The new infrastructure bill passed by Congress (also known as the bipartisan infrastructure bill) includes a section that helps increase energy efficiency for commercial and residential buildings. Efficient energy use is supported by a new program that provides loans and grants to fund energy audits, upgrades and retrofits. In Part 1 of this article series, we provided a general overview of the impact of the legislation on real estate.
Summary of the New Energy Efficiency Revolving Loan Fund Capitalization Program to Support Efficient Energy Use
- By 1 year after enactment, the government must provide grants to help states fund the program at the state level.
- States must apply for the program with justification.
- States must begin using the money no later than 180 days after receiving.
- States will provide loans to eligible recipients for commercial energy audits, residential energy audits, and commercial and residential energy upgrades and retrofits.
- States can use 25% of the money received to provide grants or technical assistance to eligible recipients to carry out audits, upgrades and retrofits.
Commercial Energy Audit Loans
- States can make loans to eligible recipients to conduct commercial energy audits.
- Eligible recipients are businesses that conduct the majority of business in the state, own or operate one or more commercial buildings, or own or operate commercial space within a building that serves multiple functions (i.e., mixed commercial and residential).
- Audits determine overall consumption of energy at the eligible recipient’s facility and provide recommendations for energy reduction through energy efficient upgrades such as lighting, heating, ventilation, air conditioning, windows, appliances, insulation and building envelopes.
- The audit helps with peak energy management by identifying top sources (contributors of the spikes.)
- The energy efficiency audit can include recommending electric systems or other high energy efficient systems that use fuels like natural gas and hydrogen.
Residential Energy Audit Loans
- States can make loans to eligible recipients for residential energy audits.
- Eligible recipients include an individual who owns a single family home, condominium or duplex or manufactured housing, or a business that owns or operates a multi-family housing facility.
- The audit evaluates the same criteria as the Home Performance Assessment used in the Energy Star Program.
- Looks at the same cost-effective opportunities (light, heating, etc.) as commercial.
- Also recommends controls and management of peak energy consumption.
- Provides energy consumption comps (comparable residential buildings in the same geographic area).
- Provides a Home Energy Score.
Commercial and Residential Energy Upgrades and Retrofits Loan
- States can make loans to eligible recipients to carry out upgrades or retrofits of building infrastructure and systems to increase energy efficiency.
- Eligible recipients are the same as the sections above, but the recipients must have completed an energy efficiency audit.
- Upgrades or retrofits of building infrastructure and systems are covered if:
- Recommended by the audit,
- Satisfies at least one criteria of the Home Performance Assessment used in the Energy Star Program,
- Improves the physical comfort of the building or facility occupants, energy efficiency of the building or facility, or quality of air in the building or facility,
- Are cost-effective,
- And reduces demand during peak times.
Grants and Technical Assistance
- States can use 25% of the money to fund grants or technical assistance to eligible recipients for the audits, upgrades and retrofits.
- Eligible recipients can be a business that is an eligible recipient for the commercial audit and has fewer than 500 employees, or a low income individual defined in Section 3 of the Workforce Innovation Opportunity Act that owns a residential building.
Funding
- $250M for the fiscal year 2022 (Oct 1, 2021, through Sep. 30, 2022) and remains available until spent.
In Conclusion
As a property owner, you are faced with many costs. Energy costs are particularly worrisome because they are variable costs that rise unexpectedly for any number of reasons. Focusing on efficient energy use can help you save money. However, it may be expensive to increase energy efficiency. The new infrastructure bill provides your state with the opportunity to participate in a loan and grant program that may assist you with funding energy efficient upgrades so that you can save now and over the long run.
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