Today's Energy Solutions

1. Today's Energy Solutions Bill McShane Sustainable Lighting Division

2. Market Size based onNorth Carolina Lamp Data* T12 Lamp Units 400w Metal Halide *based on sales of Philips lamps

3. NC Governor's goals: • Focus on 6 areas for Federal Recovery Act State Energy Program: • Support small businesses and industry through energy savings, • Grow NC’s green workforce via Jobs Now, • Develop Energy Investment Revolving Loan Fund, • Improve government energy efficiency, • Promote residential energy efficiency and renewable energy, and • Foster renewable energy technology and resource innovation. NC will demonstrate its performance by tracking the jobs created, energy costs avoided, units of energy saved, increased capacity for renewable energy generation and greenhouse gas and other emissions reduced.

4. Main Funding Sources • NC State Energy Program (SEP) • SEP Grant • Improving Gov't Energy Efficiency • $9.5MM for the entire state • SEP loan • 0% loan up to $1MM • tied to Performance Contract • Possibly combination w/Philips financing • NC State Energy Efficiency Conservation Block Grant (EECBG) • $7MM for municipalities under 35k in population

5. N.C. State Energy ProgramImproving Government Energy Efficiency • $9,500,000 total available: • $1.95 million: • For energy assessments to develop and implement long-term energy saving strategies and identify potential projects for federal and state Recovery funding. • $8 million • For Energy efficiency upgrade grants to address repair and renovation projects at state agencies, universities and community colleges that have been identified but not funded. Includes exterior lighting upgrades to LEDs

6. Energy Investment Revolving Loan Fund $18,000,000-$20,000,000 available No- and low-interest loans up to $1 million for terms of up to ten years For businesses, nonprofits, local governments, public schools, community colleges and state agencies/universities Extends scope of federal recovery funds and ensure that these funds continue to support the state’s commitment to renewable energy and energy efficiency Performance Contract Term Buy-downs

7. N.C. STATE EECBG Funds State will issue application materials/RFPs after approval and award of funds from DOE State must distribute at least 60% of allocations to small towns <35,000 residents Remaining 40% will be distributed to K-12 public school districts, community colleges and other local public authorities which is being funded with $7,044,124

8. City of Raleigh EECBG Funding • Direct allocation of EECBG funds • $2,500,000 • Includes "lighting efficiency improvements" • Contact for City of Raleigh EECBG program: Paula Thomas Sustainability Initiatives Manager City of Raleigh 919-996-3840

9. EPAct 2005 Bill McShane Sustainable Lighting Division

10. Practice What we Preach • Completed an EPAct project at our Union facility • Yielded a 48K tax deduction • ($16,000 saving plus annual energy saving) • Ongoing project for the Fall River Plant

11. Overview • The opportunity • Energy Tax Incentives Act of 2005 • Commercial building immediate tax deduction • Incentivized areas: • Lighting • HVAC • Building envelope • Also available for: • Tenant owned lease-hold improvements • Rental properties 4 stories or above • Primary Designers of Government Buildings

12. Tax Language • Credit • A Dollar for Dollar Savings • Deduction • To calculate your Savings you must multiply by your tax rate • Approximately 1/3

13. Overview • DOE Objectives • Make tax incentives performance based • The more energy you save, the more taxes you save • Maximize efficiency of conventional equipment and processes • Encourage alternative energy equipment and design

14. EPAct Strengths -- Retail Central management of design decisions Prototype then keep consistent through chain for easy compliance Majority of EPAct projects retail

15. Potential Tax Savings for Major Retailer X Assumptions: Qualifying Energy Efficient Capital improvements for each facility

16. Distribution Centers • All major and minor companies have these! • Low hanging fruit….Major companies are retrofitting. • Very large square footage • Example: 80,000 sq.ft. warehouse *2,080 hours of operation

17. Hotels • Easy opportunity • Compliance achieves full $/sq.ft. deduction in 30 states • Large spaces • Guest rooms • Exempt from bi-level switching • Substantial plug-in lighting – exempt • Franchise ownership can be a hindrance

18. Overview Building Energy Use • View of DOE analysis on tax area • Difficult to reduce building envelope energy use after-the-fact • Lighting current low hanging fruit • Prospectively, HVAC may be biggest opportunity

19. Commercial Building Immediate Deduction ASHRAE (American Society of Heating, Refrigerating and Air-Conditioning Engineers) HVAC (Heating, Ventilation & Air Conditioning) • Deductions based on improvements over ASHRAE 90.1 2001 • Energy efficient improvements must be depreciable assets • Converts 39 year depreciation to current deduction • Available for installations completed through 2014 • Deduction amounts: • Lesser of total cost or: • $1.80/sq.ft. Whole Building • $0.60/sq.ft. Individual Systems • Lighting • HVAC • Building Envelope

20. Commercial Building Immediate Deductions • Architects/Engineers/Lighting Designers • DOE goal to incentivize green design in government building sector • Benefits passed through to the primary designer of: • Federal: offices, military bases, court houses, post office, labs etc. • State: offices, transportation facilities, state universities, court houses etc. • County, city, town, village etc: offices, schools, town halls, police, fire, libraries etc.

21. 5 ways to Capture Tax Deduction 1. Whole Building ($1.80/ft2) • 50% Energy Cost Reduction below standard Permanent Rules partial deduction ($0.60/ft2) • Overall Energy Cost Reduction of 16 ⅔% below standard for: 2. Lighting or • HVAC or • Building Envelope 5. Interim Lighting Rules ($0.30/ft2-$0.60/ft2) • 25% to 40% prescribed Light Power Density (LPD) reduction below standard

22. Interim Lighting Rules • Meet W/ft2 targets • Add’l Requirements • Bi-level Switching • Meet ASHRAE 90.1 Requirements • Meet IESNA minimum light levels LPD (Light Power Density)

23. Bi Level switching-Tax Requirement Tax Explanation-not a lighting one EPAct States –a room which is defined has having four walls and ceiling must have two levels of light. (must have the ability to achieve) How to Satisfy this requirement: Multiple Switches Circuit Breakers—distribution centers Occupancy Sensors in a perimeter offices only provide On and Off

24. Free Riding Advanced tax planning strategy Lowest hanging Fruit If 40% improvement all already exist. Use the $0.60 cents square deduction for: Lighting Controls Lighting portion of Building Management Systems DayLighting design and systems

25. Benefiting from ASHRAE 2004 & 2003 IECC

26. States with Stricter Lighting Standardsthan ASHRAE 90.1 2001

27. Common Lighting Retrofits Industrial/Manufacturing/Warehouse T5 Hi-Bay Fluorescent 234 Watts Metal Halide 458 Watts Office & Retail Or 4 Lamp 4’ T12 Mag. Ballast 144→164 Watts 3 Lamp 4’ Super T-8 Elec. Ballast 72 Watts 2 Lamp 4’ Super T-8 Elec. Ballast 67 Watts

28. EPAct Strategy • Review all completed projects for EPAct Eligibility (Commercial & Government) • Establish process to maximize EPAct • Lighting • Design future projects to the higher of ASHRAE 2004, local energy codes or EPAct

29. And now a word from one of your electric utilities . . .

32. North Carolina Rebate Programs 4-lamp T5HO = approx $75 per fixture Plus Sensor