Who knew when I started Green Econome in 2009 that my previous 30 years in accounting and finance would help building owners understand the opportunities provided by tax benefits in the Inflation Reduction Act (IRA), signed into law by President Biden in late 2022?

This significant package is heavily focused on how commercial real estate owners can invest in their properties to reduce operating costs and emissions by taking advantage of tax deductions and credits. Providing cash flow to owners, some of these benefits can be transferred to others, and non-profits can receive cash tax payments to help pay for these projects.

Let’s break down one of my favorites: Section 179D

This is a tax deduction. For those still learning about financing, a tax deduction is a reduction to the property’s income before tax liabilities are calculated. So, any of these deductions should be considered against the owner’s tax rate.

Section 179D has been around for many years and there is an opportunity to take the original deduction for 2020, 2021, and 2022. The new version, I call “IRA Section 179D” is effective with projects going into service after 1/1/2023.

When I started to research this deduction to help our clients increase their cash flow for these projects, it wasn’t clear that there were two specific periods to be considered for this deduction. The initial period is effective from 1/1/2023 – 12/31/2026. Beginning 1/1/2027, we have a new version (which is not as beneficial).

How is 179D calculated for your new construction or large retrofit project?

It all starts with an energy model. What is this? Well, it is a virtual design of your building. For the initial period, the energy model is a design of the property with the mechanical standards established by ASHRAE 90.1 2007. Note 2007! If you have a building that you are retrofitting in California to Title 24 2022, you are already way more efficient. LEED certification requires buildings to meet ASHRAE 90.1 2010 standards, so again, 2007 is much less efficient.

Next, the energy model is designed to the current material and efficiency standards the building is being built to or retrofit. The driver for this deduction is the “efficiency gain,” which is the difference between the energy used at the ASHRAE 901. 2007 standard vs. the current building code standard. For those projects requiring prevailing rates, the deduction is 5 times higher, which means it can be very significant.

The calculation is the sq. footage of the property multiplied by the corresponding rate based on the efficiency gain. This value is then multiplied by the owner’s tax rate... and there you have it: the anticipated tax deduction! The larger the property, the higher the deduction, but I believe smaller buildings may benefit based on the level of improvements planned.

Efficiency projects built together, pay together

When claiming the 179D tax deduction, it is most beneficial to have completed all the projects together in the same year. Green Econome is a woman-owned, full-service energy and water efficiency project construction and consulting company with over 20 years of combined experience. We can help explain these complex tax benefits and match you with a 179D specialist. Furthermore, we can recommend solutions that will increase the NOI of your property and increase market value. Get the ball rolling and reach out to Green Econome’s founder and CEO, Marika Erdely.



I love a good federal tax credit since it is a reduction of the tax liability of the owner. Essentially, this is pure cash flow to the owner of the property. What could be better? I have two favorites improved by the Inflation Reduction Act (IRA): the Federal Solar Investment Tax Credits (ITC) for Solar and Battery Storage, and a new 45L for residential construction and major renovations.

Federal Investment Tax Credits (ITC) for Solar and Battery Storage

While there is a suite of tax credits under the ITC for residential, businesses, and manufacturers, Let’s focus on the ITC for businesses. The investment tax credit (ITC) is a federal tax credit that reduces the federal income tax liability for a percentage of the cost of a solar or storage system that is installed during the tax year. Before the passage of the Inflation Reduction Act, this incentive was 26%, but with the help of the IRA, it is back up to 30% of the project cost until 2033. (U.S. Department of Energy).

There are two bonus tax credits at 10% a pop if they are attainable.

  • Energy Community Bonus: An energy community is an area identified as a brownfield site and/or locations experiencing high unemployment and fossil fuel investment. Looking at the DOE Energy Community map, most of Los Angeles County is currently designated as an energy community. Unfortunately, this is a temporary map and we in the industry aren’t exactly sure when the map is to be reset and areas may drop off.
  • Domestic Content Bonus: This bonus requires a percentage (starting at 40%) of project materials (by cost) to be produced in the U.S. It is difficult to attain the second additional 10% solar tax credit. I’m told businesses are hard at work on this, making domestic materials readily available. Hooray for U.S. manufacturing!

