Installing energy-efficient equipment today may actually make you a few bucks.
With sustainability on the minds of many in the food industry these days, it's a fitting time to share some tips on how to get free energy-efficiency equipment upgrades in your stores while getting paid extra cash for making these upgrades.
Thanks to Section 179 of the U.S. tax code, in 2011, you can write off 100 percent of the purchase price (up to $2 million) of qualifying equipment from your gross income in the tax year the purchase is made. This works particularly well with energy-efficiency equipment, when you combine this major tax deduction with utility incentives and lease financing.
For example, say your 10-store chain implements $200,000 of energy-efficiency upgrades. You're able to get utility financial incentives to pay for half (this varies by utility, but a 50 percent cap is common) of the investment and use lease financing to cover the remaining equipment and installation costs. These upgrades normally pay for themselves and their installation costs within two years, and you end up saving about $10,000 each month, which more than covers your $5,000 monthly lease payment. In your next tax preparation, you still get to claim a $100,000 tax deduction and put another $34,000 in your bank account that would normally go to Uncle Sam.
After two years, this translates to a savings of $154,000, which goes directly to your bottom line. That's a lot of cheese. While your ongoing monthly energy savings will rise (or fall) with the price of electricity, this example assumes a 34 percent corporate tax rate, and that you are paying taxes on a minimum of $100,000 of gross revenue. Dollar amounts will vary by chosen upgrades, utility incentives and lease terms.
This tax incentive is part of the U.S. government's strategy to stimulate the economy by making it more attractive for businesses to buy equipment. Since this high tax-deduction limit is set to expire in the near future, and utility incentives for energy-efficiency upgrades are at an all-time high, 2011 is a good year to implement energy-efficiency upgrades.
And speaking of green equipment, what do Whole Foods, Meijer, Best Buy and the Mall Of America have in common? They've all installed charging stations for electric vehicles in pilot locations. Some charge a fee, while others offer free charging to drive traffic, but the free services are expected to decrease over time as the number of electric vehicles on the road increases.
Since it takes longer to charge an electric car battery than it does to fill up with gas, customers with these green cars spend regular amounts of time in retail parking lots. Because of this, electric car-charging stations are a natural fit for savvy grocers that want to be a destination for the growing number of people owning Chevy Volts and Nissan Leafs. And most major cars companies have plans to release electric cars in the near future.
Why not “green up” the entire electric charging station operation? I envision covered parking areas featuring charging stations partially powered by solar panel roofs, and maybe even a small wind turbine or two. Solar panels and wind turbines can also be installed on your main building, too. If this sounds a bit too futuristic, keep in mind that the Department of Energy has been promoting new laws requiring some form of renewable energy on all commercial buildings.
Besides, electronic charging stations just shift carbon emissions from the tailpipe of a car to the coal-fired electricity-generation plant. If we don't couple clean forms of energy with electric vehicles, we'll address only half of the situation. In addition, producing energy near the point of use will keep in check the electric grid stress (and related distribution and upgrade costs) that will be created as vehicle manufacturers shift from gasoline- to electricity-powered automobiles.
We'll have to install this kind of equipment eventually. You may as well do it while you can save a few bucks at the same time.