In the commercial market, federal government incentives are offered to owners or leaseholders who develop energy-efficient commercial buildings.
A broad incentive is the enhanced depreciation rates for properties that utilize solar, wind and geothermal technologies. These may be depreciated over an accelerated 5 year period, versus 7 to 39 years, allowing rapid recovery of energy investments. This incentive is aimed to encourage developers to enhance buildings with private green energy sources.
Another federal program offers building owners and lessees eligibility for a tax deduction of up to $1.80 per square foot ($19.35 per m3) of their commercial property for energy-efficient property improvements. These rules apply to depreciable US real estate that is constructed in an energy efficient manner so that once installed as part of the interior lighting systems, heating, cooling, ventilation, hot water systems, or as part of the building infrastructure, the total annual energy and power costs will be reduced by 50 percent or more. Only half of this credit is deducted from the depreciable basis of the property, so that more than 100% of the net cost is recovered by depreciation. At the residential level, a wide range of small incentives (less than $1,000 each) are being offered to home owners who upgrade their homes with energy saving improvements.
On the state front, California is pioneering the drive towards energy efficency. The most ambitious initiative is the California Solar Initiative which surpasses any other program offered in the US. The CSI offers a long-term rebate plan as a customer incentive for solar projects on existing residential, business, public and industrial facilities. The monumental program has alloted $3.2 Billion over the next 10 years towards solar energy rebates.
Traditionally less-green states like New York are also becoming more concerned with energy-efficient construction and are also beginning to promote green initiatives. New York State offers an array of residential and commercial rebate programs to incentivize the construction of energy efficient projects. One New York plan encourages the use of solar space heat and geothermal heat technology in new building construction by offering to cover 50-75% of incremental costs, dependent on project type up to $1.5 million.
Canny investors can benefit by monitoring these rebate programs and initiatives, many of which are offered on a short-term basis, and are normally valid for a fixed number of years.
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