These projects also benefit from Federal MACRS Bonus Depreciation and State Depreciation (which is, again, a tax deduction—reducing the income of the property for tax purposes).

By the Numbers: Cash Flow for Solar and Battery Storage Projects

Let’s examine some examples of tax savings when installing a solar PV system or an energy storage system. Many people aren’t aware of just how much these tax incentives can help to cover the cost of the project. The numbers speak for themselves.

Energy Storage System (90kW/220kWh)

Gross System Cost  $ 318,244.00
IRA ITC (30% + 10% Energy Community)  $ (127,298.00) -40%
SCE SGIP Rebate Program to Owner  $ (55,750.00) -18%
Federal MACRS Bonus Depreciation  $ (53,465.00) -17%
State (CA) MACRS Depreciation  $ (31,824.00) -10%
Net Project Cost to Owner  $ 49,907.00 -84%
Estimated Electricity Savings (Year 1)  $ 20,939.00  
Estimated Total Net Savings (15 Years)  $ 260,574.00
Payback Period 3.1 Years

Solar PV System (29.4 kW-DC)

Gross System Cost  $ 110,344.00
IRA ITC (30% + 10% Energy Community)  $ (44,137.00) -40%
Federal MACRS Bonus Depreciation  $ (27,807.00) -25%
State (CA) MACRS Depreciation  $ (8,828.00) -8%
Net Project Cost to Owner  $ 29,572.00 -73%
Estimated Annual Electricity Savings (Year 1)  $ 9,700.00
Estimated Total Net Savings (25 Years)  $ 419,117.00
Payback Period  3.8 Years

Tax Benefits Can Cover Over 80% of the Project Cost

The tables above illustrate how HUGE these tax incentives are. In just over 3 years, the entire cost of the energy storage system will have paid itself back. The battery can offset peak kW demand costs in high Time-of-Use (TOU) rates. Looking at the numbers, these energy efficiency projects are a no-brainer.

Green Econome Project Consulting, Construction & Incentive Management Services Have You Covered

Green Econome is here to guide you through the decision-making process and provide you with maximum energy and tax savings! We are a woman-owned, full-service energy and water efficiency construction and consulting company with over 20 years of combined experience. If you have a building for which you are considering solar and battery storage and would like a no-obligation quote, please contact CEO, Marika Erdely.


What is the 45L Tax Credit?

The Inflation Reduction Act amended Section 45L, a tax credit to incentivize the new development or major renovation of energy-efficient residential properties for lease or sale. The new Section 45L provisions include two tiers of credits for eligible buildings and units certified to applicable ENERGY STAR® residential and U.S. Department of Energy Zero Energy Ready Home (ZERH) program requirements. The updated Section 45L is extended to qualified residential properties acquired from January 1, 2023, through December 31, 2032. The tax credit's value per dwelling unit varies, reaching a maximum of $5,000, based on factors including the home type, number of stories, and compliance with energy efficiency requirements.

This residential construction tax credit is fantastic if you are already constructing or retrofitting at high efficiency and want to recognize your residential project as ENERGY STAR® or ZERH certified right off the bat.

Qualifying for the Section 45L Tax Credit

Here are the basic eligibility requirements for homes acquired and/or completed after December 31, 2022, and located in the U.S., wanting to claim Section 45L (as found on the Department of Energy and IRS websites). It is important to note that there are differences in terms for single-family vs. multi-family homes. Please contact Green Econome for detailed information. This is a basic outline:

Single Family Homes

  1. Certified under the applicable ENERGY STAR Single-Family New Homes (National} Program Requirements.
  2. Certified under the most recent ENERGY STAR Single-Family New Homes Program Requirements applicable to the location of such dwelling unit (as in effect on the latter of January 1, 2023, or January 1 of two calendar years prior to the date the dwelling unit was acquired), or
  3. Certified under the most recent ENERGY STAR Manufactured Home National program requirements as in effect on the latter of January 1, 2023, or January 1 of two calendar years prior to the date such dwelling unit is acquired.

