Incentives abound for businesses to save energy

It didn’t take much for Jack Fischer, general manager of Southeastern Container’s Northeast region, to convince his superiors to spend more than $313,000 to help the firm’s Hudson plant stop wasting energy.

It wasn’t just that the bottle manufacturer’s major customer – Coca Cola – would be pleased that it was doing something to reduce its energy “footprint.” It also would mean that the plant would end up saving at least $563,000 a year in energy costs.

And it didn’t hurt that it was accessing a $366,000 energy conservation grant through Public Service of New Hampshire for the project. That turned a two-year payback – a harder sell — into less than a one-year payback.

“One-year paybacks are a no-brainer, even for people without MBAs,” said Fischer. “The money we save on electricity goes right down to the bottom line.”

Southeastern Container’s grant came from PSNH is not strictly the utility’s money. It comes from the systems benefits charge that it – and every other utility customer – pays. More than 1,000 other New Hampshire companies earned some $10 million in rebates from that pool of money last year.

But utility rebates aren’t the only incentive available.

Indeed, there are some 20 programs that businesses can use to either conserve energy or switch to renewable energy and lower annual energy costs.

They range from federal tax breaks to local property-tax breaks (if you happen to live in the right town). There are free audits, zero- or low-interest loan programs. There are incentives for farmers, gas stations, home builders, rental car agencies, rural business, even for appliance manufacturers. (See accompanying chart.)

Southern Container’s Hudson plant was under PSNH’s Request for Proposal program, which has a much more complex application than most — more like a bid. The company packaged a number of initiatives that it could receive rebates over three or four years, starting off with replacing its lighting systems. That initiative alone saved $120,000 year, or enough energy to light up 670 homes.

The company also installed reflective ceilings to capture the heat from its machinery, and it now blows the air where needed to heat the building for its 80 employees. While the move saved about $10,000 annually in gas — not electricity – it was still eligible for the RFP program as part a larger package.

But the company’s biggest savings came through re-engineering the company’s compressed air system, which allows it to shape the bottles. The idea was to recycle the compressed air, rather than just release the pressure into the atmosphere, so it could be used again in another process. There also were more efficient ways to compress the air in the first place.

According to PSNH, the Hudson plant is one of the first plants in New England to have this type of air recovery system. Indeed, the company was officially recognized as one of the region’s “Northeast Business Leaders for Energy Efficiency” during the Northeast Energy Efficiency Partnerships 10th anniversary summit last May in Rhode Island.

While putting the plan into place was hard work, it wasn’t that difficult, especially since several people at Southeastern Container attended PSNH-sponsored workshops to earn about the RFP program.

Much of it simply involves “filling in the blanks,” Fischer said. And the results — now that the first two quarters of 2007 are over — are even better than initially thought, and the payback period might have even be as little as six months, he said.

The RFP program is unique to PSNH. Other New Hampshire utilities also offer unique programs, and they all offer various rebates under three relatively standard program using systems benefits proceeds. (The benefits charge money also is available to consumers – for instance, the rebates they can get when they buy energy-saving light bulbs and appliances. But since businesses pay more than half of the charges, they get more than half of the benefits.)

Large businesses (those that use over 100,000 kilowatt-hours a year) can benefit from the standard program in two ways:

• Those retrofitting their systems can get a rebate of either 35 percent of the installation cost or the amount they save in one year, whichever is less. Utilities gave out some 254 rebates last year totaling $3.6 million in 2006.

• Those installing new plants or totally replacing equipment can get 75 percent of the cost to upgrade to a system that saves more energy than required by law. Some 217 New Hampshire companies participated in that program last year, reaping $2.5 million

Small businesses are eligible for a free energy audit, and the utility will rebate about half the cost to implement suggestions stemming form the audit. Some 841 companies took advantage of that deal, receiving $2.7 million.

Electric companies are not the only ones with energy-saving programs. Gas companies have their own, usually related to heat and hot water.

KeySpan, for instance, will give companies up to $100,000 if they install thermal solar applications, and Northern Utilities will provide up to $50,000 for hot water energy-saving equipment.

And many of the grants are tax deductible — just one of the numerous federal tax breaks to encourage companies to save energy (though you should check with your accountant about eligibility).

Tax breaks

There also are numerous federal tax breaks businesses can use. Perhaps the most wide-ranging is the commercial tax deduction that can provide businesses with a credit of as much as $1.80 per square-foot if they manage to cut their energy bill in half.

The program applies to those leasing space as well as property owners. So if the payback period is less than the lease, it might be worth it. Or if not, the company might be able to work out a deal with the owner to share the cost.

Like anything with the government, this isn’t without its share of paper work. An approved firm has to certify the energy savings using approved savings. While this make sense to a large company with huge warehouses – Wal-Mart, for instance — “it’s not easy for small businesses,” said Tom Belair, a supervisor of energy efficient services at PSNH.

On the other hand, small businesses can take advantage of some of the federal tax breaks that consumers have, like tax breaks on hybrid cars for instance.

There are no tax breaks available at the state level, but a recent change in the net metering law might be beneficial to business. Previously, those who generated their own electricity could only reverse the meter and claim a credit for 25 kwh. The new law, which goes into effect Aug. 17, allows that credit to increase to 100 kwh.

And while the state Office of Energy and Planning doesn’t have many direct subsidy programs of its own, it does point businesses to several other programs that they might not know about.

One is the Industrial Assessment Center, a federally sponsored program within the University of Massachusetts that provides free audits to New England businesses that would only be considered small on the national scale: gross annual sales of less than $100 million and no more than 500 employees. That helps those businesses too large to be eligible for the utilities’ free audits.

The second is a loan program involving the New Hampshire Business Resource Center, part of the state Department of Resources and Development, and Ocean National Bank. This involves low-interest loans of $10,000 or more for energy projects that will pay for themselves in seven years or less.

Granite State Electric offers an even better deal for those customers that average demand use of 200 kilowatts or less. In addition to a free audit, the utility will pay for 80 percent of the installation charge, and provide the customer with a two-year interest-free loan to pay for the rest.

Finally, even New Hampshire towns offer you a break for energy savings. Some 64 towns offer some kind of tax exemption for property owners – including commercial — that invest in solar, wind or central wood heat. While this tax break has been around for 20 years, few people know about it and fewer take advantage of it, particularly businesses.

Bedford, for instance, leads the state by exempting property owners of $244,000 in taxes, all of them residential. (One business is now looking into it.) Unlike many towns, Bedford doesn’t cap its exemption, so a business could – using many of the aforementioned programs – not only cut its utility bills, but its tax bill as well. And, like the energy savings, the tax break keeps on going.

Indeed, as the price of energy and property tax rates increase, the savings should increase with time.