1. MAKING CENTS OF ENERGY
Aggregation Model and Cost Segregation Bobby Clark, Co-founder Midwest Clean Energy Enterprise, LLC July 26, 2017

2. Financing Energy Efficiency and Sustainability
Aggregation Model
Energy Efficiency and renewable energy opportunities can help business owners reduce their energy costs and diversify their sources of energy
Both energy efficiency, renewable energy and green/cool roofs projects help with cleaner air and improved health benefits

3. Financing Energy Efficiency and Sustainability
Aggregation Model
MCEE is developing an energy assessment tool that will allow basic energy data collected from building owners to identify opportunities for energy efficiency upgrade. The tool will assess energy usage and analyze age and efficiency of lighting, HVAC, other building equipment that uses energy.

4. Financing Energy Efficiency and Sustainability
Aggregation Model
MCEE will also gather information
on roof tops and available land that
is currently not used to explore the
viability of renewable energy
options like solar PV or geothermal and green roofs.
The initial focus will be on the buildings in NuLu but additional buildings in the Central Business District (CBD) will expand the opportunities for additional savings.

5. Financing Energy Efficiency and Sustainability
Aggregation Model
HVAC, Lighting and Solar contractors and Energy Services Companies (ESCOs) market their services to customers.
Some contractors estimate that the cost paid by customers for their services may include 20-30% for the marketing, customer interaction to gather data for quotes and similar costs.
One option to reduce these costs would be providing vendors with warm leads and energy data from multiple customers in the same geographic area.

6. Financing Energy Efficiency and Sustainability
Aggregation Model
The aggregation of multiple customers should reduce these vendor costs and the economies
of scale can be passed along to the customer.
MCEE will identify vendors and through a formal Request for Information (RFI) process and through negotiations will develop an "aggregation model" to reduce the cost of energy efficiency and renewable energy opportunities for building owners in Louisville.

7. Financing Energy Efficiency and Sustainability
Aggregation Model
Some building owners in NuLu have already provided some building and energy data and other NuLu business owners to provide information.
Aggregating building owners needs for cost effective energy efficiency and renewable energy opportunities will provide economies of scale and lower pricing.

8. Financing Energy Efficiency and Sustainability
Aggregation Model
After the data has been collected and analyzed, each building owner will be presented with options to save money.
Other tax incentives opportunities will also be presented
Building owners can add renewable energy (solar or geothermal) for some or all of their energy needs thus diversifying their energy portfolio to operate their building.
Adding renewables will help mitigate future energy costs to operate their buildings.

9. Financing Energy Efficiency and Sustainability
Cost Segregation & Tax Incentives
Renewable Tax Credits & Tax Deductions for Energy Efficiency
Cost Segregation
Asset Management Study

10. Financing Energy Efficiency and Sustainability
EPACT 2005 enacted IRS Code 179 D
Calculated based on a comparison of benchmark
ASHRAE
Subsystem deductions can be given as follows:
HVAC-$0.60 per ft2
Lighting-$0.60 per ft2
Building Envelope- $0.60 ft2
The deduction has expired for the current tax year

11. Financing Energy Efficiency and Sustainability
Federal Business Energy Investment Tax Credit (ITC)
Bonus Depreciation - 50% for 2015 – 2017
Qualified Improvement Property – New
Qualified Restaurant Property
Qualified Retail Improvement Property
Qualified Leasehold Improvements
Other Tax Incentives

12. Financing Energy Efficiency and Sustainability
Cost Segregation & Asset Management Study
Provides increased short-term tax deductions by
reclassifying assets to shorter depreciable periods
Benefits: Maximize tax deductions in the early years
for increased cash flow
More detailed study based on focused on long-life assets
that will need replacing before end of life of the building
Benefits: Allows taxpayers to immediately write-downs of
existing assets at the time of disposal like HVAC & roofing

13. Financing Energy Efficiency and Sustainability
Cost Segregation
Engineering analysis used to properly allocate construction related costs into the appropriate recovery periods
Accelerate depreciation, defer tax, improve cash flow
Popular with newly constructed and acquired properties
Other applications are often overlooked
Excellent asset management tool
Support for Tangible Property Regulations and Unit of Property

14. Financing Energy Efficiency and Sustainability
Cost Segregation
Property Type
Average % Accelerated
Apartments
15 – 35%
Auto Dealers
35 – 60%
Health Care Facilities
20 – 50%
Hotels
20 – 40%
Industrial Buildings
Manufacturing Facilities
30 – 70%
Office Buildings
10 – 30%
Restaurants
20 – 60%
Shopping Centers
Tenant Spaces

15. Success -- with tax-centric design
Financing Energy Efficiency and Sustainability
Cost Segregation
Success -- with tax-centric design
$150,000 decorative lighting system
Only source of lighting in auto dealer showroom
Bedford suggested the addition of 2 x 4 light fixtures to be used as base building lighting
Allowed $150,000 decorative lighting system to be classified as 5-year rather than 39-year

16. Financing Energy Efficiency and Sustainability
Cost Segregation
Tenant Improvements
Commonly overlooked application 30% – 60% in 5-year is typical
Important strategy for tenants and landlords
Depends on who pays for the improvements
Landlord should request reporting by tenant
Look-back Study
Reallocate costs from 27.5 or 39-year recovery period to 5-year, 7-year, and/or 15-year

17. Midwest Clean Energy Enterprise, LLC
Bobby Clark, Cofounder & Director of Business Development