Commercial Building Incentives: Programs for New Construction and Upgrades in the Inflation Reduction Act and Other Recent Federal Laws

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The recent Inflation Reduction Act (IRA), along with the Infrastructure Investment and Jobs Act (IIJA) from 2021, fund multiple programs and tax incentives to improve the energy efficiency of new and existing commercial and public buildings. The 179D tax deduction is revamped and now includes a new pathway for retrofits. Even larger broad greenhouse gas emission reduction programs under the IRA could be used to reduce emissions from commercial buildings. But the programs use a variety of mechanisms to offer varying incentives with varying goals and criteria. This brief summarizes programs that will or could provide significant resources for energy efficiency in commercial and public buildings. 

2022 Funding Opportunity Announcement for Energy Improvements at Public K-12 School Facilities – Bipartisan Infrastructure Law (BIL) – Renew America’s Schools

Applications due: Apr 21, 2023
View the full funding opportunity.

The Office of State and Community Energy Programs is issuing this Funding Opportunity Announcement (FOA) titled Energy Improvements at Public K-12 School Facilities – Bipartisan Infrastructure Law (BIL) – Renew America’s Schools.

The activities to be funded under this FOA support BIL section 40541 and the broader government-wide approach to support projects that enable replicable and scalable impacts, create innovative, sustaining partnerships, leverage funding and economies of scale, focus on disadvantaged communities, improve student, teacher, and occupant health, enrich learning and growth, assist schools that serve as community assets (e.g., neighborhood cooling centers or disaster recovery shelters), and are crafted thoughtfully within the context of public school facilities (e.g., procurement restraints, construction windows, etc.).

Topic Area 1 – High-Impact Energy Efficiency and Health Improvements

Proposals contemplated under this topic area will include energy improvements that result in direct reduction to school energy costs, increase energy efficiency, and lead to improvements in teacher and student health, including indoor air quality. Energy cost savings may be realized by reduced loads and/or by demand flexibility and demand response approaches.

Topic Area 2 – Innovative Energy Technology Packages

Proposals contemplated under this topic include innovative energy technology packages. Applicants may include any improvement, repair, or renovation to a school that incorporates two or more of the following energy improvements:

  • Energy efficiency measures
  • Installation of renewable energy technologies
  • Alternative fueled vehicle infrastructure on school grounds
  • Purchase or lease of alternative fueled vehicles to be used by a school

DOE expects to make a total of approximately $80,000,000 of federal funding available for new awards under this FOA, subject to the availability of appropriated funds. DOE anticipates making approximately 20-100 awards under this FOA. DOE may issue one, multiple, or no awards. Individual awards may vary between $500,000 and $15,000,000.

Federal Energy and Water Management: Agencies Report Mixed Success in Meeting Efficiency Requirements, and Additional Data Are Needed

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What GAO Found

According to data from fiscal year 2021, federal agencies have a mixed record meeting the six energy and water efficiency requirements that GAO reviewed. There are 27 agencies that use the Department of Energy (DOE) Compliance Tracking System to report data on their performance in meeting these requirements. These data show that most agencies met, or almost met, two of the requirements and did not meet one requirement. GAO could not determine whether agencies fully met the other three requirements due to a lack of data, either because the implementation deadline had not passed and there were not yet available data, or because DOE does not track performance (see table).

Specifically, DOE does not track whether agencies entered water use data into a benchmarking system or followed up on implemented energy and water efficiency and conservation measures (ECM) within 4 years, as called for by DOE guidance. As a result, decision makers cannot be certain that agency officials are benchmarking water use data and measuring energy and water savings from implemented ECMs. Without tracking performance on these requirements, Congress cannot know the extent to which agencies have the data they need to make effective decisions to improve energy and water efficiency.

Agencies’ Performance in Meeting Six Energy and Water Efficiency Requirements, Fiscal Year 2021

RequirementNumber of agencies that met requirementPercent of agencies that met requirement
Identify covered facilities constituting at least 75 percent of facility energy or water use24 of 2788.9
Designate energy managers for covered facilities24 of 2788.9
Conduct evaluations at covered facilities every 4 years, subject to exception1 of 273.7
Enter data into a benchmarking system
Enter energy use data into a benchmarking system7 of 2725.9
Enter water use data into a benchmarking systemAgency performance not tracked
Implement energy and water conservation measuresAgency performance not yet available
Follow up on energy and water conservation measuresAgency performance not tracked
Note: Data are as of August 24, 2022. This table summarizes relevant requirements from 42 U.S.C. § 8253(f) and DOE guidance. For more details, see table 1 in this report. Source: GAO analysis of Department of Energy (DOE) Compliance Tracking System data. | GAO-23-105673

Officials GAO interviewed from selected agencies cited varied successes and challenges to meeting each of the six requirements, but the two most frequently cited were the success of using automated or centralized data and the challenge of insufficient resources. For example, agency officials told GAO that automated data allowed them to automatically upload data into a benchmarking system, rather than entering the data manually. Conversely, officials told GAO that insufficient funding or staffing made meeting the requirements challenging. Officials from one agency explained that they must conduct evaluations at agency facilities in remote locations. This makes evaluations more resource-intensive because of the time and expense of sending staff to those locations.

