Building management systems (BMS) are essential to today’s office buildings, hospitals, colleges, and universities. Once the building is occupied, owners and tenants can save considerable money on energy bills. Buildings are also responsible for as much as 37% of pollutants and greenhouse gases in the US. Hence, reducing that output is essential as the country strives to meet goals regarding energy conservation, climate change, and carbon footprints.

This is why there are incentives from the government that allow you to offset the cost of your BMS project. These programs should be part of the cost-reduction strategy for the BMS portion of your project and, in some cases, the overall cost of your building. With a bit of research and a knowledgeable BMS partner, you can reduce the installation cost through green building incentives and benefit from future energy savings.

These programs include rebates, loans, grants, and bonds, which lower the upfront cost. There are also tax incentives, including income tax credits and tax deductions for businesses, allowing owners to recoup costs and shorten the payback period.

What’s inside this blog post:

Let’s take a look at BMS facts.
Containing your costs on BMS starts with preplanning.
Utility rebates and incentives.
Financial incentives for BMS at the federal level.
City, county, and state programs to offset BMS costs
FICO is the place to start.

Let’s take a look at BMS facts

Several months ago, FICO posted a blog, How to be a Facilities Hero. The statistics are attention-getting:

Buildings are responsible for 37% of global carbon emissions.
One-third of non-fixed operating expenses in an office building or similar structure go to energy consumption.
Direct and indirect savings from a building equipped with a modern BMS and energy-saving technologies can easily reach 30% annually.
Buildings outfitted with the latest BMS technology command more value.

–Lease prices are 8% to 35% higher.

–Occupancy rates are 9% to 18% higher.

–Sales prices are 17% higher.

Buildings equipped with modern BMS are also better for employees:

People working in well-ventilated offices have double the cognitive function of those in offices with average levels of the same pollutants (Harvard School of Public Health).
Employee work quality increases by as much as 29%, and absenteeism drops (Gallup).
By some estimates, 25% of commercial structures have substandard circulation, exposing employees to sick building syndrome.

The bottom line is that building management systems lower energy bills, allow owners to charge a premium on leases and occupancy rates, and provide for happier employees.

Containing your costs on BMS starts with preplanning

Whether you plan to incorporate a robust BMS strategy for a new building or upgrade an existing system, the best place to start your research on rebates and tax incentives is with your BMS partner. They will be the most familiar with the various programs.

It’s best to research rebates and incentives at the beginning of your planning process. Many of these savings require that your project meet specific requirements, and discovering and planning for those requirements in advance is always better than making a mid-course correction.

For example, one of the federal government’s BMS tax incentive programs, referred to as 179D, provides extra tax deductions if you meet higher prevailing wage and apprentice requirements. You need to consider this requirement in the project’s early planning stages.

Many incentive programs require third-party independent verification. Again, your BMS partner should be able to provide names of professionals who can fulfill this service.

Utility rebates and incentives

According to Schneider Electric, utilities across the US earmark more than $4 billion in annual rebates and incentives for energy-efficiency projects. NorthWestern Energy, the utility providing gas and electricity to the western two-thirds of Montana and eastern South Dakota, with additional services in Nebraska and Yellowstone National Park, offers the Montana Commercial Electric Rebate Program. Customers receive direct rebates for using approved components in their BMS system. For instance, you can get a $2.00-per-foot rebate for every foot of insulated hot-water piping. These rebates reach as high as $800 for replacing every electric water heater with an ENERGY STAR-rated heat pump water heater.

You should check with your local utility in your region and your BMS partner to secure the best rebates, incentives, and discounts. Utility rebates and programs vary by region and supplier, and requirements change constantly, so do your research.

Financial incentives for BMS at the federal level

The federal government offers many incentives, typically in the form of tax credits and tax incentives. The most recent expansion of these programs came with the Inflation Reduction Act of 2022, which expanded or extended the Energy Efficient Tax Credits program and 179D incentives, according to an article in Facilities.net.

179D–This is often called the Energy Policy ACT (EPAct). It originally was part of the EPAct of 2005. Tax incentives are available for HVAC, lighting, and hot water systems. Depending on your building envelope and insulation, you can receive a tax deduction of as much as $5.00 per square foot. Your deduction depends on how many of these elements and systems you incorporate. The 179D tax deduction also incentivizes meeting higher prevailing wage and apprenticeship requirements. Claiming some of these deductions requires third-party verification.

Section 48 Investment Tax Credit–If you’re considering including renewable energy systems in your project, including solar, wind, geothermal, and hydropower, this section grants you as much as a 50% credit on the project’s total cost. Depending on costs and efficiencies, some BMS systems automatically switch between the public grid and alternative power sources, so using renewable energy can be incredibly efficient and money-saving for your building operation.

Business Energy Investment Tax Credit–This tax credit maxes out at 30%, provided your building meets renewable energy requirements. This incentive also requires you to meet prevailing wage and apprenticeship requirements.

Modified Accelerated Cost Recovery System–This incentive allows you to depreciate the costs of an energy-efficient building by as much as 60% in 2024, rather than the conventional 39-year straight-line basis.

Check on city, county, and state programs to offset BMS costs

Cities and counties have a stake in the energy savings incorporated into your BMS plans for your project. City planners and economic development agencies are concerned about the wise use of the electrical grid that serves their business community and residents. When a large office building in a downtown area quickly fills with employees, computers, and electrical devices, the electrical grid can get overextended.

There are also programs at the state level. The Montana Department of Environmental Quality (DEQ) has grants and loan programs for alternative energy systems and electric vehicle (EV) infrastructure. If you’re planning EV chargers in your project’s parking structure, funding is available to help offset the cost.

You can find useful links for state-specific incentives on the American Council for an Energy Efficient Economy (ACEEE) website and the Database of State Incentives for Renewables & Efficiency website.

Programs are constantly changing, with funds running out or new programs coming online. You’ll also find programs that apply to buildings serving a metro area and others that pertain to more rural areas. Do your research.

FICO is the place to start

For more than twenty years, the experts and technicians at FICO, based in Great Falls, Montana, have designed and installed building management systems. FICO partners with the most recognizable names in the industry, including Schneider Electric, Salient Systems, and other well-known suppliers and innovators of building management systems. FICO has designed and installed building management systems in office buildings, hospitals, schools, colleges, and universities.

To learn more about the energy savings capabilities of building management systems, including how to offset costs through various rebate and incentive programs, contact FICO or visit our website today.