A big shift is happening in financing for decarbonization projects in the United States. In my private conversations with real estate sustainability and ESG leaders, I've learned this is one of the top things on their minds.
"This is the pivotal decade to get on track to net-zero emissions, and (with the IRA) we’ve bought ourselves the decade. There's more work to be done, but we just got all the federal financial incentives that we need for the next decade."
—Jesse Jenkins on the Volts podcast
The shift centers on the impending tax changes brought on by the Inflation Reduction Act (IRA), which aims to reduce carbon emissions in buildings by subsidizing both energy efficiency retrofits and renewable energy installations.
PwC says "the bill (will) reinstate and significantly expand current incentives by providing an estimated $370 billion of new energy-related tax credits over the next 10 years." With these changes, projects which were previously failing to “pencil out” could now be economically profitable for real estate owners.
The biggest changes are important for buildings that are owned by tax-exempt entities (e.g. public institutions or non-profits) or real estate investment trusts (REITs). Read: that's a lot of buildings.
These entities don't have taxable income for decarbonization tax credits to offset. Additionally, REITs in particular don't have the ability to pass tax credits along to shareholders. For these buildings, not only are decarbonization tax credits getting extended and expanded, owners will now be able to transfer credits to third parties or claim the tax credits as refunds.
Similar modifications are coming to the Section 179D tax deduction program, growing the funding amounts and allowing REITs and tax-exempt building owners to take advantage (although in a limited capacity).
Ryan Knudson, Macerich's Vice President, Corporate Responsibility and Sustainability, talked to the Nexus Pro community last week about this opportunity:
"We can now take 20-30% off the top of capital projects that we would typically need to pass on. Reducing that up front cost opens up a new playbook."
What's that mean for you? We as a community must get smart on how we sell these projects and what boxes we need to check in order to reap the full financial value of the IRA.
How do you see this impacting your projects?
—James Dice, Founder of Nexus Labs
P.S. Another sustainability VP told me "A market will need to be made for these credits." The Nexus Labs Syndicate's next investment will be attempting to do just that. Join the syndicate to see the deal.
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✖ At the Nexus
Here’s everything worth sharing from Nexus HQ this week:
★ PODCAST: 🎧 #124: Tearle Whitson Tells the Inside Story of Microsoft's Smart Buildings Program–Episode 124 is a conversation with Tearle Whitson of DB Engineering, formerly leader of Microsoft’s smart buildings program while he was at CBRE.
This is the story of one of the most successful and famous smart buildings programs on the planet, straight from the mouth of one of the key players.
★ MEMBERS-ONLY EVENTS THIS MONTH:
- New Member Orientation: Nexus Founder, James Dice, hosts an introduction to the Nexus Labs Community and how you access and take advantage of all the resources that come with your Pro Membership. This is for new members or those who've not taken advantage of all the resources at the Nexus Community. November 16th @ 9 am MT.
- Subject Matter Expert Workshop: Pro member and Smart Buildings Programs Director at TIA, Marta Soncodi, will lead us as our SME. Topic TBD. November 21 at 2 pm MT
- Member Gathering: Global Leader in Real Estate Sustainability and ESG, Ben Myers will lead this month's Pro Member Gathering. Topic TBD. November 30th at 9 am MT
Join Nexus Pro now to get the invites and access to the recordings.
🏆 And the winning commenter is: Andrew Soulier (90% of other commenters forgot question #2!)
Give him a like!
★ JOBS: Are you hiring? Searching for a job in smart buildings?—We've relaunched the Nexus Labs Jobs Board.
It's got great jobs from Belimo, Lockheed Martin, The Clarient Group, Gridium
🔥🔥🔥 Hot Jobs in Smart Buildings
Belimo produces millions of sensors and actuators for the HVAC industry. All their devices have a digital identity and participate in the Belimo Digital Ecosystem. This job will enable you to develop your skills further and make a difference in an ecosystem of small devices with a big impact.
👉 Lockheed Martin has two open positions:
- Building Management Systems Controls Engineer in Startford, CT.
- Fault Detection & Diagnostics Lead in Moorestown-Lenola, NJ.
These positions support the Smart Buildings Team within the Lockheed Martin Rotary & Mission Systems (RMS) Facilities organization. The selected candidate will initially work under the guidance of the team with the goal of quickly becoming an independent subject matter expert.
As a leading technology innovation company, Lockheed Martin’s vast team works with partners around the world to bring proven performance to our customers’ toughest challenges.
🔍 A message from our sponsor, Clockworks Analytics 🔎
The Building Analytics Comparison Guide is used by industry-leading facility teams and service provider organizations to make the jump from building automation system (BAS) alarms to prioritized and proactive maintenance using Fault Detection and Diagnostics (FDD) software. There are actually two kinds of fault detection and diagnostics (FDD) software: those that stop at the first “D” (Detection) and those that go all the way to Diagnostics.
This guide tells the story of the second "D" and why it's so important. Get the guide here.
👋 That's all for this week. See you next Tuesday!
Whenever you're ready, there are 4 ways Nexus Labs can help you:
1. Take our shortcut to learning the Smart Buildings industry here (350 students and counting)
2. Join our community of smart buildings nerds and gamechangers here (450 members and counting)
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4. (NEW) Join the Nexus Labs Syndicate on Angellist for opportunities to invest in the best smart buildings startups that cross my desk each month.