Energy Codes and Energy Incentives



National Code Adoption Map as of November 2013.  Source DOE website.

On Jun 26, 2014 the Idaho Chapter of the US Green Building Council hosted an event at our Boise office titled “The Business Case for Carbon Reduction”.  Local leaders from government, commerce, industry, architecture and non-profits spoke of the pressing need to incorporate sustainable practices into our everyday business models as well as the planning and design of buildings and communities.  To that end we are posting an article written earlier this year that discusses incentivizing sustainable design.

A similar version of this article first appeared in the Idaho Business Review, January 20, 2014.  Look for future articles in the IBR later this summer – Kent Hanway, AIA, CSHQA President

On Jan. 1, 2014 Idaho adopted the 2012 International Energy Conservation Code, the most current and most stringent code applicable to renovation and new construction for commercial construction. This brings Idaho in line with states such as Washington, Oregon, California, Massachusetts and many others. (Although the most current we can find, the map above is a few months behind.)  While energy is relatively inexpensive in Idaho and some may ask why we are working so hard, this is a strong move for our future to keep energy consumption and costs low.

Many people think manufacturing and transportation are the big energy consumers and polluters. Each does its share, with manufacturing consuming 31 percent and transportation 28 percent of U.S. energy. The remaining 41 percent?  Buildings.  The energy to construct and then use the buildings we make consumes more energy than either industry or transportation. Buildings are also the No. 1 producer of global carbon dioxide emissions and the amount is steadily increasing. An analogy from The Living Building Challenge, a nonprofit promoting sustainable design, compares building a 50,000-square-foot commercial building to driving a car 20,000 miles per year – for 730 years!

No matter your view on climate change, we cannot continue on this trend. It simply costs too much to build and operate inefficient buildings. The IECC is revised every three years, and compared to 2006, the 2012 code raises energy efficiency of commercial buildings by 30 percent. However, it is up to the states to adopt new codes, so the federal government and many power companies employ construction-related programs that encourage better-than-code outcomes. Often these programs are very generous, paying for equipment and upgrades with the owner paying only for design and installation.

Idaho Power is one of those companies. Since 2002, Idaho Power has implemented various programs to incentivize building owners and builders to exceed code requirements and build greener buildings.  Idaho Power currently sponsors three commercial building programs:

• Easy Upgrades offers incentives for simple retrofits within existing commercial and industrial buildings.
• Building Efficiency for Commercial Construction assists in offsetting capital expenses for efficient lighting, cooling and control systems, as well as better-built building shells for new or renovated commercial and industrial construction.
• Custom Efficiency for Complex Projects addresses large commercial and industrial users that improve their electrical systems or processes.

Until recently, a federal incentive program within Section 179(d) of the tax code allowed generous tax deductions in the form of accelerated depreciation for energy upgrades to existing commercial buildings.  Although there is periodic talk in Washington of extending this provision, it sunset December 31, 2013 and looks unlikely to be renewed.

Our experience with both programs has saved our clients and ourselves money.  However, as we see in the federal program, incentives are not guaranteed into the future.  With more stringent codes, many incentive programs are less cost effective or even redundant.  Power companies will not incentivize customers for merely reaching code.

Yet, there is a silver lining going forward.  Regardless of the duration of these and other programs, savvy developers and investors already know something very important about building green: It saves money and increases property values.

The simple payback from many energy efficiency measures is estimated at five to seven years. Green buildings are less expensive to operate, raising return on investment compared to comparable leased space. Green buildings are also perceived to have greater value in the market. In five different studies from 2009 to 2011 in 12 urban U.S. markets, some including Boise, green buildings experienced higher rents, fewer vacancies and faster absorption. Sales of green buildings experienced shorter durations and higher net prices.

Karen Warner, president of Tenant Realty Advisors in Boise, sums it up:  “The demand for green office buildings will continue to increase as more and more national firms recognize the benefits of leasing sustainable office space. Not only does it make economic sense, but green buildings also have a positive influence on employee retention and productivity.”

The financial incentives of grants, rebates and deductions may be vanishing, but the real money in green building remains.  –

Kent Hanway is a licensed architect and president of CSHQA, a Boise-based, 90-person architectural and engineering firm. He is a member of the Idaho Power Energy Efficiency Advisory Group, the Urban Land Institute and the American Institute of Architects.