Rebates, tax incentives for energy efficient high-bay lighting systems in commercial facilities

Changes in lighting regulations and energy-savings plans could make retrofitting warehouses and industrial operations a quick pay-back and utility cost savings proposition

DENVER, CO – Commercial operators of warehouses and industrial facilities can enjoy significant rebates and tax incentives for switching out antiquated high-bay lighting systems by the end of 2011, and this is on top of energy-cost savings of up to 50%.

Allstar Electrical Services of Denver has been providing top-notch commercial electrical systems retrofits and new builds for over a decade in Colorado, and is an expert at replacing whole-facility lighting systems that meet the demands of Xcel Energy rebate programs and government tax incentives.

Many warehouses and industrial facilities utilize HID (high-intensity discharge) lamps or the common T12 fluorescent lighting arrays for high bay and large-area lighting solutions, both of which are less efficient energy users for these applications than more modern lighting systems. Indeed, the U.S. Department of Energy in 2010 began phasing out T12 fluorescent lights and the manufacture of the most common forms of T12 lights will cease as of July 2012. It is highly recommended that operators of large-are facilities retrofit their buildings with T8, T8 Super or T5 HO systems.

Xcel Energy in Colorado is offering a great rebate program for such retrofitting, providing bonus rebates of up to 50% of the cost of the project through the end of 2011. When you add in up to 50% savings on utility bills for operating such systems versus the old systems, the pay-back on the purchase and installation costs can be as little as three to seven years. Plus, since the T12s are being phased out by mid-year 2012, the cost of maintaining an older lighting system will significantly increase. These special rebates are a bonus on top of existing Xcel Energy rebates for switching to more efficient lighting systems in commercial facilities, so the savings could even be greater: all rebates cannot exceed 75% of the cost of the new lighting.

In addition, under provisions of EPAct of 2005 (Energy Policy Act) owners or tenants in commercial properties can enjoy generous tax deductions for upgrading lighting systems with the Energy Efficient Commercial Buildings Tax Deduction, a special financial incentive designed to reduce the initial cost of investing in energy-efficient building systems via an accelerated tax deduction. Under this provision, the owner (or tenant) can upgrade a building’s lighting system to qualified levels to earn the deduction, capped at $0.60/square foot. For example, in a 100,000 square foot warehouse facility, the deduction would amount to $60,000; for a business in the 35% tax bracket, that would reduce the tax burden in the year of retrofitting by $21,000. The provisions of the tax code these incentives fall under are known as EPAct 179D deductions, and for the moment they are scheduled to expire on January 1, 2014 (they have already been extended twice).

The size measurement of fluorescent lights refers to the diameters of the tubes themselves. T12 tubes have a diameter of twelve eights of an inch, or 1 ½ inch, while T8 are one inch in diameter, and T5s come in at 5/8”. This matters because the thinner bulbs are more energy efficient, and thus save on utility costs.

Lighting designers, and expert commercial electricians like Allstar Electrical Services, are very adept at choosing the proper lighting systems for each facility. In general terms, T8 systems are used for mounting heights under 20 feet, with T5 used when mounting heights exceed 20 feet, and there are also T8 Super and T5HO (high-output) lights that provide greater lighting capacities at a higher cost. Designing the proper system for any facility may involve mixing the fixtures, so that, for instance, the lower-cost T8 fixtures and bulbs will be used in office settings, and areas in the warehouse requiring higher lighting capacities would use one of the other choices.

Beyond the rebates, tax incentives and energy savings that come along with a new lighting system for warehouses and industrial facilities, another advantage of going to a T8/T5 fluorescent lighting solution is the relative ease of retrofitting and installation. In other words, Allstar Electrical Services can get a new lighting system up and running with minimal downtime in the facility’s operation cycle.

Owners and developers of new commercial properties should also take note that such high-efficiency lighting systems in new construction also may qualify for rebates and tax incentives.

As with all rebate and tax incentives on lighting systems, there are many specific qualifications that must be met in order to claim the benefits, and these vary by project. In some cases, for instance, the plan must be submitted to Xcel Energy in advance for pre-qualification, and of course tax professionals may need to be consulted in order to meet the accounting procedures for claiming deductions.

Allstar Electrical Services has worked with a variety of commercial facility managers, contractors, architects and tax professionals on lighting projects that qualify for rebates and tax incentives and can plan such a project to meet all of the requisite qualifications. For complete information call 303-399-7420.

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