What is the incentive? The CBTD incentive is calculated as an Applicable Dollar Value (ADV) of $2.50 per square foot (SF) for achieving 25% savings against the reference building, increasing $0.10/SF for every 1% energy reduction beyond the 25% base, up to a $5/SF maximum. These rates assume prevailing wage and apprenticeship requirements are met.
If prevailing wage and apprenticeship requirements are not met, the CBTD incentive drops to $0.50/SF for the building for achieving 25% savings against the reference building, increasing $0.02/SF for every 1% energy reduction beyond the 25% base, up to a $1/SF maximum.
Is it a one-time deal? An owner can now claim the CBTD every three years for a privately owned building, four years if a tax-exempt entity, as long as the project fulfills 179D’s requirements.
How are energy savings demonstrated? The IRA instructed Treasury to publish regulations detailing methods for calculating and verifying energy and power consumption based on the California Nonresidential Alternative Calculation Method Approval Manual. It also requires Treasury to detail how to certify projects for the CBTD, including specifying qualified individuals who will determine compliance and qualified energy modeling software (at the time of publication, the software list was good only for projects in service before Jan. 1, 2021). Each certification must include an explanation of energy-efficient building features and projected annual energy costs for the owner.
What if my project is a retrofit? For retrofit projects, the reference building is the pre-retrofit building and not a theoretical benchmark based on 90.1. The design must demonstrate an expected 25% decrease in energy use intensity — measured in BTU — compared to the pre-retrofit building. A qualified retrofit plan is required, and the building must have been placed in service at least five years before producing this plan. The deduction must be taken in the year of final qualifying certification.
Lighting and advanced controls can play a part
The elimination of the old Interim Lighting Rule made lighting’s role in gaining the CBTD incentive more complex, as improving lighting efficiency to achieve the deduction will require a holistic building systems approach, not to mention the use of energy modeling software.
In new construction projects today, LED lighting and lighting controls can deliver significant energy savings compared to 90.1-2007. But achieving savings becomes more difficult when the baseline reference is energy standard 90.1-2016 or later; in particular, 90.1-2019 includes maximum interior lighting power densities based almost entirely on LED lighting and requires detailed control strategies.
To maximize energy savings, designers are encouraged to consider networked lighting controls able to implement advanced strategies, such as institutional task tuning, reduced control zoning largely at the luminaire level, and highly detailed and robust sequences of operations.
For retrofit projects, designers have more latitude based on the existing lighting system, which could make the 25% savings target easier to achieve. Here, LED lighting and advanced controls can deliver substantial energy savings, though lighting often will need to play a part in a holistic building upgrade, as again the savings target is intended to encompass the building’s interior lighting, HVAC, and hot water systems.
As with any project type or energy goal, the designer must ensure the lighting system performs its primary role of fostering an appropriate visual environment. Energy savings must be evaluated carefully against the interests of good design and the needs of building occupants. Fortunately, lighting control options providing the substantial energy savings should not compromise lighting quality if properly designed and managed.
Overall, the latest version of the CBTD offers a strong incentive to achieve a high level of energy efficiency in commercial buildings. In new buildings, it incentivizes more detailed design and advanced control options. In existing buildings, it incentivizes a wide range of lighting and advanced control options that, when coupled with available utility rebates, can substantially reduce initial cost.
