Incentives for More Sustainable and Greener Businesses

Part
01
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Part
01

Incentives for More Sustainable and Greener Businesses - New York

New York has several tax and financial incentives for small businesses becoming more sustainable in the state. Some include the NY Solar Sales Tax Exemption, Property Tax Abatement for PV, Energy Conservation Improvements Property Tax Exemption, the NY-Sun Incentive Program, and Energize NY.

New York Solar Sales Tax Exemption

  • Since 2005, the state of New York has exempted the sales and compensating use tax on the retail use and installation of commercial solar energy materials.
  • These commercial solar energy systems are exempt from New York's 4% sales and use tax and the 3/8% sales and used tax imposed in some districts.
  • The exemption also applies to commercial solar energy systems and solar energy systems owned by third parties. Solar lease payments and receipts showing the sale of electricity by these solar energy equipment are exempt from the state sales and use tax.
  • This exemption may be extended to local sales and use tax in New York municipalities and counties with a population of more than 1 million. The government in these counties may decide whether the exemption applies to local taxes.
  • The sales tax exemption does not apply to recreational applications like solar pool heating.

Property Tax Abatement for Photovoltaic (PV) and Energy Storage Equipment

  • For commercial building owners installing solar photovoltaic systems for electricity, the state offers property tax abatement incentives.
  • The program enables property owners to deduct 5% of the solar installation cost annually, for four consecutive years, from property tax bills amounting to $62,500.
  • The deduction rate depends on when the solar system was installed. If it was installed earlier than 2018, the rate could be between 2.5% to 8.75%. The program ends in 2021.

Energy Conservation Improvements Property Tax Exemption

  • Under this program, businesses may be exempt from real property taxes for some energy systems, such as fuel cell electric generating systems, solar energy systems, and micro-hydroelectric energy systems.
  • The tax exemption lasts for up to fifteen years from the date the energy equipment was installed.
  • To qualify for the exemption, "electric energy storage equipment must have started construction after January 1, 2018, and before January 1, 2025. The exemption applies to the increase in value of the real property due to the addition of the energy equipment."

NY-Sun Incentive Program

  • For small businesses in New York, this program offers financial incentives and financing to alleviate the cost of buying and installing a solar system.
  • The program was launched with the goal of supporting 6 GW of installed capacity by 2025.
  • The program has different megawatt budgets that vary by region. The block incentives are set based on installed cost per watt, historical demand, and equity, on a regional basis.
  • The incentives "available within each MW Block are scheduled to step down over time as certain targets are met."
  • Small businesses need to partner with a participating contractor to be certain they are eligible for the incentive.
  • New York-based small businesses are offered a maximum incentive of 750 kW. Incentive rates vary from $0.45/W to $0.60/W based on the region.

Energize NY

  • Also known as Property Assessed Clean Energy (PACE) financing, Energize NY offers commercial and nonprofit property owners financing for renewable energy projects and deep energy upgrades.
  • The program allows these property owners to pay back the "cost of clean energy upgrades through a special charge on their property tax bill."
  • Program participants must have renewable energy projects in a NY municipality that is a member of the Energy Improvement Corporation (EIC).
  • The financing amount ranges from $5,000 to $2,500,000. It is limited to "10% of the appraised value of the property, or the cost of energy improvements, whichever is lower."
  • Its interest rate ranges from 5% to 7% depending on the term length. Term lengths are typically 5 to 15 years.

NYSEG (Electric) - Commercial and Industrial Efficiency Program

  • Prescriptive rebates and custom incentives are offered to non-residential NY customers that have installed energy efficient equipment with an electricity Systems Benefits Charge (SBC) included in their energy bills.
  • All nonresidential NYSEG or RG&E electricity customers are eligible. Custom incentives are "available when energy efficiency improvements require site-specific engineering and cost analysis."
  • The incentive amount varies by equipment. For example, for LED lighting, it is $4 to $10 per lamp for replacement tubes. For HVAC, it is $50 to $100/ton.
Part
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Part
02

Incentives for More Sustainable and Greener Businesses - Connecticut

The state of Connecticut encourages small businesses to become more sustainable by offering low-interest loans through the Small Business Energy Advantage Loan Program, Commercial PACE Financing, and Low Interest Energy Efficiency Loan Program.