Multi-Family Homes

  1. Certified under the most recent ENERGY STAR Multifamily New Construction National Program Requirements (as in effect on either January 1, 2023, or January 1 of three calendar years prior to the date the dwelling was acquired, whichever is later), and
  2. Certified under the most recent ENERGY STAR Multifamily New Construction Regional Program Requirements applicable to its location. (as in effect on either January 1, 2023, or January 1 of three calendar years prior to the date the dwelling was acquired, whichever is later).

All Eligible Dwelling Units

Must be certified as a zero-energy ready home under the Zero Energy Ready Home (ZERH) program of the Department of Energy as in effect on January 1, 2023 (or any successor program determined by the Secretary).

What are the Additional Benefits to the 45L Amended by the Inflation Reduction Act?

  • Increased credits: for homes acquired between 2023-2032.
  • Prevailing wage kicker: tax credit is higher for multifamily projects that meet the prevailing wage requirements.
  • Double the savings! 45L tax credit can also be utilized with the IRA’s Section 179D for buildings over 4 stories.

Green Econome Helps Maximize Savings on your Multifamily Projects

While Green Econome is not a tax professional, we work with vetted partners and offer incentive and financing management, as well as project construction and building certifications for multifamily properties. We are a woman-owned, full-service energy and water efficiency construction and consulting company, with over 20 years of combined experience. Tax credits can be complicated, don’t miss out on crucial savings and upgrading your building’s energy efficiency! Contact our founder and CEO Marika Erdely for a consultation.



At Green EconoME we are passionate about saving building owners and operators energy, on their energy costs and maximizing their capital investments. That’s why we cringe when people tell us they finished a project and didn’t take advantage of any of the many available utility incentives. Right now, utility incentives and tax benefits for energy efficiency and clean energy generation are the vehicle that governments are using to mobilize clean energy goals. What motivates you to make improvements to your commercial real estate is yours. What matters to us is that we each benefit from the actions we take, and that those actions hold long term value.

Utility Incentives 101

Utility incentives are financial and sometimes technical support available to specified projects or equipment. They can be offered by the utility directly, a program administrator, or are publicly administered programs. This year, there has been a shift toward centralizing some incentives and programs to be available across California, rather than at the regional utility level. This shift marks California’s response to clean energy mandates and helps distribute funds equitably to all utility customers. It creates a bigger funnel for end-user incentives and rebates to assist with efficiency, renewables, resilience, EV infrastructure, and building decarbonization. Confused? Call us.

Our Top Three California Energy Saving Incentives

Aside from not knowing about available incentives, another barrier simply is that there are so many options, decision-making can be difficult. Here are some key programs that, from our experience to date, are easy to manage, pay well, and have a stable stream of funding:

  • LADWP Commercial Lighting Incentive Program (CLIP)This is offered through LADWP directly to its qualifying business customers. CLIP is for lighting retrofit projects where the building has an annual average monthly electrical demand (kW) above 200 kilowatts. Every efficiency project Green EconoME has completed has included LED lighting retrofits. We leverage this incentive where we can, and consistently see on average 30% savings on the total project cost.
  • SoCalREN Multifamily Program (SCR)The County of Los Angeles administers the Southern California Regional Energy Network (SoCalREN) programs. The SoCalREN offers financial assistance to public agencies and multifamily residential property owners for energy efficiency retrofits impacting both electric and gas use. Green EconoME has served as a consultant and contractor on several SCR multifamily retrofit projects over the past 2 years. See our Case Studies for results. We have seen energy savings exceed program requirements, and have been awarded further program credits.
  • California Energy Design Assistance (CEDA) ProgramCalifornia Energy Design Assistance provides complimentary energy design assistance and financial incentives for commercial, public, industrial, agriculture, and high-rise multifamily new construction projects, or major alterations that are in their early design phases. The goal of the program is for buildings to be designed efficiently from the start, thereby realizing lifelong savings and less environmental impact. CEDA helps the design team identify the most energy efficient strategies through custom energy modeling, then helps the owner implement those measures through incentives to reduce cost. CEDA, along with LADWP’s Zero By Design (ZBD) understands that every team is different and allows room for the professionals you bring to the project to complete some or all of the work, as long as it meets set criteria. 

