Energy Act 2005 Encourages Building Upgrades and Reduces Expenses

By John Conover

The Energy Policy Act of 2005 sent an important energy efficiency message from Congress to facilities managers. As the first national energy policy enacted in over a decade, the Energy Act expanded energy efficiency goals, created incentives for the use of renewables and called for new product efficiency standards.

Facilities managers may still be wondering how the new energy legislation affects their operations and occupants. The impact of this legislation on the building sector, the largest user of energy in the U.S., is significant. It provides new opportunities for facilities managers to upgrade aging infrastructure and reduce energy expenses.

New standards for HVAC systems

Facility managers are aware that heating, ventilating and air conditioning (HVAC) systems can impact between 20 to 50 percent of a building’s total energy consumption, depending upon the geography, climate and building function. Working with HVAC providers, these expenses can be reduced by taking advantage of developments in HVAC technologies which can lower energy consumption while increasing comfort and occupant productivity.

The 2005 Energy Act includes significant energy efficiency standards for commercial products, such as HVAC systems. These new efficiency standards for commercial HVAC systems must go into effect by January 1, 2010; however, there is no reason for facility managers to wait to take advantage of energy savings because highly efficient HVAC products and systems are available today.

In choosing a system, facility managers should seek systems with a high Seasonal Energy Efficiency Ratio (SEER). The SEER rating system was designed to provide a straightforward way to compare product efficiencies and energy saving potential across vendors. For example, Trane’s XL 1600 has a SEER rating of 16, which uses less energy, has lower maintenance requirements and is appropriate for small building applications. Trane’s R-123 system, for large buildings, offers a balance of low global warming potential and the highest efficiency in its class.

Facility owners and operators are encouraged to work with HVAC consultants to determine the most efficient system, given their specific building parameters and operating goals.

Tax incentives for commercial buildings

Buildings constructed and occupied between 2003 and 2007 can take advantage of important tax deductions. The provisions allow a deduction of up to $2.25 per square foot, if the building exceeds the American Society of Heating, Refrigerating and Air Conditioning Engineers (ASHRAE) Standard 90.1-1999 by 50 percent.

The ASHRAE standard specifies facility requirements including energy management, HVAC, building envelope, electric power systems, lighting and water savings.

The three methods for compliance with the ASHRAE standards are:

• “Prescriptive path” including mandatory requirements
• “Energy Cost Budget Method” combining mandatory provisions and a formula which calculates savings between multiple building systems
• “Simplified Approach” allowing a subset of mandatory and prescriptive requirements

HVAC consultants can serve as an excellent resource for facility managers trying to understand the new mandates, product standards and tax incentives included in the Energy Act of 2005.

Energy efficiency incentives, such as tax deductions will help support a shift to more environmentally responsible and energy efficient building management. As U.S. facilities install energy efficient HVAC solutions, their managers will appreciate short-term tax breaks along with long-term energy savings.

Energy savings tips

• Conduct an energy audit on existing systems. A building and energy audit helps evaluate a building’s HVAC load, lighting and water usage, and calculate the building’s entire baseline utility consumption. This can be used to identify opportunities to reduce consumption.
• Perform routine and predictive maintenance on high-energy usage items. Predictive maintenance allows users to ensure that the HVAC system is working properly and identifies areas where parts may need to be replaced. It also improves system reliability and reduces owner cost by extending equipment life, planning system outages and reducing downtime and lost productivity.
• Install a higher efficiency HVAC system and ENERGY STAR qualified appliances. High efficiency HVAC systems and ENERGY STAR qualified appliances are available today which allow facility managers to meet tax deduction criteria.
• Adjust building control settings for maximum energy savings. Maintain safety and comfort when a building is open while minimizing energy consumption when it is not by coordinating lighting and HVAC system use to align with facility operating hours. Integrated control systems reduce maintenance time and lower energy costs. Often simple upgrades can have a significant impact on overall energy usage.
• Consult with an HVAC system provider. Advice from HVAC consultants on energy efficient systems clarify energy policy requirements and provide insight into managing operating costs without negatively affecting occupant comfort or worker productivity.

John Conover is president of Trane Americas. He is responsible for all sales and distribution in the Western Hemisphere for Trane’s commercial business. Previously, he worked in a variety of positions in the Detroit and Columbus/Cincinnati district offices, including sales engineer, building automation manager, sales manager, and district manager. He has a BS degree in civil engineering from Lehigh University and is a registered professional engineer.