Sales and Use Tax Exemption for Solar and Geothermal Systems

  • Connecticut has a sales and use tax exemption rule for geothermal resource systems and solar energy equipment.
  • Eligible equipment include solar space-heating systems, solar water-heating systems, and solar-electric systems.
  • Consumers buying any of the eligible equipment must ensure that they present a Certification Form CERT-140 to the seller.

Small Business Energy Advantage Loan Program

  • This program offers loans to companies making energy efficiency upgrades to their utilities.
  • The loans are then repaid through the customers' utility bills.
  • The loans provided range from $500 to $100,000 and have a 0% interest rate. They are to be repaid in 12 to 48 months.
  • Eligible energy efficient technologies include lighting, air conditioners, LED lighting, heat pumps, and chillers, to name a few.

Commercial PACE Financing

  • Connecticut's Commercial PACE Financing initiative is an innovative program that helps business owners get access to long-term financing to make smart energy upgrades to their buildings.
  • These upgrades can significantly reduce the energy costs at these facilities, thus making them more comfortable.
  • The program focuses on capital improvements worth more than $150,000. The loan offered can be repaid through the local property tax bills within 20 years.

Express Lighting Rebate Program

  • Through this program, business owners are offered access to energy efficient lighting fixtures.
  • A wide range of "lighting equipment, including sensors, is eligible for rebates on a per-unit basis ranging from $10 to $50 per fixture."
  • To be eligible, business owners must be customers of Eversource. There must also be at least a 10% "system wattage reduction between the old and new system wattage for a product to qualify."

Low Interest Energy Efficiency Loan Program (Electric and Gas)

  • Under this program, small business owners that are electric customers of The United Illuminating Company and Eversource Energy and gas customers of Southern Connecticut Gas and CNG are offered low interest loans for investments in energy efficiency improvements.
  • The loan ranges from $2,000 to $1,000,000 and is offered at a subsidized low-interest rate.
  • The loan can be repaid in up to 60 months.

RESEARCH STRATEGY

We mainly leveraged DSIRE, the most "comprehensive source of information on incentives and policies that support renewable energy and energy efficiency in the United States" to gather some government tax incentives and support offered to small businesses becoming more sustainable or greener in the state of Connecticut. While we attempted focusing on tax incentives alone, we found that Connecticut only offers one tax incentive for small businesses willing to be more sustainable. A lot of the programs we found are loans that need to be repaid.
Part
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Part
03

Incentives for More Sustainable and Greener Businesses - Rhode Island

Rhode Island only has one government tax incentive for small businesses becoming more sustainable. These businesses can also leverage the federal investment tax credit. There are several other financial incentives that Rhode Island offers to encourage small businesses to be more sustainable. Some include the Renewable Energy Fund and the REG program.

Renewable Energy Sales Tax Exemption

  • In Rhode Island, some renewable energy systems and equipment sold in the state are exempt from the state's use and sales tax.
  • A few of these eligible energy systems include DC-to-AC inverters interconnecting with utility power lines, solar thermal collectors like extruded plastic, wind turbines, solar electric systems, wind turbines, and geothermal heat pumps.

Renewable Energy Fund

  • Rhode Island's Renewable Energy Fund offers grants and loan opportunities for direct municipal, residential, and commercial renewable energy installations. The program also offers these funds to new renewable energy business ventures in the state.
  • The program has various funding levels, ranging from $250,000 to $1,000,000. Awards are given based on the "technical and financial feasibility of a project, cost per kilowatt hour (kWh) of energy produced, anticipated amount of renewable energy related benefits (job creation, environmental benefits, etc.), and the experience of the solar provider’s project team."
  • The program offers grants specifically for renewable energy initiatives that could potentially help produce electricity in a cleaner manner.

Federal Investment Tax Credit

  • Small businesses in Rhode Island can leverage the 26% Investment Tax Credit offered by the Federal Government for eligible renewable energy systems.
  • This federal solar tax credit allows businesses to remove 26% of the cost of installing a solar energy technology from their federal tax.
  • There is no limit on the value and the business owners must own their solar energy system to qualify.
  • In 2021, this credit will reduce to 22%. From 2022 onward, it will be just 10%.

