What Happened?
Miami-Dade County was awarded $1.135 million from Consolidated Edison Solutions after completing improvements to its downtown chilled water system. The system’s improvements qualified Miami-Dade County for federal tax incentives and enabled the region to pay for the improvements through energy cost reductions.
The Goal
Miami-Dade County received more than $1 million in federal 179D tax incentives from Consolidated Edison Solutions after a 15-year period of self-funding the chilled water system upgrades. The county’s Office of Sustainability was also able to save 585,000 kilowatt hour annual electric consumption and reduce greenhouse gas emissions by 327 metric tons per year. As part of the county’s sustainability plan, improvements to the downtown chilled water system enabled more facilities in the county to run on the system while saving energy.
Miami-Dade County established a sustainability plan that takes advantage of the federal 179D tax benefit established through the 2005 Energy Policy Act creating opportunities for tax deductions up to $1.80 per square foot for building retrofits and green construction projects. The 179D rules for government-owned building projects and upgrades state public agencies can allocate the value of the tax benefit to an organization that does pay taxes and receive savings in return. Consolidated Edison Solutions partnered with Miami-Dade County to achieve the savings through an energy performance contract.
Energy Performance Contracting
The U.S. Department of Housing and Urban Development define energy performance contracting as a financing technique to repay the cost of installing energy-efficient measures with cost savings derived from lower energy consumption. Perks to using energy performance contracting include:
- Energy savings without upfront capital costs
- A single contractor can do necessary energy audits
- A guarantee for energy savings from a selected series of conservation measures
The majority energy performance contracting projects are delivered by an energy service company and involve:
- Turnkey Service: The energy service company provides all services for the project
- Comprehensive Measures: The energy service company selects a set of measures to meet the needs of the facility and achieve the desired goals
- Project Financing: The energy service company arranges for project financing from a third party
- Project Savings Guarantee: The energy service company provides a guarantee that energy savings generated will cover the cost of the project in its entirety
Fifth Fuel
Miami-Dade County and public agencies nationwide are looking to optimize the “fifth fuel”, or energy efficiency, in sustainability projects. In many cases it is cheaper to save kilowatt hours through comprehensive efficiency measures than building additional capacity for generating more energy.
Therefore, many organizations are conducting extensive energy audits to pinpoint areas of inefficiencies and make the necessary improvements for long-term sustainability and energy savings. When buildings, lighting, transit systems, industries and utilities are more energy efficient, experts believe the savings generate a fifth source of energy.
A recent study from GE on the Industrial Internet estimates over a 15-year period:
- $30 billion in savings could be achieved if the commercial aviation industry reduced jet fuel use by 1 percent
- $90 billion could be saved through a 1 percent efficiency increase in oil and gas exploration and development
- $66 billion in fuel costs could be cut with a 1 percent improvement in the efficiency of gas-fired power plants
Efficiency on the Brain
Gov1 has reported on a variety of energy innovations that are generating significant financial savings.