Why GAO Did This Study

The federal government is the single largest energy consumer in the United States. In fiscal year 2021, its roughly 350,000 buildings used more than 344 trillion Btu of energy and 119 billion gallons of water, according to DOE data. For decades, the federal government has taken steps to improve energy and water efficiency at federal facilities, including through laws and executive orders. In particular, six requirements from section 432 of the Energy Independence and Security Act of 2007, as amended, relate to the use of energy and water efficiency measures in federal facilities.

GAO was asked to review issues related to agency compliance with these energy and water efficiency requirements. This report examines (1) the extent to which agencies are complying with the six energy and water efficiency requirements and (2) the successes and challenges that selected agencies have encountered in their efforts toward meeting these requirements.

GAO reviewed DOE data on agency performance in meeting requirements; interviewed officials from six federal agencies, selected in part for facility size and energy use; and conducted a literature review.

‘Green banks,’ poised for billions in climate funds, draw states’ attention

Read the full story at Stateline.

In recent years, several states have created or helped to fund specialized banks that lend money to homeowners and businesses for energy-saving and climate projects. Now, states have billions more reasons to establish such institutions, known as green banks.

Congress last year approved a Greenhouse Gas Reduction Fund of $27 billion, largely to pour money into green banks and similar financial institutions. Newly established green banks from Nevada to Illinois are readying for federal support that could supercharge their efforts, while bipartisan leaders in places such as New Mexico and Alaska are pushing to create their own state green banks…

Green banks provide financing to support climate-friendly projects, often focusing on energy savings and solar generation in residential and commercial buildings. Such projects have struggled to obtain capital from traditional financing institutions.

Like conventional banks, green banks provide loans that must be repaid, but they often offer long-term, low-interest loans that aren’t available on the private market. Some use other tools to lower risk for private lenders or to finance projects in partnership with utilities.

USDA accepts applications for Rural Energy for America Program (REAP)

USDA is making $300 million available under the Rural Energy for America Program (REAP) to expand renewable energy and support energy-efficiency projects for people living in rural America. This funding includes $250 million provided by the Biden-Harris Administration’s historic legislative package known as the Inflation Reduction Act. The application deadline is March 31, 2023.

USDA is seeking applications for Fiscal Year 2023 funding. Two significant changes to this additional funding include an increase in the maximum Federal grant share from 25% to 40% of total project cost and an increase of maximum grant amounts from $250,000 to $500,000 for energy efficiency projects and an increase from $500,000 to $1,000,000 for renewable energy systems. Projects in underserved areas are prioritized for funding under this notice.

Agricultural producers and rural small businesses are eligible applicants for loan guarantees and grants to develop renewable energy systems and to make energy efficiency improvements. State and local governments, federally-recognized tribes, land-grant colleges or universities or other institutions of higher education, rural electric cooperatives, public power entities, and Resource Conservation & Development Councils (as defined in 16 USC §3451) are eligible applicants for grants to conduct energy audits and provide development assistance.

To discuss potential projects and ask questions about the REAP program or the application process, contact your local USDA Rural Development State Energy Coordinator.

Leaky air ducts can undermine heat-pump performance. Aeroseal has a fix

Read the full story at Canary Media.

After decades of steady growth, a tech that seals air ducts from the inside out may be poised to take off, thanks to new heat-pump and efficiency incentives.

Conservation could soon take center stage for many F&B companies

Read the full story at The Food Institute.

Food and beverage companies are finding water and energy conservation practices are not only good for the planet, but good for the bottom line.

Nationwide initiative to accelerate energy upgrades for affordable housing

Residential Retrofits for Energy Equity (R2E2) will provide deep technical assistance to state, local, and tribal governments as well as community-based organizations to jumpstart energy upgrades for single family and multifamily affordable housing, especially in frontline communities. These retrofits will lower utility bills, reduce greenhouse gas emissions, improve residents’ health, create good-paying local jobs, and help mitigate racial inequity.

