Energy Efficiency Incentives, for Local Law 97 and Beyond
In New York State, property owners, both residential and commercial, can tap into a range of valuable energy efficiency incentives aimed at strengthening sustainability efforts. As New York City’s Local Law 97 of 2019 mandates substantial reductions in greenhouse gas emissions for large buildings, these incentives encompass diverse programs, tax credits, and financing options that not only aid in compliance but also offer avenues to reduce energy consumption, cut costs, and champion environmental preservation. Explore your options below:
Installation Rebates
Owners or managers of residential multifamily buildings with 5 or more units can apply for Con Edison’s Multifamily Energy Efficiency Program incentives. Eligible improvements include boilers, common area lighting, insulation, and energy management systems. Additionally, qualifying buildings can receive free LEDs and water-saving devices.
To apply for these incentives, you’ll need to fill out a Multifamily Energy Efficiency Program Application and submit any required documents. Once your application is processed, you’ll be able to choose from a list of approved contractors to carry out the upgrades.
Con Edison Multifamily Buildings Neighborhood Program (Brooklyn and Queens only)
If you own a multifamily building in certain areas of Brooklyn or Queens, you may qualify for Con Edison’s Neighborhood Program, designed to ease the energy grid during peak usage and avoid expensive infrastructure upgrades. The program offers various incentives, including up to $1,650 per kW saved on LED lighting in common areas and free 9W LEDs for tenant units. Wall-mounted A/C systems, elevator motor upgrades, and chiller and cooling tower improvements can also net you up to $2,000 per kW saved. Additional benefits are available for new applications in the Jamaica area after July 1, 2023. These incentives can cover up to 100% of eligible costs, capped at the total project cost.
Con Edison New York State Affordable Multifamily Energy Efficiency Program
If you own or manage an affordable multifamily building with at least five residential units in New York City or Westchester County, you could be eligible for the Affordable Multifamily Energy Efficiency Program (AMEEP). This program offers incentives up to $2,000 per dwelling unit for installing energy-efficient equipment. The aim is to reduce energy consumption, lower maintenance costs, and contribute to New York State’s climate goals. Eligibility requires buildings in New York City or Westchester County with five or more residential units that meet “affordable” criteria, along with necessary supporting documentation. AMEEP is a collaborative initiative involving various energy companies in New York, including Con Edison and National Grid, as well as the New York State Energy Research and Development Authority (NYSERDA).
Tax Incentives
Solar Electric Generating Systems Tax Abatement Program
The Solar Electric Generating Systems Tax Abatement Program offered by the NYC Department of Buildings provides a four-year tax incentive for constructing solar electric generating systems in residential and commercial buildings within New York City. This program is in line with the city’s sustainability plan, encouraging building owners to adopt cleaner and more reliable power sources, thereby reducing greenhouse gas emissions. Eligible systems generate electricity using solar energy but exclude equipment linked to non-solar electric systems or recreational storage. The abatement amounts to 5% of eligible expenses, with a maximum of $62,500 per year for four years or the building’s annual tax liability, whichever is lower. To learn more, contact the Department of Buildings.
Solar Energy System Equipment Credit
Eligibility for the Solar Energy System Equipment Credit is extended to those who have purchased solar energy system equipment, engaged in a written lease agreement for such equipment, or entered an agreement spanning a minimum of ten years to buy power generated by solar energy system equipment not owned by them. The system in question should utilize solar radiation to create energy for residential purposes like heating, cooling, hot water, or electricity. Additionally, it must be installed and used at the principal residence in New York State. The credit amount equals 25% of qualified solar energy system equipment expenses, with a cap of $5,000. This credit, though non-refundable, can be carried over for up to five years if it exceeds tax liability.
