Guide to Energy Incentives for Businesses in Pennsylvania

Guide to Energy Incentives for Business in Pennsylvania

If you’re considering energy-efficient upgrades for your business, you probably know that energy efficiency can improve your bottom line. Energy-efficient upgrades can reduce your operating costs significantly. One study found that cutting energy use by just seven % could save up to $120,000 for a 500,000 square foot office building.

But energy-efficient improvements can be expensive up front. Energy-efficient equipment usually costs more than less efficient equipment. And deciding to install clean-energy equipment like solar or wind power can be an even bigger expense.

Luckily, there are many business energy programs in Pennsylvania. Along with energy rebates for businesses, Pennsylvania businesses can apply for green energy loans or grants. There are also a number of energy tax incentives that businesses can apply for.

Pennsylvania Energy Efficiency Grants

Pennsylvania offers several energy-efficiency grants for businesses. The state and federal government offers these grants as an energy-efficiency incentive. They range from grants for purchasing equipment to constructing energy-efficient buildings.

Energy-efficient grants don't need to be repaid. Unlike loans, there are no interest charges.

However, energy-efficiency grants also have a few downsides. There's usually more competition for a grant than there is for a loan. The application may take longer to complete, and the agency that offers the grant might have more requirements for the funding.

Small Business Advantage Grant Program

The Small Business Advantage Grant program offers energy-efficiency grants for small businesses. Businesses can use the award to buy or upgrade energy-efficient equipment. Major equipment like air conditioning units and furnaces qualify for upgrades though this grant.

Pie chart that shows grant is up to $2 million or 30% of project cost and loan is up to $5 million or 50% of project cost.Businesses can apply for up to $9,500 for energy efficiency improvements. A business that receives a grant will need to match the funding they receive. Also, eligible projects need to save the business at least $500 per year.

Pennsylvania's Department of Environmental Protection offers this grant annually. They'll accept applications on a rolling basis until funding runs out.

Pennsylvania Solar Energy Program

The Solar Energy Program offers two categories of grants. First, they'll grant awards to solar equipment manufacturers or assemblers. The amount of the grant is based on the number of jobs created.

The second grant category includes businesses that generate and distribute solar energy. This is a broad category, and businesses can use the funding in many ways. Along with construction costs, grants can fund feasibility studies, planning and research. Businesses usually receive grants based on the number of kilowatt hours generated.

The maximum grant amount is $1 million. Like other energy efficiency grants from the state of Pennsylvania, small businesses will need to match the funding they receive.

Alternative Fuels Incentive Grants

This grant program helps Pennsylvania businesses convert their existing fleet to clean-energy alternatives. Businesses, non-profits and governments are all able to apply for these grants.

Businesses can use these grants to buy new vehicles or upgrade an existing fleet. Vehicles that run on compressed natural gas, propane or electric are all eligible. In 2014, businesses received $4 million to buy energy-efficient vehicles.

The Alternative Fuels Incentive Grant also offers funding for businesses researching new fuel technology. They awarded $1.8 million in grants for fuel research in 2014.

Alternative and Clean Energy Program

The Alternative and Clean Energy (ACE) program offers both grants and loans. Pennsylvania businesses, schools and governments can apply.

The ACE program awards grants in two categories. First, businesses that make clean-energy equipment can apply for grants. The amount of the grant is based on the number of jobs created.

Businesses can also receive grants for clean-energy production. These awards can be used for solar panels, wind turbines or biomass. The maximum grant is $2 million, or 30% of the project cost. Eligible businesses will need to match the amount of the grant awarded.

Businesses, schools and governments can also apply for loans from the Alternative Clean Energy Program. Businesses throughout Pennsylvania can use these loans for energy efficiency and conservation projects. Loans from ACE can also be used to build Compressed Natural Gas fuel stations.

Loans for most projects can be up to $5 million, or 50% of the project cost. Loans for renewable energy manufacturers are based on the number of jobs created. Loans can be up to $40,000 for each job created within three years of funding.

Pennsylvania Green Energy Loans and Mortgages

Green energy loans are a popular way to pay for energy-efficient equipment. These loans usually have a lower interest rate than standard business loans. Businesses with these loans can often qualify for energy-efficiency tax credits or rebates. Some funders also offer technical help.

Energy-efficiency loans are the most common way to pay for upgrades, but not the only way. Some places will also fund energy-efficiency projects in exchange for an equity stake. Banks and federal agencies both offer green mortgages. And a few companies will pay for energy upgrades via clean-energy royalties.

Pollution Prevention Assistance Account Loan Program

This loan is a useful tool for small businesses looking for energy-efficiency upgrades. Any Pennsylvania business with fewer than 100 employees is eligible. Businesses can use the loan to pay for energy-efficient equipment or for clean-energy equipment. They can also use it for to reduce waste, recycle or implement other pollution prevention programs.

Loans through the Pollution Prevention program have a maximum interest rate of 2%. The largest loan is $100,000, or up to 75% of the total eligible project cost. These loans have a 10 year repayment period — one of the longest available for clean energy loans.

EnergyWorks Loans

EnergyWorks loans are available to businesses in five counties in the greater Philadelphia area. Businesses in Philadelphia, Bucks, Chester, Montgomery and Delaware counties can all apply for these loans. Eligible projects include energy-efficient systems and equipment. These loans can also be used for insulating, daylighting and air sealing projects.