Tax Benefits 

A powerful 1-2 punch is combining utility incentives with tax deductions like Section 179D, and the CARES Act Qualified Improvement Property (QIP), which allows for accelerated depreciation, while the solar tax credit (ITC) is a full credit off the owner’s tax liability. A clean energy future, regardless of how we feel about it, is the direction California is already moving. Local, state, and federal policy around clean grid infrastructure and lowering carbon emissions can strain property owners, which is why these robust incentives are available, being widely funded, and introduced at a rapid pace. Green EconoME has been helping clients navigate and manage available incentives for their projects, ensuring the richest paybacks possible. Schedule a meeting to discuss your current or future projects.

Green EconoME is a full-service provider. Our team of multidisciplinary, qualified professionals can fulfill your 1-5-10 and are versed in the latest incentive programs and financing options. It is what our integrated approach is based on. Whether your goal is to simply comply or to fulfill ESG strategies, Green EconoME analyzes energy use, and existing conditions to provide solutions that reduce operating costs, and increase the value of your property. Contact us with questions or for pricing. Chula Vista, we are so excited for the health and future of your community, congratulations! We can’t wait to get started.

Did you implement Energy Efficiency measures in your building during 2018 or prior? You may be eligible for a tax deduction and/or credit.

As of December 19, 2019 the Senate has approved the 2019 Tax Extender Bill, which extends the 179D deduction and the 45L tax credit. This  allows for the adjustment of 2018 tax returns to include qualified energy-efficiency projects from that year.

The deadline to amend 2018 tax returns is December 31, 2020. Projects from earlier than 2018 may still qualify if you have not taken advantage of available incentives. Ask Green EconoMe how you can maximize this benefit.

What is Section 179D Tax Deduction

179D was created in 2005 under the Energy Policy Act (EPACT), allowing a tax deduction from $0.30 to $1.80 per square foot for the installation of energy efficiency systems in the commercial space.

Building owners are not the only beneficiaries of this tax deduction. Tenants may also be eligible if they take on construction spending. However, deductions can only be recognized for the year that efficiency measures are up and running.

What is Section 45L Tax Credit

45L was created in 2005, providing $2,000 per dwelling unit that consumes less energy than national standards. This credit is meant for low-rise apartment developers with buildings 3 stories or fewer. Buildings 4 stories or more may qualify for the 179D deduction detailed above. The 45L credit can be applied to new construction or the refurbishment of existing units. Like with 179D, in order to be recognized for the tax credit, the new or refurbished unit must be leased or sold within the year that tax return is filed.


Does my Building Qualify for Tax Deduction or Tax Credit?

Green EconoME is a woman-owned, multi-disciplinary energy consulting and construction firm providing full-scale energy efficiency services to diverse public and private sector clients. Not only are we led by a former CFO who seeks all incentives available for each project, our ROI data is also 98% accurate. Contact us to see if any of your projects are eligible for these extensions!

info@greeneconome.com or (818) 681-5750

Solar PV reduces operating costs & increases building’s valuation!

Why should building owners consider Solar PV installations?

  1. Solar Energy is truly renewable. The amount of energy generated by a PV system reduces both the kWh used by a building and the building’s peak KW.
  2. The cost of solar-generated energy is much lower than the cost of energy purchased from a utility.
  3. Thanks to the longevity of solar systems (appx. 25 years), a solar PV investment will allow owners to reap financial benefits for years to come.
  4. The minute the system starts operating, Net Operating Income (NOI) increases.
  5. Stop relying on others for energy by creating your own on-site energy independence.
  6. Get Net Energy Metering (NEM) credit when excess energy gets sent back to the grid.
  7. Solar Projects are eligible for the 30% Federal Investment Tax Credit (ITC). Installation of a new roof at the same time as the solar project, allows for 30% ITC on both projects.  This Tax credit is dropping to 26% on January 1, 2020.
  8. Demonstrate to your employees, neighbors, and customers that you’re serious about  “Going Green”.

Case Study on Solar PV Savings

A hotel client invested $1.4 million into Solar PV systems to provide 27% of the hotel’s energy usage. With current tax credits and accelerated bonus depreciation, the project cost was reduced by 54%. Incredible.

Consult us today and see why a Solar PV system makes sense for all the above reasons and more!!