R2E2 will kick off with training sessions in January for state, local, and community teams on scaling up building energy retrofits and leveraging the unprecedented federal funding available from COVID-19 relief programs, the bipartisan infrastructure law, the Inflation Reduction Act, and other sources. R2E2 is a partnership of the American Council for Energy-Efficient Economy (ACEEE), Elevate, Emerald Cities Collaborative, and HR&A Advisors, with People’s Climate Innovation Center advising on centering equity in the project and its outcomes and on facilitating community-driven planning processes.

USDA accepts applications for Rural Energy for America Program

U.S. Department of Agriculture (USDA) Secretary Tom Vilsack yesterday announced that the department is making $300 million available under the Rural Energy for America Program (REAP) to expand renewable energy and support energy-efficiency projects for people living in rural America. This funding includes $250 million provided by the Biden-Harris Administration’s historic legislative package known as the Inflation Reduction Act.

USDA Rural Development is in a unique position to make climate-smart investments in rural infrastructure. The Inflation Reduction Act represents the largest ever federal investment in clean energy for the future. This historic funding will strengthen our energy security, create good-paying jobs, and save Americans money on their energy costs.

USDA is seeking applications for Fiscal Year 2023 funding. Two significant changes to this additional funding include an increase in the maximum Federal grant share from 25% to 40% of total project cost and an increase of maximum grant amounts from $250,000 to $500,000 for energy efficiency projects and an increase from $500,000 to $1,000,000 for renewable energy systems. Projects in underserved areas are prioritized for funding under this notice.

USDA will host an informational webinar for applicants and stakeholders on Wednesday, December 21, 2022, from 3:00 – 4:30pm Eastern Time. To register, visit: 
https://www.zoomgov.com/webinar/register/WN_BSQ3b8K6Sz-sbpdJluEtfw.

Agricultural producers and rural small businesses are eligible applicants for loan guarantees and grants to develop renewable energy systems and to make energy efficiency improvements. State and local governments, federally-recognized tribes, land-grant colleges or universities or other institutions of higher education, rural electric cooperatives, public power entities, and Resource Conservation & Development Councils (as defined in 16 USC §3451) are eligible applicants for grants to conduct energy audits and provide development assistance.

Interested applicants are encouraged to contact their local USDA Rural Development State Energy Coordinator well in advance of the application deadlines to discuss their project and ask any questions about the REAP program or the application process.

Additional information on the required materials and how to apply for the REAP program are available on page 77059 of the Dec. 16, 2022, Federal Register.

U.S. Department of Energy recognizes Better Plants partner Waupaca Foundry, Inc. for energy efficiency leadership

The U.S. Department of Energy (DOE) recently recognized Better Buildings, Better Plants partner Waupaca Foundry, Inc. for energy efficiency advances made in its Waupaca, Wisconsin facilities. DOE staff toured Waupaca’s Plant 1 to see firsthand examples of the efficiency innovations made throughout its portfolio.

As the world’s largest iron foundry, Waupaca melts up to 9,500 tons of iron per day. The company committed six facilities across the U.S. as an inaugural Better Plants partner and has reduced energy intensity by more than 20% to date. Since joining Better Plants, Waupaca’s commitment has expanded to include decarbonization through participation in DOE’s Low Carbon Pilot and Better Climate Challenge.

Waupaca received a 2022 Better Plants Better Project Award for upgrading and optimizing the compressed air system at Plant 1, increasing the system’s energy efficiency by 13.5% and reducing annual energy usage by 18,000 MMBtu and annual water usage by 13 million gallons.

At Plant 2/3, the company upgraded and expanded the waste heat recovery system by installing a new control system, upgrading piping, adding three new air units, incorporating new controls and heat recovery technologies, and commissioning the new system and additional air units to ensure all operational requirements were met. The improvements increased the amount of waste heat recovered at Plant 2/3 by 42% and informed Waupaca’s implementation of waste heat recovery upgrades at Plant 1.

The combined savings at Plants 1 and 2/3 reduced Waupaca’s natural gas usage by 1,200,000 therms per year, equivalent to $540,000 in annual savings and an annual reduction of 72,000 tons of CO2. Waupaca shared its process and results in a Better Plants Showcase Project so that other organizations may learn from its success.

Better Plants is part of the Better Buildings Initiative, through which DOE partners with public and private sector organizations to make commercial, public, industrial, and residential buildings more efficient, thereby saving energy and money while creating jobs. To date, more than 900 Better Buildings partners have shared their innovative approaches and strategies for adopting energy efficient technologies. Discover more than 3,000 of these solutions in the Better Buildings Solution Center.