Residential Clean Energy Credit
The Residential Clean Energy Credit is available for homeowners who invest in renewable energy solutions like solar, wind, geothermal, fuel cells, or battery storage technology. The credit equals 30% of the costs of qualifying clean energy property installed in homes from 2022 to 2033. It applies to energy-efficient improvements made in the United States and cannot exceed the owed tax amount. Any extra credit can be carried forward for future tax years. There’s no fixed limit except for fuel cell property.
Eligibility covers improvements to the main home, regardless of ownership status, as long as it’s lived in most of the time and located in the U.S. The credit isn’t available for properties solely used for business. Qualified expenses encompass new clean energy property costs such as solar panels, wind turbines, and geothermal heat pumps. Traditional components with a primary structural function don’t qualify. Rebates and incentives might affect the credit amount.
To claim the credit, file Form 5695, Residential Energy Credits, with your tax return. The credit applies to the year when the property is installed, not purchased.
Energy Efficient Commercial Buildings Deduction
The tax deduction program offers building owners the chance to claim deductions for energy-efficient commercial building property (EECBP) and energy-efficient commercial building retrofit property (EEBRP) put into service. The deduction, governed by Internal Revenue Code Section 179D, was expanded in 2022 under the Inflation Reduction Act. Eligibility applies to owners of qualified commercial buildings and designers of EECBP/EEBRP in buildings owned by specified tax-exempt entities, including certain government bodies and organizations. Previously, it was only for owners of qualified commercial buildings and designers of EECBP in certain government-owned buildings.
Qualifying buildings must meet ASHRAE standards, involve systems like interior lighting, heating, cooling, and building envelope, and aim for a 25% or more reduction in energy costs compared to a reference building under the specified ASHRAE standard.
For property placed in service after 2022, the deduction equals the lower of the cost of installed property or a savings-per-square-foot calculation based on energy savings percentages. A prevailing wage and apprenticeship bonus applies if conditions are met.
For property placed in service before 2023, the deduction is capped at $1.80 per square foot for buildings with 50% energy savings, with partial deductions available for certain property. ASHRAE standards dictate energy savings measurements, with different standards for buildings starting construction or being placed in service at different times.
New York State Real Property Tax Exemption
The New York State Real Property Tax Exemption program offers property owners the opportunity to reduce their taxes by installing solar panels. Complete and submit the required form to your local property assessor. However, it’s important to note that specific municipalities and school districts might choose not to participate in the exemption, potentially impacting your property tax assessment by including the solar installation’s value. To determine whether your community has opted out of the program, you can either contact your local assessor’s office or refer to the online list of municipalities provided.
Solar Electric Generating System (SEGS) Tax Abatement
The Solar Electric Generating System (SEGS) Tax Abatement program offers property tax reductions for utilizing solar power, a reliable and renewable electricity source. Eligibility is determined by the NYC Department of Buildings, while the Department of Finance manages the benefit. Class 1, 2, and 4 properties are eligible, except those under ICAP, 421-a, 421-b, 421-g, or paying PILOTs. The benefit amount depends on your solar service start date, ranging from 2.5% to 8.75% of installation cost. The benefit is either the percentage of cost, your Annual Property Taxes, or $62,500—whichever is lowest. The abatement applies for four years beginning on July 1 after Department of Buildings approval.
In New York State, individuals and businesses can qualify for a refundable Clean Heating Fuel Credit if they purchase bioheating fuel for residential space heating or hot water production. To be eligible, the bioheating fuel must contain at least 6% biodiesel and must have been purchased on or after January 1, 2017. The biodiesel percentage is indicated by a number following the letter ‘B’ in the fuel’s designation (e.g., B10 means 10% biodiesel).
The credit amount is calculated as one cent for each percentage of biodiesel in the fuel, up to a maximum of 20 cents per gallon, for purchases made before January 1, 2026. For example, if you buy 250 gallons of bioheating fuel with 20% biodiesel, you would be eligible for a $50 credit.
To claim this credit, you’ll need to maintain proper records that can substantiate your eligibility, especially if audited. Documentation requirements are outlined in the Clean Heating Fuel Credit recordkeeping guidelines.
