The construction industry continues to evolve, with sustainability and efficiency at the forefront of modern building practices. Commercial rebates are one of the most effective ways to reduce costs while promoting energy efficiency. These financial incentives, available at the federal, state, local, and utility levels, can significantly impact the bottom line of construction projects. Understanding the available rebates can help businesses, developers, and property owners make informed decisions that lead to substantial savings.

The Importance of Commercial Rebates in the Construction Industry

With rising energy costs and increasing regulatory requirements for sustainability, commercial rebates have become crucial in the construction industry. These rebates encourage businesses to incorporate energy-efficient technologies, renewable energy sources, and environmentally friendly building practices. By taking advantage of these financial incentives, developers can offset upfront costs, increase long-term savings, and enhance the value of their properties.

Key Commercial Rebates for Energy Efficiency and Renewable Energy

Several federal and state programs provide rebates and financial incentives for commercial construction projects prioritizing energy efficiency. Here are some of the most impactful programs currently available:

Energy Efficient Commercial Buildings Deduction (179D)

One of the most valuable tax deductions for commercial construction projects is the 179D Energy Efficient Commercial Buildings Deduction. This program provides a significant financial incentive for projects that exceed energy efficiency standards.

• Buildings that outperform the referenced energy code by at least 25% are eligible for this tax deduction.
• The Inflation Reduction Act (IRA) significantly increased the deduction amount, now allowing a maximum of $5 per square foot for eligible projects.
• Projects must comply with prevailing wage and apprenticeship requirements to receive full credit.
• Public sector and tax-exempt entities can transfer the credit to the project’s designer, reducing costs for governments and nonprofits.

This deduction makes energy-efficient upgrades more affordable and accessible, helping developers prioritize sustainability in new construction and retrofits.

Investment Tax Credit for Energy Property (48)

The Investment Tax Credit (ITC) for Energy Property is an essential financial incentive for commercial construction projects focused on renewable energy.

• The ITC provides a base tax credit of 6%, which can increase to 30% if prevailing wage and apprenticeship conditions are met.
• It applies to investments in solar, geothermal, fuel cells, energy storage, biogas, microgrid controllers, and combined heat and power systems.
• Properties placed in service after 2025 will be eligible for the Clean Electricity Investment Tax Credit (48E), a similar program designed to support green energy investments.
• Additional stackable bonuses are available for projects in energy communities, low-income areas, or those using domestic materials, allowing some projects to receive up to 70% in tax credits.
• Tax-exempt entities like municipalities and nonprofits can receive direct payments instead of tax credits.

This program enables businesses to integrate renewable energy into their construction projects while benefiting from substantial financial incentives.

Additional Financing and Rebate Programs

Beyond federal tax credits, other financial tools help businesses and developers reduce costs while improving energy efficiency in commercial buildings.

Commercial Property Assessed Clean Energy (C-PACE)

C-PACE is a financing mechanism that enables property owners to secure low-cost, long-term financing for energy efficiency improvements.

• C-PACE loans are repaid through a voluntary property tax assessment.
• The program is available in 28 counties and can finance renewable energy, water conservation, resiliency, and air quality improvements.
• Since it uses private capital, C-PACE does not burden local government budgets.

This financing model allows commercial property owners to invest in energy-efficient upgrades without large upfront expenses.

Green Energy Loan Fund

The Green Energy Loan Fund is a revolving loan program designed to finance energy conservation and efficiency projects.

• It is open to commercial buildings, nonprofit organizations, local governments, multifamily residential buildings, and industrial facilities.
• Eligible applicants can receive loans ranging from $100,000 to $2.5 million or more.

By offering long-term financing, this program supports businesses seeking to implement energy-saving measures in new and existing properties.

Small Business Advantage Grants

For smaller businesses looking to enhance energy efficiency, the Small Business Advantage Grant provides financial support.

• Businesses with fewer than 100 employees can receive reimbursement for 50-80% of eligible project costs.
• The maximum grant award is $8,000.
• Applications for the 2024-2025 program will reopen in the summer.

This grant makes it easier for small businesses to adopt energy-efficient solutions and reduce operational costs.

Pollution Prevention Assistance Account (PPAA) Loan Program

The PPAA Loan Program offers low-interest, fixed-rate loans to small businesses aiming to reduce waste, pollution, or energy consumption.

• Eligible businesses can receive loans of up to $100,000 at a fixed 2% interest rate.
• Loans can cover up to 75% of project costs, with a maximum term of 10 years.

This initiative supports sustainability efforts while helping small businesses lower their energy bills.

Utility-Sponsored Commercial Rebates

Many utility companies also provide financial incentives to encourage energy efficiency in commercial construction. The Black Hills Energy Commercial New Construction Program is one such initiative that supports businesses integrating energy-efficient design and construction strategies.

• The program offers design incentives, providing financial support for design teams incorporating energy-saving elements into their projects.
• Construction incentives are based on verified electric savings, rewarding businesses that achieve energy performance at least 5% above IECC 2021 or ASHRAE 90.1-2019 standards.

By collaborating with utility companies, businesses can unlock additional savings and enhance the sustainability of their construction projects.

Maximizing Savings Through Commercial Rebates

The availability of commercial rebates in the construction industry presents significant opportunities for businesses, developers, and property owners. By leveraging federal tax credits, state financing programs, and utility-sponsored incentives, commercial projects can achieve energy efficiency while reducing upfront costs.

As regulations continue to emphasize energy efficiency, these financial incentives will remain essential for those looking to make smarter and greener in the years to come. Incentive Rebate360 will help you maximize your savings by offering expert rebate management services. To speak with our experts call 480-653-8180, email [email protected], or schedule a call that fits your needs by clicking the button below!