Geothermal Designer Tax Credit: Don’t Leave Money on the Table

“Your database of completed geothermal projects is a goldmine.”

That was the message at tonight’s New England Geothermal Professional Association member’s meeting. Charles Goulding, from Energy Tax Savers, gave a compelling presentation about some underutilized government programs that directly benefit geothermal designers. It would be impossible to do his presentation justice, but here are some of my notes (in layman’s terms) that should be interesting to anyone who has completed (or will complete) a geothermal project between 2005 and 2013:

• Under the Energy Policy Act of 2005 (EPAct), geothermal designers on government projects are eligible for tax credits of up to $.60/square foot of building space.  On a 500,000 square foot space, this would be $300k.  This is on top of what goes to the building owner.
• The most interesting insight from Mr. Goulding was that most engineers, architects, and contractors don’t know about this benefit.  Who gets it is 100% negotiable – in many cases it is just a matter of asking for it.  “Open your mouth and ask.” was his advice.
• What if the design firm doesn’t have a tax appetite for the credit?  It can be carried over for up to 15 years.
• The biggest niche market for this type of reward?  K-12 schools.
• The fact that EPAct is tied to ASHRAE standards and based on Lighting, HVAC, and Building Envelope efficiency creates a lot of low hanging fruit.  For example: some simple lighting improvements to a building with a geothermal system installed pre-2005 can trigger the $.60/square foot credits for efficient HVAC.
• For private commercial projects, the big message was the federal grant money for 10% of project costs.  The owner gets paid cash within 60 days of project completion.  At least 5% of the project must be complete before January 1, 2012, so this should be a great tool for motivating your prospects sitting on the fence.

Clearly, I’m not a tax professional.  These are just some of the highlights from the presentation.  I think this information is most important for architects, engineers, and contractors who’ve worked on a commercial or government geothermal project, but didn’t know about these benefits.  If you don’t specialize in geo it would be easy to miss.  Tax information is so dense that I appreciate when people can just tell me what I need to know.  Hopefully this whets your appetite to learn more.