Making your commercial real estate (CRE) portfolio more energy efficient and sustainable is a great way to achieve your environmental, social, and governance (ESG) goals, help the environment, improve your brand image, and to see a strong return on your investment.
But it’s an expensive endeavor. Fortunately, public utilities, local governments, and state agencies make energy efficiency a more affordable option with energy incentive programs. Depending on where your buildings are located, these incentive programs can come in the form of rebates, tax incentives, or loans for qualified purchases. Categories include incentives for HVAC systems, water heaters, building insulation, and other energy efficiency measures.
While these incentives can vary significantly by location, they essentially fall into three categories: prescriptive incentives, custom incentives, and rebates. The key differences between these three are the types of projects that qualify and the dollar amounts you receive.
1. Prescriptive energy incentives
These incentives are awarded for the most common upgrades or improvements made—for example, upgrading from fluorescent, incandescent, or halogen lighting to high-efficiency LED lights. Prescriptive incentives offer preset dollar amounts once the work is completed, requirements are met, and verification is submitted to the governing body. Customers are paid a standard rate for qualifying equipment that’s installed properly. These types of incentives don’t typically require pre-approval.
The downside of these programs is that funding is often limited and available on a project-by-project basis until the funds are used or the program ends, whichever comes first. And many utility incentive programs may be modified or terminated without prior notice, leaving you to foot the entire bill. If you want prescriptive energy incentives in your ESG arsenal, it’s in your best interest to act quickly—ideally, not long after the specific incentive program begins.
2. Custom energy incentives
These programs offer greater flexibility than their prescriptive counterparts, but the eligibility requirements may be more complex. Custom incentives require approvals from the issuing entity before qualifying projects begin—including removal and/or installation of equipment. The utility will inspect your existing equipment and determine the potential energy savings as compared to the proposed more efficient equipment or system. The more energy the upgrade will save, the more you earn in incentives.
For example, the benefits of upgrading an HVAC system from pneumatic to direct digital control vary significantly from building to building, which requires custom calculations. Thus, this kind of project is usually supported with custom incentives.
Rebates are payments you receive after you’ve upgraded to new, energy-saving equipment. Qualifying products are found in catalogs issued by utility providers. To be eligible for these types of energy incentives, the building must have a commercial gas or electric account with the utility. Rebates are a great way to partially offset the cost of replacing equipment that’s malfunctioned or is approaching obsolescence.
Use technology to earn energy incentives
Hank, and AI-powered HVAC optimization solution, is one way to upgrade your HVAC system and qualify your commercial real estate for rebates or energy incentives. Hank’s HVAC optimization technology can make your buildings eligible for a number of incentives: automated systems optimization or monitoring-based commissioning incentives, building tune-up incentives, or custom incentives.
For example, when you leverage the power of Hank technology, your commercial building will be eligible for (among others):
- Equipment & Systems Performance Optimization incentives from Mass Save in Massachusetts
- Pay for Performance Program incentives from DCSEU in Washington, D.C.
- Market Access Program from PG&E in California
- Facility Energy Management System rebate from TECO in Florida
Hank success story
When Samuels & Associates–owners of a 492,126 sq. ft. property in Boston, MA, including both office and residential spaces–was faced with significant energy costs, they knew a change needed to be made. With an annual spend of approximately $826,000, a major portion of this expenditure was attributed to HVAC energy usage, totaling 45% of their total energy consumption.
Samuels & Associates sought the expertise of Hank, an AI-based HVAC optimization solution. Hank’s utility experts engaged in multiple discussions with the utility provider, Eversource, to explore the potential energy savings for the building. With the help of Hank, Samuel & Associates achieved an estimated annual cost reduction of $71,500, amounting to a 19% reduction in their HVAC energy consumption.
Want to see if you qualify for one or many energy incentives for your commercial real estate portfolio? Work with a Hank technical specialist, and see just how much you can save.