As of June 30, 2009: 25,020 loans for $204.49 million
Questions and Answers...
5% Dollar and Energy Saving Loans
The Nebraska Energy Quarterly features questions asked about 5% Dollar and Energy Saving Loans.
Loan forms may be obtained from participating lenders, the Nebraska Energy Office, or the agency's loan web page.
Q:
Our local newspaper had an article on energy saving loans for commercial businesses. I own a television sales and service shop and would like to know if I would qualify for these loans. If so, what is required?
A:

Information on Dollar and Energy Saving Loans and specific project application forms can be found on the Energy Office’s web site or we can mail you the information and forms. The web site and application forms list what projects are eligible for a loan. You may want to determine what project or projects you want to undertake, get bids for the work, complete the appropriate project application forms and take the application forms along with the bids and any required documentation to a Nebraska lender. Tell the lender you wish to apply for a Nebraska Energy Office Dollar and Energy Saving Loan. The lender submits your application to our office for us to verify the project is eligible for the program and to receive a commitment on our share of the loan. If the project is eligible and the application complete, we notify the lender, who in turns notifies you, that you may begin the work. Please note that you may not contractually obligate yourself or start the project before our office has made a written commitment to your lender.
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If you have additional questions contact: Jack Osterman, Nebraska Energy Office, Box 95085, Lincoln, NE 68509 or by phone, 402.471-2817.

Q:

How can I receive a tax credit or other type of incentive to replace lighting in a commercial warehouse which is being used as a mechanics shop? Do you have recommendations on what lighting would be most energy efficient for the warehouse? I also heard my local electric utility offers rebates for replacing lighting fixtures. Secondly, I have considered installing a wood burning furnace because we have an ample supply of scrap wood as a by-product of our manufacturing process. Are there incentives for this type of furnace, and who could I contact to purchase a furnace?

A:
Go to the Energy Office’s web site for federal tax incentives, then click on the link to ENERGY STAR. At the bottom of the page you will see a table that lists all of the RESIDENTIAL tax credits. But since your project is a commercial application, there are several links on the same page which are directed at commercial tax incentives.

Commercial tax credits can be up to $1.80 per square foot of building floor space, if the building is brought to a state of being 50 percent beyond ASHRAE 90.1-2001 (90.1) and certain addenda. You will find links to IRS information, Notice 2006-52, and a supplement, Notice 2008-40, on the ENERGY STAR web site under the headings “Not Looking for Consumer Information?” and “Tax Deductions for Commercial Buildings.”

Please visit these sites for more information: Unlike the residential tax incentives, which are a direct credit toward your tax, the commercial incentives are only a deduction.

As you read the rules you will see that there are four ways to take advantage of the commercial incentives. A company can attempt to bring the entire building to a state of being 50 percent beyond 90.1, or they can simply address one of the three components valued at $0.60 per square foot each: 1) Lighting, 2) Building Envelope, and 3) Heating, Ventilation and Cooling (HVAC) and Hot Water. This incentive is available unit December 31st of 2013.

Fifty percent beyond 90.1 means that the building uses 50 percent less energy than a similar building that is built to just meet the requirements of 90.1. This does not mean that you must reduce your lighting levels by 50 percent, but by 16-2/3 percent to claim the incentive (16-2/3 percent for each of the three categories adds up to 50 percent).

A copy of ASHRAE 90.1 shows lighting allowances for a warehouse at 1.2 watts per square foot, and 1.7 watts per square foot for a workshop. A 16-2/3 percent reduction places this at .99 watts per square foot for a warehouse, and 1.4 watts per square foot for a workshop. This should provide an idea of the approach that could be taken.

This information is provided as an example. You should consult with a tax advisor to get the complete ruling on the required lighting reduction percentages and appropriate addenda to 90.1 that may apply. You should also consult with a lighting professional or engineer to determine the exact watts per square foot listed in ASHRAE and the appropriate addenda.

If you have not already done so, I would recommend that you contact your local utility for recommendations on the type of lighting that will best help you meet the tax incentive requirements. The utility may also suggest the use of occupancy sensors to ensure that lights in the warehouse, and perhaps the shop, are turned off when they are not needed – the fastest way to save energy.

Most lighting retrofit projects can be funded using Dollar and Energy Savings Loans. These loans are made available through local participating lending institutions. Depending on the type of lighting you select, you can download the application forms from our web site. Instructions for obtaining a loan are also outlined there.

For lighting, there are two possible application forms. The first is for products that are prequalified, and those are found on Form 4, Lighting Projects Application . If the type of lighting you select is not listed on Form 4, but your project has a simple payback (not including interest), it may still be eligible using our Steps to Obtain a Low Interest Loan Using an Energy Saving Improvement Analysis, Form 32 – Energy Saving Improvement Analysis, and Form 33 – Energy Billing History.

The wood stove may be eligible for the loan program using our Form 36, Waste Minimization Summary. This application is available for certain projects which reduce the flow of products, such as wood, in the waste stream.

For any project to be eligible, the borrower may not contract or make a down payment for any part of the project, and may not start the project until after it has been approved by the Energy Office. For instance, the lights that you have already purchased are not eligible for a loan, but the lighting in the warehouse and the wood waste furnace may be eligible, provided program guidelines are met.

The Energy Office does not make specific recommendations for products, such as wood burning furnaces. We do recommend that customers get multiple bids for cost comparison and that they check with the Better Business Bureau for contractor reliability.
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