination
  12. 12. Energy Grants – REAP/9007 3rd Party Verification – Energy Efficiency: • Requires energy audit or energy assessment • $50,000 project cost (over or under) • Documents the energy savings • Documents the cost savings • Establishes the return on investment • Requires technical report and/or evaluation • $200,000 project cost (3rd Party if over) • Documents and evaluates the technical merit
  13. 13. Energy Grants – REAP/9007 3rd Party Verification – Renewable Energy: • Requires business-level feasibility study • If over $200,000 total project cost • Documents and evaluates the feasibility • Documents the energy generation • Documents the cost savings • Establishes the return on investment • Requires technical report and/or evaluation • $200,000 project cost (over or under) • Documents and evaluates the technical feasibility
  14. 14. Energy Grants – REAP/9007 3rd Party Verification – Renewable Energy: • Requires business-level feasibility study • If over $200,000 total project cost • Documents and evaluates the feasibility • Documents the energy generation • Documents the cost savings • Establishes the return on investment • Requires technical report and/or evaluation • $200,000 project cost (over or under) • Documents and evaluates the technical feasibility
  15. 15. Energy Audit Objective The overall goal of an energy audit is to evaluate an individual facility for economically feasible, energy cost saving opportunities. Additionally: • Quantify the amount of energy waste • Translate energy waste into wasted dollars • Assist in good decision making • Required for some Federal Grants
  16. 16. Energy Audit Steps • Analyze utility usage and costs • Perform site visit, collect data • Identify potential energy saving measures • Calculate energy and cost savings • Calculate cost of measures • Evaluate economic feasibility of each measure • Formulate an action plan for implementation • IMPLEMENT FEASIBLE MEASURES!
  17. 17. Energy Conservation How Much Can You Save?????????? • How much are you currently spending? • Example: a school spends $9,000/yr on propane for heating. Can a new heating system save $20,000/yr in propane energy costs? • A grain handling system uses $600/yr in energy costs. Can you save $2,000/yr in energy costs by buying a new, ‘energy efficient’ system?
  18. 18. Energy Use Summary Sample Phase I Energy Use M M Btu/yr electricity natural gas
  19. 19. Energy Audit – On Site On site • Confirm utility usage and costs • Site visit • Inspect equipment and systems • Identify potential energy saving measures • Collect detailed information on these systems • Operating parameters • Operating hours • Building occupancy • Temperatures
  20. 20. Energy Audit – Identify On site – what to look for: • Equipment/systems that can be shut off • How? How often? • Equipment/systems that can be turned down • How? How often? • Old/inefficient equipment • What is current efficiency? How much is it used? • Heating/cooling systems • Can you recover energy? How? How often?
  21. 21. Energy Audit – Energy Use Calculate current energy use and cost: • How much energy is each equipment/system consuming? (energy/year) • What is the current cost? (energy/yr x energy cost) Calculate new energy use and cost: • How much energy would the new systems consume? (energy/yr) • What is the new cost? (energy/yr x energy cost)
  22. 22. Computer Simulations Provide a tool for investigating physical systems • Uses: • Forecasting/prediction • Energy use • Comparing alternatives • HVAC systems • Examples include: • Indoor Air Quality • Airflow • Thermal comfort • Equipment performance • Building energy modeling
  23. 23. Building Energy Modeling Used to evaluate the performance of buildings • Evaluates energy, cost, and comfort • Performance monitored for full year • Includes most building systems • Envelope • HVAC • Lighting • Service hot water • Scheduling • Controls
  24. 24. Building Energy Modeling Some examples of software include: • EnergyPlus, BLAST, DOE-2, many others Typical modeling environment: • Consists of interaction between several ‘modules’ • Complex computational environment
  25. 25. Building Energy Modeling Why is it important? • Buildings use approximately 1/3 of all energy • Simulation can and has helped reduce building energy consumption • Allows energy alternatives to be investigated • Leads to an energy- and cost-optimized building • Can help isolate operational problems in existing buildings • Necessary for many incentive programs • Required for LEED • Compare proposed building to ASHRAE Standard 90.1-2004
  26. 26. Energy Modeling Sample Facility Energy Usage $82,201/yr
  27. 27. Energy Audit – Savings Calculate energy and cost savings for each measure: • Energy Savings = Current Energy Use – Proposed Energy Use (energy/year) • Cost Savings = Current Energy Cost – Proposed Energy Cost ($/year) Compare savings to implementation cost: • Simple Payback Period = cost / $ savings per yr • Evaluate the feasibility for your facility • Generally 3 year payback or less is very good