Financing Options
NYC Accelerator Financing / PACE Financing
The NYC Accelerator program offers various financing options to assist with energy efficiency upgrades. Among the most notable is the NYC Accelerator PACE Financing, which provides up to 100% long-term financing for energy-saving measures. This financing is unique as it’s repaid via the tax bill, making it transferable upon the building’s sale. It’s available for commercial, industrial, multifamily buildings, and nonprofit institutions. Other financing options include mortgage loans tailored for energy improvements, equipment loans for urgent repairs, and Energy Service Agreements where providers oversee the entire retrofit project. Owners can also explore Power Purchase Agreements for on-site power projects and predevelopment loans for initial planning costs.
If you’re a building owner of multifamily, commercial, industrial, or institutional properties, you may be eligible for Equipment Loans offered by the New York City Energy Efficiency Corporation (NYCEEC). These loans have a minimum size of $200,000 and can cover up to 90% of your project costs. For affordable multifamily buildings, the financing can even go up to 100% of the project costs. The loan package is quite flexible, allowing for construction financing if needed, multiple draws, and the bridging of incentives. A wide array of energy-efficient technologies and systems are eligible for financing, including HVAC, lighting, domestic hot water systems, and more. One key requirement is that any project financed through this program must aim for a net annual reduction in greenhouse gas emissions.
NYCEEC Loans: Green Predevelopment Loan
The NYCEEC Green Predevelopment Loan Fund is designed to assist owners of affordable multifamily buildings in New York City with predevelopment expenses. The loan offers 0% interest and no fees, with a term of 30 months. Eligible applicants are those seeking construction or permanent financing through specific programs, such as those offered by the New York City Department of Housing Preservation & Development. The loan can cover a variety of predevelopment costs, including property surveys and legal fees. The maximum loan amount varies, with up to $40,000 available for projects involving a single building. To apply, owners need to complete a detailed application and provide a soft commitment letter from their construction lender.
NYCEEC Loans: Multifamily Express Green Loan
The Multifamily Express Green (MEG) Loan is specifically designed for Cooperatives and Condominium Associations. With a minimum loan size of $200,000, it can finance up to 90% of eligible project costs. One of the standout features of this loan is its streamlined application and closing process, which doesn’t require an energy audit. The loan is applicable for a range of energy-efficient technologies and upgrades, including solar photovoltaic systems, HVAC upgrades, electrification, heat pumps, window replacements, building envelope improvements, battery storage, and measures to comply with Local Law 97. The loan aims to make the financing process as straightforward as possible, offering standardized loan documentation to expedite the process.
Income-Based
EmPower+ assists low- and moderate-income single family and 2 to 4 family households in enhancing energy efficiency. This initiative offers free home energy assessments to identify energy waste and create a tailored plan for energy reduction. Qualifying participants receive free installation of suggested improvements and financial incentives. The program covers both owners and renters in this category. Application involves eligibility confirmation, submission, contractor selection, assessment, approval, and implementation. Low-income households can receive up to $10,000 in no-cost improvements, while moderate-income homes get up to 50% off eligible upgrades, capped at $5,000. Renters can participate with landlord permission. Essential enhancements like insulation, air-sealing, safety items, and appliance upgrades are included. Additional incentives might be available through utilities and local organizations. Regional Clean Energy Hubs offer assistance with applications and provide information on local support.
More New York State and energy company rebates can be found at NYS Clean Heat.
Contact RAND
RAND’s MEP & Energy Teams can help building owners develop energy and greenhouse gas reduction strategies, identify feasible energy reduction measures, and create a roadmap to achieve the targeted emissions reductions per Local Law 97 of 2019. For more information, contact RAND at 212-675-8844 or info@randpc.com.
This list is current as of August 2023. We will strive to keep this information as up-to-date as possible so that you have latest resources at your disposal.