Businesses will need to prove that the project reduces energy use by 25%. An energy professional will need to verify energy savings. The EnergyWorks loan fund sometimes offers technical help with energy analysis for applicants.

EnergyWorks loans have a variety of interest rates and terms. Interest rates start at 3.5%. The length of the loan depends on the expected lifespan of improvements.

Pennsylvania Green Energy Loan Fund

The Green Energy Loan fund offers loans for energy-efficient remodels and retrofitting. Businesses, non-profits and government are all able to apply. Loans pay for energy-efficient equipment as well as for construction costs. Most loans go to businesses that are remodeling or upgrading equipment.

To qualify for a loan, businesses will need to show that the project will reduce their energy use by 25%. If a business needs help proving this, they can contact PA Green Energy Loan Fund. The fund gives businesses technical help with energy analysis.

Loans range from $100,000 to $2.5 million. Most loans have an interest rate between 4 and 5%, and the length of the loan can be up to 15 years.

TRF Sustainable Development Fund

TRF's Sustainable Development Fund offers several types of financing for businesses in Pennsylvania. Loans and subordinated debt are the most common. The fund also offers equity investments and royalty financing for green-energy projects.

Businesses can use these loans to buy clean-energy systems. Entrepreneurs can also use these loans to fund clean-energy startups. Clean-energy manufacturers and distributors can also use these loans to expand their business.

Eligible businesses need to be in the PECO territory of Southeastern Pennsylvania. Businesses in Bucks, Chester, Delaware, Montgomery and Philadelphia counties can apply for these loans.

Metropolitan Edison Company/Pennsylvania Electric Company Sustainable Energy Fund

The Sustainable Energy Fund offers loans for clean-energy projects. They'll also consider equity and other forms of investments. Most loans and investments are capped at $500,000.

Most projects that receive funding generate renewable energy. The fund will consider solar, wind, biomass, methane or hydroelectric projects. Businesses that make solar equipment or clean-energy technology can also apply for loans.

Solar Energy Program

The Solar Energy Program offers loans for solar-energy projects in Pennsylvania. They also offer grants and loan guarantees for businesses.

Businesses that make solar-energy equipment can apply for loans based on jobs created. The maximum loan is $35,000 for each job created.

The maximum loan is $35,000 for each job created.

Businesses can also apply for loans for solar energy generation and distribution. The Solar Energy Program will make loans of up to $5 million or $2.25 per watt.

Fannie Mae Green Initiative

The Green Initiative offers mortgages for apartments and multi-family housing. Fannie Mae's green financing program offers several types of loans.

Eligible projects include energy-efficient and water efficient improvements. Apartment owners can install solar panels or upgrade equipment. Businesses can also use loans to pay for green building certification.

Green financing loans offer 10 basis points off loans. This means that if the average interest rate is 4%, a Fannie Mae green loan has an interest rate of 3.9%. Loans can be made for up to 80% of the property value.

High Performance Building Incentives Program

The High Performance Building program offers grants and loans to help businesses build high-efficiency buildings. Grants can be used to cover a wide range of improvements including purchasing energy efficient appliances or installing energy efficient insulation and weatherizing. Major renovation and new construction projects are both eligible for the loans. Businesses can also use loans for design costs.

The maximum grant is $500,000 or 10% of the project cost. As with other grant programs, businesses need to match the grant amount they receive. Loans from the High Performance Building Program can be up to $2 million. Businesses that receive these loans need to match the amount of the loan awarded.

Pennsylvania Business Energy Rebates and Energy Tax Credits

Pennsylvania also offers energy rebates and tax credits. Utility companies use net metering to connect businesses with renewable power sources to the grid. Net metering is one of the most popular rebates available for renewable energy.

With net metering, businesses can get credit for electricity they generate but don’t use. Businesses can join the Pennsylvania Alternative Energy Credit program to sell excess power. Many utility companies also have their own form of net metering.

Pennsylvania businesses can also receive tax credits for energy-efficient improvements. Energy efficiency tax credits change regularly. Some of the current tax credits expiring in 2016.

Pennsylvania AEPS Alternative Energy Credit Program

The Alternative Energy Credit Program allows businesses to sell excess solar or renewable power. One alternative Energy Credit is equal to 1000 kWh of electricity. Most energy credits sell for between $0.032 and $0.055 per kWh. However, rates are based on market conditions.

Business Energy Investment Tax Credit

This is a 30% tax credit for businesses that install clean energy equipment. Businesses that use solar, fuel cells and small wind power are all eligible. Businesses that install geothermal and small wind turbines can also get a tax credit. The maximum credit is $1,500 per 0.5 kWh for fuel cells or $200 per kWh for microturbines.

30% tax credit for businesses that install clean energy equipment.Solar Investment Tax Credit

The Solar Investment Tax credit is a 30% tax credit for solar installments. Both businesses and individuals can apply for it. The company that installs and funds the project can claim the credit. That means that any business that purchases solar equipment can apply for it. It’s currently in effect until the end of 2016.

Energy-Efficient Tax Credits for Commercial Buildings

Businesses that own or lease an energy-efficient building can apply for this tax credit. Most buildings need to show a 50% energy reduction to qualify for the full credit. Businesses that show energy reductions of at least 16.7% can receive a partial tax credit. This tax credit is worth $1.80 per square foot of office or retail space.

These energy incentives can help your business pay for energy efficiency upgrades. To find out about other ways your business can lower its operating expenses, contact Shipley Energy.