For a multitude of reasons LED lighting is, in the vast majority of cases, superior to other alternatives. Aside from the very important aesthetic and environmental benefits of LED lighting, from a business perspective, the real reason to utilize them is to save money. As a result, LED lighting provides an opportunity to execute a financial transaction which provides a net cost savings. The end result is to free up cash flow for other uses.
While LED lighting can save you a significant amount of money, it does have an initial capital cost. So the question is asked…”How are we going to pay for this?” No need to worry. Light Energy Development, through its sister company, LRB Financial, has developed programs to help fill the funding gap. LRB has long-standing relationships with lenders to develop programs that meet their client’s needs. We will help structure the debt so that the loan payment will be paid for through the energy savings realized by installing LED lighting. We will finance large and small projects for our commercial and municipal clients at highly competitive interest rates. WE PROVIDE SOLUTIONS
There are two additional potential positive impacts upon the overall transaction. The first of these pertains to rebates that may be available from your electrical power provider. Light Energy Development will assist you in the application, review, inspection and rebate receipt process. These rebates can be up to 50% of the total cost of the LED lights. The second pertains to tax credits and depreciation matters. Light Energy Development recommends that you consult your tax advisers for specific advice relative to you particular situation.
What are the economic benefits of LED upgrades?
EPAct – The Energy Policy Act of 2005 provides for a Federal Tax Deduction of $0.60 per square foot for putting in energy efficient lighting and the associated controls. You have a certification completed and the benefits are a simple line item adjustment to your tax returns. A 200,000 square foot warehouse could generate $120,000 in tax deductions when re-done properly. This program expired at the end of 2013, but there is a chance of renewal. Stay tuned.
Utility Rebates – Just the same way you get a rebate for buying a new energy efficient refrigerator, you are also entitled to rebates from the utility company for energy efficient lighting.
Energy Savings – Can reduce the power usage by 50%. With energy costs scheduled to DOUBLE in some areas over the next 5 years, you can see how important these savings are.
Depreciation Recapture – Section 1245 and 1250. When a renovation is completed, some of the assets may be considered personal property by the IRS. These assets qualify for Bonus Depreciation.
Abandonment – When a property undergoes renovation, such as a relighting or new HVAC system, the old systems are abandoned for accounting purposes. This means that the net book value of the asset may be written off as a loss (i.e. taken as a tax deduction). This deduction can provide significant economic benefit to the property owner.