  28. 28. Energy Modeling Energy Savings – Increase Envelope Insulation $77,749/yr $4,452/yr savings
  29. 29. Energy Modeling Energy Savings – Geothermal $63,761/yr $18,440/yr savings
  30. 30. Energy Modeling Energy Savings – Thermostat Setbacks $69,947/yr $12,254/yr savings
  31. 31. Energy Modeling Energy Savings – Heat Recovery $65,006/yr $17,195/yr savings
  32. 32. Energy Modeling Energy Savings – Lighting & Equipment $76,419/yr $5,782/yr savings
  33. 33. Energy Modeling Energy Savings – High Efficiency (All Systems) $31,506/yr $50,695/yr savings
  34. 34. Sample Energy Savings Sample Building 1 Summary 8.5% reduction in annual energy use • $42,956/yr total energy cost reduction • 8.1% reduction in annual energy costs • 4.7 year total simple payback period for all recommendations combined Sample Building 2 Summary • 7.0% reduction in annual energy use • $34,894/yr total energy cost reduction • 6.9% reduction in annual energy costs • 1.6 year total simple payback period for all recommendations combined
  35. 35. Energy Savings Summary Sample Building 1 Phase I Energy Savings M M Btu/yr energy savings
  36. 36. Energy Conservation – Measures Additional Examples of Energy Efficiency: • High efficiency heating & cooling systems • Heat recovery • Modulation controls (turn down/shut off) • Lighting • Replace incandescent with HE fluorescent • Replace mercury vapor with HPS/MH/HE fluor. • Heating systems • Temperature setbacks – freeze protection • Plug leaks / prevent infiltration • Turn Down • Shut off
  37. 37. Incentive Programs EPAct 2005 Federal Tax Deduction • Commercial Building Tax Deduction: Provides a tax deduction for exceeding ASHRAE/IES Standard 90.1-2001 to the property owner for which the energy efficient expenditures are made • New construction or renovations
  38. 38. Incentive Programs Commercial Building Tax Deduction • Allows for up to $1.80/sf tax deduction • Fully qualifying property • Saves at least 50% in energy costs through improvements in the following • Envelope • Lighting • HVAC/SWH
  39. 39. Incentive Programs Commercial Building Tax Deduction - Subsystems • Partially qualifying property up to $0.60/sf in each • Saves at least 10% in envelope • 20% in lighting • 20% in HVAC/SWH
  40. 40. Incentive Programs Commercial Building Tax Deduction – Lighting Subsystem Details • Interior Lighting Tax Deduction: Lighting energy consumption is estimated to represent approximately 1/3rd of commercial building energy use • Outperform the ASHRAE/IESNA Standard 90.1- 2001 lighting requirements by 25-40% . Eligible tax deduction per sqft will be between $0.30- $0.60
  41. 41. Incentive Programs Commercial Building Tax Deduction Provides a tax credit AND energy savings! • Client qualified for $1.07/sqft tax credit • Installed high-performance insulation • Qualified for full $0.60/sqft • Installed efficient lighting technologies • Qualified for $0.47/sqft Required energy model and comparison of ASHRAE 90.1-2001 baseline and actual installation Example Provided by Derek Hengeveld, PE BTU Engineering, Inc. hengeveld@BTU-Engineering.com
  42. 42. Incentive Programs Business Energy Investment Tax Credit (ITC) • U.S. Dept. of Treasury • Commercial, Industrial, Agricultural • Only tax paying entities are eligible • 30% (Solar, Wind) or 10% (Geothermal) of system cost tax credit • May take tax credit as a cash grant from the U.S. Department of Treasury • The U.S. Department of Treasury has not released guidelines and is not accepting applications currently for this grant (expected late spring’09)
  43. 43. Incentive Programs Business Energy Investment Tax Credit (ITC) • U.S. Dept. of Treasury • Categories (partial) • Solar water or space heat • Wind • Photovoltaic • Hydroelectric • Biomass • Landfill gas • Geothermal electric • Geothermal hp • Fuel cells
  44. 44. Energy Conservation – Summary Best Solution: • No single magic bullet for total energy savings • Best solution: make informed decisions and integrate a combination of many items • Consider utilizing Federal incentives to leverage resources
  45. 45. Energy Help Resources • Your utility company • Building Energy Codes – request that your builders follow applicable energy codes • Read energy labels, compare Wattage, consider Energy Star models • REAP/9007 - Contact you local USDA Rural Development Office Energy Audits • Self audit worksheets – available from State and Federal sources • Your utility company may offer assistance • 3rd Party energy audits
  46. 46. Thank You Questions? Michael Twedt, Mechanical Engineering Dept. South Dakota State University (605) 688-4303 Email: Michael.Twedt@SDState.edu
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