Net Metering

  • Net metering requires "electric distribution companies to credit power produced by renewable energy systems installed behind a customer meter."
  • It allows state agencies, municipalities, public housing organizations, hospitals, and non-profits with eligible renewable energy materials to get bill credit for power generated up to 125% of the on-site use each billing period.
  • Participants must have a renewable energy system installed onsite. The net metering systems are typically "sized to meet on-site loads, based on a three-year average of electricity consumption at the property."
  • Utilities may not "impose any other charges on the net-metered customers" as these customers are exempt from "backup or standby rates commensurate with the size of the net-metered system."

Renewable Energy Growth Program (REG Program)

  • This program supports the creation of distributed generation projects in Rhode Island. Technologies like solar, anaerobic, wind, and hydro power are eligible.
  • The program allows customers to "sell their generation output under long-term tariffs at fixed prices." Annually, the program revises its megawatt allocation plan and new ceiling prices.
  • In 2019, the program had a cap of 12.23MW. As of January 2020, its cap is 7.44MW.
Part
04
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Part
04

Incentives for More Sustainable and Greener Businesses - Massachusetts

The state of Massachusetts encourages small businesses to be more sustainable through programs and incentives like the Business Energy Efficiency Rebate Program, Small Business Direct Install Program, Renewable Energy Property Tax Exemption, Solar Massachusetts Renewable Target (SMART) Program, and the Excise Tax Exemption for Solar or Wind Powered Systems.

Renewable Energy Property Tax Exemption

  • In Massachusetts, solar energy and wind energy systems that are used as primary power systems for heating or supplying general energy needs of taxable property are 100% exempt from local property tax for 20 years.
  • The incentive "applies only to the value added to a property by an eligible system and does not constitute an exemption for the full amount of the property tax bill."
  • Energy systems that are used for dual purposes, such as structural and energy, are not eligible for the exemption.
  • Eligible properties include commercial and industrial business properties.

Mass Save - Small Business Direct Install Program

  • The Small Business Direct Install program offers customers in Massachusetts "payment of up to 70% of the cost of energy efficiency equipment and installation."
  • Typically, small businesses have to work with qualified contractors. These contractors offer a free on-site energy assessment to identify potential energy savings measures.
  • Next, they will provide a customized sheet with details on energy efficient recommendations and installations.
  • The program is available to customers that get power from the National Grid, Columbia Gas of Massachusetts, Unitil, Cape Light Compact, Eversource, Blackstone Gas Company, Berkshire Gas, and Liberty Utilities.

Solar Massachusetts Renewable Target (SMART) Program

  • Under the Solar Massachusetts Renewable Target (SMART) Program, solar energy system owners in the state get payment for their solar production at a fixed rate per kWh of solar energy produced.
  • The incentive or compensation that the system owner receives is "calculated by subtracting the value of the energy (determined by electricity rates) from the total incentive amount." The compensation rate varies from $0.01/kWh to $1.06/kWh depending on the project.
  • The program is capped at a gross sum of 1,600 megawatts. Up to 35% of the program's capacity is set aside for projects of 25 kW or less.
  • Small businesses in Massachusetts that own any form of solar energy system are eligible.

Excise Tax Exemption for Solar or Wind Powered Systems

  • For businesses, Massachusetts exempts any "solar or wind powered climatic control unit and any solar or wind powered water heating unit or any other type unit or system powered that qualifies for the state's excise tax deduction for these systems from the tangible property measure of the state's corporate excise tax."
  • The incentive is 100% of the "tangible property portion of the excise tax."
  • The solar or wind installation must be based in Massachusetts and used solely for business.

Reading Municipal Light Department - Business Energy Efficiency Rebate Program

  • The Reading Municipal Light Department provides incentives for non-residential customers to install energy-efficent sensors and lighting.
  • The rebates offered by the department are limited to $25,000/customer annually. This rebate cannot exceed 50% of the purchase cost.
  • The incentive amount varies but it typically ranges from $10 to $350 for lighting and $15 to $60 for sensors & controls.
  • Eligible energy-efficient upgrades include solar photovoltaics, manufacturing equipment, and wind, among several others.
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