The “Nutmeg State” has a thriving green building economy. With some of the highest energy costs in the nation, Connecticut is an outstanding opportunity for green business.
Connecticut businesses offer a variety of energy savings services, solutions and products for people interested in creating a “Triple Bottom Line” for their real estate.
Connecticut also offers remarkable financial incentives tied to investments in energy conservation and/or renewable energy.
Connecticut is a leader in clean energy programs, with more than 90 projects and 7 megawatts of clean energy in the pipeline across 110 cities and towns. The Connecticut Department of Energy and Environmental Protection (DEEP) has funded 11 resilient power microgrids to reduce dependency on the major utilities, while increasing redundancy and resiliency across the state.
By tapping into these opportunities, you can realize economic, social and environmental benefits that create a “Triple Bottom Line” for your real estate.
CT Green Building Council (CTGBC)
The Connecticut Green Building Council (CTGBC), the local chapter of the U.S. Green Building Council, was formed in 2001 with a mission to promote and educate policy makers, the Connecticut construction industry and building owners as well as the financial community of the benefits of these buildings.
The CTGBC plans various workshops on green building topics, networking opportunities, educational forums, introductory seminars on green buildings as well as work with the US Green Building Council to hold “LEED” training in Connecticut.
Connecticut Green Building Tax Credits, Deductions and Incentives
Many commercial and residential properties in Connecticut are well-positioned to benefit from state or federal green building tax incentive options and/or financing programs.
While every option is as unique as the real estate it is associated with, each offers a path to boost cash flow and, therefore, increase asset value. You can leverage incentive programs to invest in solid state (LED) lighting, or rooftop photovoltaic systems, for example.
The following options may be used separately or together.
Eversource – ZREC and LREC Long Term Contracts:
ZRECs and LRECs are performance based incentives that pay solar panel owners a fixed amount for the electricity they produce for a period of 15 years. ZREC stands for Zero Emissions Renewable Energy Certificate. LREC stands for Low Emissions Renewable Energy Certificate.
The incentives are obtainable for Solar Photovoltaic and other renewable energy systems according to the following sizes:
- 100KW up to 1MW in capacity for a ZREC
- 100KW up to 2MW in capacity for an LREC
Owners of solar panels may learn more and apply to receive LRECs and/or ZRECs through Eversource, formerly CL&P. Applications for this incentive must be submitted online and projects applying must be located in the Eversource service territory.
Local Option – Property Tax Exemption for Renewable Energy Systems – This is a property Tax Incentive. The incentive amount is offered and set by local municipalities. The energy production capacity may not exceed the total electric load for the Facility applying for the credit.
State Property Tax Exemption for Renewable Energy Systems – This is a property Tax incentive which allows for up to 100% tax exemption for a renewable energy powered property whose electric generating capacity cannot exceed the total electric load for the Facility applying for the credit.
Sales and Use Tax Exemption for Solar and Geothermal Systems – This is a sales tax Incentive which allows for up to 100% tax exemption for commercial properties who purchase solar energy production equipment. This tax incentive applies to the equipment purchased and the labor used to install said equipment. No expiration date is listed for this program. A CERT-140 form, found on the CT Department of Revenue Services, must be presented at time of purchase to the authorized seller.
Local Option – C-PACE Financing – Connecticut Property Assessed Clean Energy (C-PACE) is a no money down financing option that provides commercial building owners with capital to make energy efficiency improvements. There is no financing minimum but this incentive is preferred to be used for capital improvements above $150,000 due to transaction costs.
This finance incentive can be applied to solar photovoltaic systems, HVAC, efficient lighting and lighting controls, mechanical, building envelope, insulation, and other efficiency measures. These measures can be 100% financed as long as they produce a positive return on day one.
Access to PACE financing can make investments in solar energy particularly effective, especially when combined with other energy efficiency measures.
To be eligible the property must be located in a participating municipality and the property owner must work with an approved energy professional to help identify eligible projects. To learn more and apply, visit CPACE.com.
Commercial and Industrial Rebate Program – This is a rebate incentive provided by Ameresco aimed to help customers install energy efficient equipment, such as lighting/lighting controls, to help reduce peak loading. The rebate amount is up to 100% of the project cost with a maximum of $1000/kW and is based directly on the amount of kWh’s saved during peak hours with the implementation of the new energy efficiency equipment. Peak hours are defined as: Winter – Dec/Jan (5pm-7pm) & Summer – Jun/Jul/Aug (1pm-5pm)
Energy Efficiency Fund (Electric) – Energy Opportunities – Energize CT program offers commercial, industrial and/or municipal property owners of any size the opportunity to engage in energy efficiency measures using high efficiency alternatives to conventional lighting, HVAC, refrigeration, water heating, process-related equipment and potential custom measures.
Retrofits are defined as replacements of existing equipment that is operational and has at least 25% of its useful life remaining or upgrades and/or modifications of existing equipment that save energy. The program incorporates financial incentives, which may include zero percent or low-interest rate financing, or rebates, to help reduce or defray the cost of such measures.
Connecticut Green Bank Solar Commercial Lease – A solar lease is an excellent option for commercial property owners.
The Connecticut Green Bank offers a 20 year lease option for systems of 50-350 kW. Smaller projects may also be considered on a case by case basis. After five (5) years, customers have the option to purchase the system at Fair Market Value.
Solar leases may include roof mount and ground mount systems. However, ground mount systems are only accepted with indemnification from the municipality for environmental compliance.
Municipalities and schools must be rated A3 (Moody’s) or A- (S&P/Fitch). Commercial property owners must be rated Aa2 (Moody’s) or AA (SP/Fitch).
Lease customers must be approved for the ZREC (Zero Emissions Renewable Energy Certificate) by a solar installer or use the C-PACE financing option as described here.
One of the most compelling features of the solar lease is that the systems include 20 year warranties on the panels and inverters. Operations and maintenance of the panels is covered by Assurant’s solar insurance bundle. This offers a one-call path to resolution.
The solar lease is also available for municipal buildings or religious organizations, that are unable to take advantage of the tax benefits (investment tax credit and MACRS accelerated depreciation).
Connecticut PPA (Power Purchase Agreement) – The CT PPA is available to commercial real estate owners interested in reducing electric costs, with zero money up front.
With a PPA, a third party investor buys solar panels and uses your roof to install them. In return for using your roof, you receive a significant reduction in the cost of your electricity… In some cases, a 30% or larger reduction in electric costs may be realized. Your reduced rate is guaranteed for 15 years, so you are not affected by future increases in the cost of electricity from EverSource or United Illuminating.
After 15 years the solar system may be purchased at market value or it can be or removed or the PPA can be extended.
CT Business FEDERAL Tax Incentives
Business Energy Investment Tax Credit (ITC)– This is a corporate tax credit which allows for a credit of 30% of expenditures related to purchasing equipment used to generate solar electricity. No maximum credit limit and no limits to the size of solar energy system installed. This incentive can be used with other incentives described above.
Modified Accelerated Cost-Recovery System (MACRS) – This is a corporate depreciation incentive allowing businesses to recover investments of renewable energy equipment including solar photovoltaic systems through depreciation deductions. Most depreciation schedules operate on a 5 year depreciation schedule.