Incentives for Commercial Building Upgrades in New York City

New York City plans to reduce its emissions by 80% by the year 2050, compared with the levels measured in 2005. Both energy efficiency and renewable energy generation are key elements of emissions reduction, and commercial buildings represent a significant portion of energy consumption in NYC. As a result, any upgrades that reduce the energy footprint of buildings can greatly contribute towards the city’s sustainability goals.

In order to reduce the energy consumption of commercial buildings, the NYC government has established minimum performance requirements in its Energy Conservation Code - the last version was published in 2016. However, there are also various incentive programs for businesses who exceed the minimum requirements.

This article will provide an overview of the main incentive programs available for commercial buildings in NYC. They target measures such as building system upgrades, electrical demand management and renewable generation.

Con Edison Commercial and Industrial Energy Efficiency Program

This program offers various cash incentives for businesses who upgrade to energy-efficient equipment. These incentives are divided in two general categories: prescriptive equipment rebates and custom incentives.

Equipment rebates are based on capacity or calculated per unit installed, and they target various types of energy efficiency upgrades.

Custom incentives are available for all energy efficiency upgrades that don’t fall in any of the categories above. The incentive amount is calculated differently depending on whether the upgrade involves electricity or gas savings:

• $0.16/kWh for electricity savings, where the rebate cap is 50% of project costs or $1,000,000, whichever is lower.
• $2/therm for gas savings, where the rebate cap is 50% of project costs or $250,000, whichever is lower.

Business customers who upgrade from an oil boiler to a gas boiler are eligible for a $10,000 conversion rebate, which may increase up to $25,000 depending on equipment characteristics. The minimum efficiency required is 80% for steam boilers and 85% for hydronic boilers.

Small businesses get two exclusive benefits that are not available for large commercial and industrial customers. Con Edison grants them a free energy audit to identify potential lighting and refrigeration upgrades, and then provides an incentive for up to 70% of the cost of the measures identified through the audit.

Special Incentives for Buildings in Brooklyn and Queens

There are many neighborhoods in Brooklyn and Queens where businesses have access to incentives not available in other parts of New York City. In the case of small businesses, the free energy audit from Con Edison also applies, but the incentive covers 100% of the cost for lighting upgrades and refrigeration night case covers. In addition, there is a rebate of $200/ton for ductless mini-split air conditioners.

Large commercial and industrial customers in these neighborhoods also have access to energy efficiency incentives not available elsewhere:

• Combined heating and power (CHP) systems are eligible for rebates of up to $1,800 per installed kilowatt of capacity.
• Refrigeration Batteries: Businesses that use refrigeration systems can get a rebate and financing for an ice storage system. The refrigeration battery offers power bill savings by reducing energy consumption during peak demand hours, when the highest energy rates apply.  The upfront cost for clients is zero and financing is paid back with savings.

Demand Management Incentives

Utility companies not only have to deliver enough energy to meet the needs of their customers. They must also be able to meet peaks in power grid demand, which occur when many types of high-power equipment are being used simultaneously. In New York City this tends to happen during the hottest days of summer, when air conditioning systems are taken to their limit.

In order to alleviate power grid demand, Con Edison has introduced the Demand Management Program for buildings who reduce their summer energy consumption peak by at least 50 kW. The list of eligible measures includes battery storage, thermal storage, electric chiller controls and non-electric chillers. It is important to note that incentives are auctioned once per year and subject to several caps:

• They must not exceed 50% of the project cost as estimated by Con Edison.
• They must not exceed 50% of the actual project cost.
• The maximum value is $3 million per project, and $5.5 million per applicant per year.

In addition to the general incentive caps, there are specific limits for each type of equipment, which are updated by Con Edison each year. Although the incentives are auctioned and the number of projects that get the benefit is limited, commercial energy consumers can apply again in future auctions.

The Smart Usage Rewards program also provides cash incentives for companies who reduce their peak demand. The main difference is that this program rewards fast response instead of larger capital-intensive projects. Businesses who participate in the program can get up to $18,000 per year for every 100 kW of peak demand reduction. Con Edison will notify participating businesses in advance when a demand reduction is required, and they can choose to be notified 21 hours in advance, or 2 hours or less in advance.

To be eligible, businesses must have an interval meter installed. This is a type of power meter that breaks down energy consumption by the hour. Business without them can get in touch with Con Edison for an upgrade.

Incentives for Renewable Generation Systems

Renewable generation is a complementary approach to energy efficiency, reducing the net consumption of electricity from the power grid. The New York State Energy Research and Development Authority (NYSERDA) has introduced three main incentive programs for businesses who develop renewable energy projects.

The Combined Heating and Power (CHP) Program offers incentives of up to $2.5 million for companies who install a CHP system with a capacity of up to 3 megawatts. Like in the Con Edison Energy Efficiency Program, there are both prescriptive incentives for predefined CHP systems, and custom incentives for systems above one megawatt that are engineered according to client-specific needs. In general, all commercial and industrial clients who pay the System Benefits Charge (SBC) are eligible.

The NY-Sun Incentive Program by NYSERDA offers rebates for solar PV systems, and the applicable rebate changes depending on installed capacity:

• Commercial and industrial facilities with enough energy demand to justify a solar power system above 200 kW are eligible for a rebate of $0.61 per watt of installed capacity.
• Systems below 200 kW get a rebate of $0.60/W for the first 50 kW of installed capacity, and $0.40/W for all capacity exceeding 50 kW and up to 200 kW.

It is important to note that NY-Sun rebates are assigned by blocks, and the incentive amount decreases as total accumulated capacity increases. These values apply as of August 2017, but can be expected to decrease. Therefore, businesses considering solar photovoltaic systems can get better rebates by proceeding sooner.

The Small Wind Turbine Program covers up to 50% of the cost of a wind turbine, and the incentive amount is calculated based on yearly energy generation:

• Incentive for the first 10,000 kWh = $3.50/kWh
• All generation above 10,000 kWh and up to 125,000 kWh = $1.00/kWh
• All generation above 125,000 kWh and up to 1,000,000 kWh = $0.30/kWh
• All generation above 1,000,000 kWh = $0.15/kWh

It is important to note that some limits apply: the maximum system size is 2 MW per client per site, and the incentive is limited to $1,000,000 per client per site. In addition, the wind turbine output must not exceed 110% of its owner’s energy consumption.

Concluding Remarks

Commercial and industrial buildings in New York City have access to a wide range of incentives for energy efficiency and renewable generation upgrades. It is important to note, however, that a project must meet a series of performance and quality requirements to be eligible, and working with a qualified engineering company is the best way to ensure compliance. Many of these incentives are also subject to yearly funding limits or deadlines, so adequate project planning is also important.

Editors Note: This post was originally published in September 2017 and has been revamped and updated for accuracy and comprehensiveness.