Section 179D Question

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Has anyone run a baseline building for a retrofit building to qualify a business owner for the Section 179D tax deduction? It seems simple enough to model the existing building based on ASHRAE 90.1 standards. Has anyone found any potential "hiccups" along the way that has prevented the up to $1.80/sq tax deduction aside from the obvious of not meeting the energy upgrade percentage?

Here's my main concern. I have a cabinet manufacturer customer who has a 100,000sf metal building that is roughly 30% wood working or manufacturing, 65% warehouse storage and 5% office space. 95% of this facility is heated only. Do I have to include cooling in the baseline from ASHRAE 90.1 system 5 on appendix G, table G3.1.1.A? The only upgrades we are proposing are to take out the air rotation unit and radiant tube vacuum systems and a few other minor items.

Any advice would help. Thanks in advance.

Thanks,

Tom Mickley
Mechanical Engineer CEM
The K Company
Cell 330-760-3994
Office 330-773-5125

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outside of 179d expiring at the end of 2013? unless you're involved in
a project that is impacting prior tax year filings for the customer?
only the obvious as you say and perhaps erv control being set to have it
run with the supply fan of the hvac unit is for instead of a delta t or
e between outside air and exhaust air.

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Hello Tom,

Not sure if you have reviewed this documentation from NREL regarding the tax deduction calculations, but I found it helpful.

http://www.nrel.gov/docs/fy07osti/40467.pdf

Byron D. Burns, EIT, BEMP
Energy Analyst/ Modeler

H&A Architects & Engineers | www.ha-inc.com
d: (804) 420-1622 p: (804) 285-4171 f: (804) 217-8520

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FYI

The 179D program uses the older ASHRAE 90.1 2001 Baseline and requirements

-David

David C. Fishel, PE
Senior Energy Analyst

RLF | architecture engineering interiors
4750 New Broad Street, Orlando, FL 32814
p 407.730-8600 | f 407.730-3603| www.rlfarchitects.com

P Please consider the environment before printing this e-mail

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ASHRAE 90.1 has several addendums now that have added system types, just for warehouse type spaces where they are heated only. Look for Addenda DN, system types 10 and 11.

Aaron Busby, PE, LEED AP
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I'm not aware of anything says we can or can't use addendum to Appendix
G. It is certainly frustrating not having anywhere to take questions.
The inability for modelers to seek clarifications means that the
community is probably taking a lot of different approaches to the
incentive.

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The legislation clearly states ASHRAE 90.1-2001 as in effect on April 2, 2003 and lists which addenda that includes. The NREL published 'Guidelines' document says the same thing.
It combines tax law, accounting, building design, and energy modeling so yes there are lots of 'hiccups' out there.

Paul Riemer, PE, LEED AP BD+C
DUNHAM

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I haven't had the time this morning to read all of the email responses yet, but I have a coworker email this website this morning which is what sparked my interest originally.

http://www.nema.org/News/Pages/NEMA-Commends-Senate-Finance-Committees-Extension-of-179D-Tax-Deduction.aspx

Thank you all for the responses by the way.

Thanks,

Tom Mickley
Mechanical Engineer CEM
The K Company
Cell 330-760-3994
Office 330-773-5125

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I've used this approach in the past. Appendix G requires the schedules
to be the same, and where no cooling systems exist you need to model it
the same as the proposed. The NREL guidelines say you can use the "
[schedule of the] taxpayer?s building if they are known (see Section
3.6)." If a building has no cooling setpoint it is not unreasonable to
interpret a no cooling setpoint as a high cooling setpoint. A large
heated warehouse will have most its energy use in fans, lighting, and
heat (depending on the heating setpoint). I don't think you would be
gaming the system at all to have your model be consistent with the
actual energy profile of the building.

- Steve

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This requirement of adding cooling where it is not designed is an odd one to be sure. A possible workaround is to recognize that the proposed building will have a cooling "setpoint" that is higher than usual and to model the proposed and baseline cooling systems with an equally high cooling setpoint.

Dan

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Tom the original poster:

When you say "proposing" do you mean the project wasn't completed some time between 2005 and 2013?

I see a bigger hiccup relating to the legislation not being currently extended into 2014, unless this happened recently.

Other major hiccups:

1) $1.80 deduction is only if all three paths are pursued - envelope, HVAC, and electrical. What you described here was only HVAC measures.

2) it's a deduction and not a credit...so your client with 100,000 sf is looking at $60,000 deduction, for which their net value may be ~$20,000 or less depending on many other factors outside of the efficiency work itself.

DSE Mobile

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AND eQuest 3.63..

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I agree that it is explicit on what version 90.1-2001 to use and what
addendum. But there is no such clarification on the version of Appendix G.

- Steve

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Here?s an odd one. The building that I was talking about has four 30 ton rooftop units that were never used for cooling from the get go. They only used the air rotation unit for heating in the winter. They reversed all the rooftop units fan flow to the warehouse/manufacturing areas and opened all the dock doors during the summer months. They essentially turned the rooftop units into a terribly inefficient exhaust fan to create a cool breeze for the workers in the summer time. A good portion of their electric consumption in the summer is due to the rooftop unit supply fans (now exhaust) running constantly and I believe off the top of my head that they are each 20 or 25hp motors. I was proposing to add sidewall prop fans on VFDs based on temperature and interlocked with louvers on the opposite side of the warehouse that would cut the fan power usage by about %70 and replacing that air rotation unit with several radiant tube heater vacuum systems. I originally modeled the building as is because I wasn?t going to try for the Section 179D, and was saving about 30% of their total utility costs. Could I add exhaust fans to the warehouse to recreate the rooftop units they converted even though it doesn?t show it on the prints If I were to model this as an ASHRAE 90.1 2001 baseline?

Thanks,

Tom Mickley
Mechanical Engineer CEM
The K Company
Cell 330-760-3994
Office 330-773-5125

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This is encouraging! Still a long ways to go before it is law, but it could be a smart move to keep this in mind for current 2014 projects which will most likely be retroactively eligible if it is approved in the near future.

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For 179D the baseline isn't the existing conditions necessarily, but rather a 90.1 model with a basically compliant HVAC system. Proposed model will then be based on the new system, including all of the fans which you are discussing and whatever other HVAC systems are existing.

Similarly your proposed and baseline models will have identical envelope and lighting configuration equal to 90.1 baseline levels if these aren't part of the tax deduction -- regardless of the existing conditions.

Overall it sounds like a great actual project, but not necessarily an awesome fit for 179D.

Oh - one of the hiccups from before - the deduction is bounded by the cost of the upgrades. In this case you may be comfortably over the limit, but it might come up from time to time.

Your biggest issue right now is probably the extension of the legislation.

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