# Presentation: 265584

## Beyond Energy Codes:  Transforming the Marketplace

- 2000 National Workshop on
- State Building Energy Codes
- New Orleans, LA
- July 12, 2000
- Philip Fairey

## Market Transformation

- There is money on the table!
- Compared to IECC 2000, 15-25% energy savings can be cost effectively achieved using current technology

**Why it will work . . .**

## Last Time -- The Big Mistake

- Previous credits, given as% of purchase price up to a maximum, failed miserably.  Why?
- Rocket Science?  No, it’s just free markets:
- Prices rise to maximum allowable credit.
- Scams and con artists abound.
- Legitimate businesses leave the market place.
- When the tax credit sunsets, the industry disappears.

**Price-based credits**

## Example

- 40% credit up to maximum of $4,000.
- $3,000 hot water system example:
- Price system at $10,000 (max credit)
- Offer $3,000 trip to Bahamas as sales incentive.
- Consumer gets $3,000 trip plus $4,000 tax credit.
- Seller gets $7,000 for $3,000 system.
- Taxpayers foot the bill!

## Successful Transformation

- Credit depends on energy performance, regardless of product price.
- Likely free market response:
- Price competition among methods that can reach the performance levels.
- Business models stress increased efficiency, reduced costs, and maximized sales volume.
- Performance-to-price ratios (kWh/yr per unit price) tend to increase
- Consumer recognition, confidence, and loyalty tend to increase.

**Performance-based credits**

## Example

- Solar tax credit of $0.35 per certified annual kWh savings.
- $3000 hot water system example:
- 2000 kWh savings yields $700 credit
- 23% of sales price.
- But ...
- If system cost is reduced to $700
- Tax credit will pay 100% of sales price!

## “Energy Efficient Buildings Incentives Act”

- New Tax Credit Bill (S. 2718) introduced by  Senator Robert C. Smith (R-NH).
- Aimed at market transformation through performance-based tax incentives.
- Strong support from environmental interests.
- Energy savings based on nationalenergy codes and standards.
- Strong certification and verification procedures.

## Bill Summary

-    The Smith Bill (S.2718) provides tax incentives for:
- Residential and commercial building energy efficiency
- Advanced, high-efficiency heating, cooling and hot water systems
- Solar hot water and photovoltaic systems installed on buildings

## Residential Buildings

-               Bill provides tax _**credits**_** **for:
- Energy-efficient new homes*:
- $750 – 30% better than IECC 2000
- $2,000 – 50% better than IECC 2000
- Hot water heaters:
- $500 – EFelec = 1.7 or EFgas=0.80
- $250 – EFgas = 0.65
- Heating systems*:
- $250 – HSPF = 7.5
- $500 – HSPF = 9.0
- $1,000 – gas Heat Pump COP=1.25
-   *  Credit may be claimed for either whole-building energy efficiency or for heating & cooling equipment at the discretion of the tax payer.

## Residential (Cont’d)

-               Bill provides tax _**credits**_ for:
- Cooling systems*:
- $500 – SEER = 15.0 (peak EER=12.5)
- $250 – SEER = 13.5 (peak EER = 11.5)
- Solar energy systems:
- Hot water – $0.35 per annual kWh savings up to maximum credit of $1,000.
- Photovoltaics – $1.50 per peak watt up to maximum credit of $6,000.
-   *  Credit may be claimed for either whole-building energyefficiency or for heating & cooling equipment at the discretion of the tax payer.

## Commercial Buildings

-            Bill provides tax _**deductions**_** **for:
- Building energy efficiency*:
- $2.25 per ft2 – 50% more efficient than ASHRAE Standard 90.1-1999.
- Hot water heaters:
- $1,500 – EFelec = 1.7 or EFgas=0.80
- $750 – EFgas = 0.65
- Heating systems*:
- $750 – HSPF = 7.5
- $1,500 – HSPF = 9.0
- $3,000 – gas Heat Pump COP=1.25
-   *  Deduction may be claimed for either whole-building energy efficiency or for heating & cooling equipment at the discretion of the tax payer.

## Commercial (Cont’d)

-             Bill provides tax _deduction__**s**_ for:
- Cooling systems*:
- $1,500 – SEER = 15.0 (peak EER=12.5)
- $750 – SEER = 13.5 (peak EER = 11.5)
- Solar energy systems:
- Hot water – $1.00 per annual kWh savings Photovoltaics – $4.50 per peak watt
- Public property:
- Deduction may pass through to “the person primarily responsible for designing the property...”
-   *  Deduction may be claimed for either whole-building energy efficiency or for heating & cooling equipment at the discretion of the tax payer.

## floridagreenbuilding.org

- Thankyou!