Industry Information

The Energy Policy Act (EPAct)

The Emergency Economic Stabilization Act of 2008 (HR-1424), approved by the Congress and signed into law by President Bush on October 3, 2008, extends the benefits of the Energy Policy Act of 2005 through December 31, 2013.

This means that all provisions of the original 2005 law which offered tax incentives for energy efficient lighting projects remain in effect for five (5) additional years.

For those of you previously not familiar with EPAct, the original August, 2005 bill included significant provisions for the owners of commercial buildings to receive tax incentives for qualified energy efficient lighting projects. Section 1331 of the bill provided an accelerated tax deduction up to the complete cost of an energy-efficient lighting system, capped at a maximum of $0.60 per square foot.

After passage of the bill, the IRS issued guidelines and rules for qualification. Highlights are given below with additional details available from industry sources:

• An upgrade or retrofit which can reduce lighting power density by 25-40% of the minimum requirement (standards have been published) qualifies for the per square foot deduction.
• Warehouses must exceed the standard by 50%.
• IESNA standards define the minimum light levels that are acceptable to qualify after the project has been completed.
• Bi-level switching controls are required to qualify.

Details concerning the installed lighting systems and other equipment eligible for accelerated depreciation are available with IRS Notice 2006-52.

Tax professionals who may want additional details concerning the deduction are encouraged to review IRS Code Section 179D. Please note that IRS Form 4562 must be filed to take the deductions.

The potential tax deductions can mean a substantial difference in the ROI associated with your lighting project. You need substantial expertise in engineering and design to optimize the energy savings, reduce lighting density, while meeting standards and workplace requirements. You also need customized models to project the tax savings and financial returns under alternative design scenarios. Finally, you need someone who can stay on top of EPAct provisions and the reporting and documentation that will be required to realize the tax deductions.

You need Eco Engineering.

Industry Information

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