Category: News

Air conditioning and heating equipment is rated by manufacturer’s to give the consumer an idea of how efficient it is.  Typically calculated by comparing the energy input versus the energy output, it allows consumers to compare similar equipment.  But what exactly do these numbers mean and how do they relate to actual costs?

For heating, the calculations are generally quite simple.  A natural gas furnace that puts out 104,000 Btu/hr in heat but requires 130,000 Btu/hr to do so would be rated at 80%.  The missing 26,000 Btu/hr are lost up the chimney.  How does this translate to actual costs?  The national average cost of natural gas in 2015 was approximately $0.80 per therm (aka 100,000 Btu).  For every hour your furnace is on, you pay $1.04 to get $0.83 worth of heating (a loss of $0.21 per hour).  Let’s say the same furnace was rated 94%.  Now you only pay $0.89 for the same amount of heat (a loss of only $0.06 per hour).  If our example building was in Arkansas, these savings could add up to about $200 per year for this size of furnace.

On the air conditioning side, the equipment works very differently and requires an alternate approach.  Air conditioners are called heat pumps because they pump the heat out of your home or business.  The efficiency is shown using the Energy Efficiency Ratio (EER) which is a ratio of output cooling energy (in Btu) to input electrical energy (in Wh).  For example, a unit with an EER of 12 would require 5 kWh to move 60,000 Btu (aka 5 tons).  To translate this to costs, the 5 ton unit requires $0.52 to operate for one hour (based on 2015 national average of 10.42 cents/kWh).  The same unit with an EER of 16 would only cost $0.39 cents per hour.  Continuing our example, if this unit was on a typical building in Arkansas the savings between 12 and 16 EER could be around $600 per year.

The trick with energy efficiency is to balance the cost savings from usage (like we calculated above) with the initial cost of the equipment, available incentives, project location, building type and usage.  These are all major factors and we engineers often use computer simulations to help us in calculating the savings.  If you think your building could use some energy upgrades, please consider hiring us to take an in-depth look and determine how you can lower your costs by saving energy.

The 179d Tax deduction was originally passed in 2005 allowing buildings with energy efficient components (i.e. lighting, HVAC, envelope) to receive a federal tax deduction.  A few changes have been made to the law since then but one facet of the law keeps coming up over and over again; the law keeps expiring every two years.

In the past the government has always renewed it, but sometimes at the last minute, and in the case of 2015 retroactively a year after expiration.  The 179d tax deduction is nestled in with the larger Section 179 which includes lots of tax deduction methods for businesses.  These tax deductions are a bit higher profile and there has historically been a lot of pressure to extend them if not make them permanent.This bring us to this year where the tax deduction is again set to expire on December 31, 2016.  Any projects completed after this date are (currently) out of luck.

Last year, Senator Orrin Hatch (R-UT) introduced the Tax Relief Extension Act of 2015 which would make provisions of Section 179, including 179d, permanent.  It would also expand the eligible buildings to include non-profits (the tax deduction could be assigned to the design team).  This bill was referred to the Senate Committee on Finance where it currently awaits further consideration.

Representative Steve Womack’s (R-AR) office reported that they are unaware of any specific bills currently moving through the House to address the tax extenders.  However, they do expect one to be produced and are confident that it would pass the house before the end of the year.

While there aren’t many specifics, the tax extenders do appear to be receiving some thought in Washington.  I believe that the best case scenario is one in which Section 179d receives a permanent extension before December 31, 2016.  Of course, the worst case scenario would be one in which it lapses not to be renewed.  A more likely worse case scenario would be section 179d getting retroactively renewed in the next Congress towards the end of 2017 similar to what we saw happen in 2015.

Stay tuned for updates over the next few months as this package is hopefully assembled and makes it through the halls of our federal government.  If you have any questions about Section 179d (read more on our services page) or believe you have a project that could benefit, please contact us for more information.

Congratulations to Belle Boutique in opening their new Fayetteville location on Wedington Drive.  We were honored to be a part of the design team for this tenant finish-out project.  One of the best feelings as a design professional is to see your designs constructed and put to use.

Below are a few more pictures of the store.  You can see more of our past projects on our portfolio page.