Upgrading Electrical HVAC Equipment in New Jersey: Commercial and Industrial Buildings

Michael Tobias
6 Minutes Read
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    As discussed in some of our previous articles, New Jersey is strongly focused on making its buildings greener, and this is achieved in great part through the NJ Clean Energy Program. One of the sub-programs is SmartStart Buildings, which provides financial incentives for energy efficiency measures in commercial and industrial facilities. Both new constructions and existing buildings are eligible for the rebates provided through the program, and the NJCEP has incentive tables and pre-programmed worksheets to simplify the rebate calculation procedure.

    HVAC systems account for a significant portion of building energy consumption, while having a sizeable carbon footprint:

    • In ventilation and air conditioning systems the carbon footprint is indirect, since both systems run with electricity. The corresponding emissions depend on the power grid energy mix, but the main power source in NJ is natural gas - a fossil fuel.
    • Space heating and domestic hot water normally produce direct emissions. In most buildings, these systems rely on furnaces and boilers fired by oil or gas.

    This article will describe the HVAC incentives from the NJ Clean Energy Program that focus on electrically-powered equipment. There are also incentives for gas-fired equipment, which are covered in another article.

    Well-designed HVAC systems save on energy and maintenance.

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    Electric Chillers

    The SmartStart Buildings program provides financial incentives for water-cooled and air-cooled chillers that meet minimum efficiency levels and are used for space cooling applications. Chillers used for industrial process cooling do not get a prescriptive program incentive, but can submitted through a custom application. Specific incentive rates vary depending on chiller type, but the general procedure is as follows:

    • If the chiller qualifies, there is a base rate in USD per ton of capacity.
    • The chiller gets an additional performance incentive for every 0.1 EER above the minimum value, or every 0.01 kW/ton below the minimum value. The performance incentive is also calculated based on USD/ton.

    In addition to chiller capacity in tons, the following aspects are considered to determine the applicable incentive rate:

    • Is it a constant speed or variable speed chiller?
    • Is the project an existing building or a new construction?

    For example, a variable-speed, water-cooled, positive displacement chiller with a capacity below 75 tons gets a base incentive of $40/ton. The required performance is 0.78 kW/ton, and the incentive is increased by $2.50/ton for every 0.01 kW/ton below the required value.

    Assume the proposed chiller has a capacity of 60 tons and operates at 0.60 kW/ton:

    • Base incentive = 60 ton x $40/ton = $2,400
    • Difference with max. kW/ton = 0.78 kW/ton - 0.60 kW/ton = 0.18 kW/ton
    • Performance incentive per ton = $2.50/ton x (0.18 / 0.10) = $45/ton
    • Performance incentive = 60 ton x $45/ton = $2,700
    • TOTAL INCENTIVE = $2,400 + $2,700 = $5,100

    Note that this is just an example, and the incentive rates change depending on chiller characteristics.

    Electric Unitary HVAC

    This incentive applies for many types of HVAC equipment and controls. Like in the case of electric chillers, there are minimum efficiency levels for eligibility, which are detailed in tables in the NJ Clean Energy Program website.



    1)Unitary HVAC split system
    2)Unitary HVAC single package
    3)Central DX system
    4)Air-source heat pump (ASHP) split
    5)ASHP single package
    6)Water-source heat pump
    7)Packaged terminal AC
    8)Packaged terminal heat pump
    9)Single-packaged vertical AC
    10)Single-packaged vertical heat pump

    1)Dual enthalpy economizer control (exclusively for existing buildings)
    2)AC economizing controls
    3)Occupancy-controlled thermostat    



    Unlike incentives for electric chillers, these do not have a variable performance-based component. Instead, the incentive rate in USD/ton is determined based on equipment capacity ranges and where the HVAC unit falls among two efficiency tiers - the higher tier yields a higher incentive, but there is no progressive scale between them.

    Ground Source Heat Pumps

    This incentive covers closed-loop ground source and groundwater source heat pumps. Both types of GSHP are classified into two tiers based on performance, where the higher tier gets a better incentive in USD/ton. Note that open-loop GSHPs are not eligible for the benefit, so make sure your use a closed-loop system.

    Variable Frequency Drives

    Many types of equipment found in HVAC systems can achieve massive energy savings if their speed is controlled with a variable frequency drive (VFD). The logic is simple: running a motor at partial speed consumes much less electricity than running it intermittently to produce the same design airflow.

    The incentive rates are the same for all eligible applications, calculated based on total motor horsepower controlled by the VFD. However, the eligible HP range is different for each application.



    Variable air volume HVAC, airfoil/backward inclined fan

    Variable air volume HVAC, forward curved fan

    Constant air volume HVAC, airfoil/backward inclined fan

    Constant air volume HVAC, forward curved fan

    Cooling tower fan

    Chilled water pump

    Air compressor

    Boiler feedwater pump

    Boiler fan motor - airfoil/backward inclined

    Boiler fan motor - forward curved

    Kitchen hood

    5 - 50

    5 - 50

    0.5 - 50

    0.5 - 50

    10 - 50

    20 - 50

    25 - 200

    5 - 50

    5 - 50

    5 - 50

    0.5 - 50


    The SmartStart Buildings incentive programs improves the financial outlook for many building enhancements, including HVAC systems. Regardless of whether the project is a new construction or a renovation in an existing building, incentive rates increase the return on each dollar spend upfront.

    Just keep in mind there are certain performance metrics to meet to be eligible for an incentive, and in many cases you must also submit product certifications according to industry standards. Work with qualified consulting and design engineers to make sure all requirements are met.

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    Tags : HVAC Energy Efficiency Building Upgrades NJ Clean Energy Program

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