Commercial & Multifamily Building Energy Incentives

 

Energy costs can significantly impact commercial and multi-family properties’ operating budgets. Energy-efficient improvements can reduce energy costs which can help trim overhead, keep rents competitive, improve property value, and attract and retain tenants. To make these improvements, financial incentives for adopting energy-efficient practices and renewable technologies are available from utilities, as well as local, state, and federal sources. 

The resources on this page can help commercial and/or multi-family property owners gain a better understanding of energy use in their buildings and learn about available resources to improve the economics of energy efficiency and renewable energy upgrades. If you would like to find ways to reduce energy costs for a single-family home or individually-metered unit or condo in a multi-family residential building, please visit Montgomery Energy Connection for residential energy incentives.

 

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Incentives and Grants

Incentive and grant programs provide discounts or rebates on energy efficiency measures and can also pay for technical support and building retrocommissioning.

EmPOWER Utility Incentives

The EmPOWER Maryland Act of 2008 directs Maryland's major energy utilities to provide a variety of energy efficiency incentives to commercial and industrial (C&I) properties. These programs are highly diverse and offer solutions for a variety of building owners and operators.

Incentives from electricity providers may include rebates or discounts for:

  • Lighting
  • Demand management programs
  • Combined heat and power systems
  • Energy efficient appliances
  • Chillers and packaged HVAC units
  • Commercial kitchen equipment, such as freezers, ice makers, and dishwashers
  • Heating and air-conditioning systems and units
  • Programmable thermostats
  • Building tune-ups
  • HVAC tune-ups
  • Monitoring-based commissioning

Additional incentives are also available from your natural gas provider, including space heating systems, high-efficiency food service appliances, and combined heat and power systems.

Utility incentives are typically segmented into small business, medium and large business, and multi-family offerings based on their building type or electricity bill demand (kW).

Small Businesses

Small businesses can access up to 70-80% of the total project costs covered by utilities’ small business programs when upgrading to more energy-efficient equipment. Electric utilities also provide on-bill financing to pay for upfront costs through a small business advance which is repayable through your electric bill, with zero interest for up to 24 months.

Pepco

Potomac Edison

  • The Small Business Direct Install Program is available to commercial accounts with average annual demand under 100KW. For a limited time, the Small Business Direct Install Program will provide you with energy-saving LED screw-in lamps and tubes that you can easily install yourself, at no additional cost.
  • Potomac Edison Small Business Incentives

BGE

  • Small business and small nonprofit customers in BGE’s service territory on rate schedules G and GS are eligible to participate.
  • BGE Small Business Incentives

Washington Gas

Medium & Large Businesses

Utilities offer financial incentives that can cover up to 50% of the project cost for a number of energy-efficient upgrades. Most commercial incentives apply to master-metered multifamily properties as well. Click on your utility below to access their medium & large business websites:

Pepco

Financial incentives can cover up to 50% of the project cost for prescriptive and custom energy-efficient upgrades as well as for Building Tune-up to ensure your equipment is operating at peak performance.

Potomac Edison

Financial incentives can cover up to 50% of the project cost for prescriptive and custom energy-efficient upgrades. Maximize your facility’s energy performance with Potomac Edison’s Building Tune-up and Retro-commissioning (BT/RCx) Program.

BGE

Financial incentives can cover up to 50% of the total cost for retrofit projects and up to 75% of the cost difference between standard- and high-efficiency equipment for new construction projects and replacement of end-of-life equipment. Access technical services to evaluate your options for improving energy efficiency and lowering costs.

  • Eligibility: All commercial, industrial, government, institutional and nonprofit customers (rate schedules G, GS, GL, P and T) in BGE’s service territory are eligible to participate
  • BGE Energy Solutions for Businesses

Washington Gas

Financial incentives area available for gas heating, water heating, and cooking equipment as well as for HVAC tune-ups. Customers can also request a free Commercial Energy Conservation Kit.

Multi-Family Buildings

Most multifamily buildings that are master-metered (i.e., one meter measures the energy usage for all or multiple units) are eligible for utilities’ business discounts. The common areas of a multifamily property are also typically eligible for business incentives.

If you would like to find ways to reduce energy costs for a single-family home or apartment or condo in a multi-family residential building that is individually metered (i.e., the tenant has their own utility account and pays their own utility bills), please visit our residential energy incentives and projects page.

In addition to the business discounts, some utilities also provide distinct incentives for multi-family buildings.

BGE

Financial incentives cover up to 50% of the cost of energy-efficient appliances and equipment for individual units in multifamily housing, including apartment buildings and condominiums.

  • Eligibility: Building owners, property managers, and landlords can take advantage of these incentives. However, which rebate application you need to complete and submit depends on who the BGE electric account holder is and whether the account is a commercial or residential account.
  • Multifamily Tenant Equipment

State Incentives

Maryland Energy Administration (MEA) offers business incentives for energy efficiency, renewable energy, and resilience. MEA offers:

Note that some funds often run out quickly, so make sure you reach out to MEA for updated information.

Multi-Family Buildings

Energy efficiency improvement programs for low- and moderate-income housing: Maryland Department of Housing and Community provides loans and grants to implement cost-effective energy conservation measures that will collectively reduce energy use by at least 15%. To learn more, visit Maryland’s DHCD website.

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Building Operator Training

Building personnel are critical to keeping buildings running efficiently, safely, and optimally. Utilities offer financial incentives that cover up to 80% of enrollment costs or a maximum of $1,000 per course, whichever is less, for approved building operator and maintenance training.

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Financing

Financing programs provide loans for energy efficiency and renewable energy projects. These programs typically provide financing at lower interest rates or longer terms. Flexible financing can make projects possible with little or no up-front cost with loans terms that better coincide with utility cost savings.

Montgomery County Green Bank

The Montgomery County Green Bank is a nonprofit corporation dedicated to accelerating energy efficiency, renewable energy, and clean energy investment in Montgomery County. They provide more affordable and flexible financing options for County businesses for clean energy and climate-resilient projects through the following programs:
  • The Commercial Loan for Energy Efficiency and Renewables (CLEER) provides funds for Energy Storage, Geothermal, Solar PV, Combined heat & power, EV Charging, measures in Pepco’s C&I energy savings program, and covers 100% financing for up to 12 years.
  • The Renewable Energy Power Purchase Agreement (CSPPA) allows building owners to experience the benefits of solar energy with no out-of-pocket costs and without the burden of owning and maintaining a solar PV system. A third-party developer installs, finances, owns and operates the solar energy system on the customer’s property. The customer then purchases the system’s electric output for a predetermined period through a Power Purchase Agreement (PPA). Through the PPA, a set price per kWh offers the customer stable and often lower-cost electricity compared to the utility’s charges per kWh.
  • The Small Business Energy Savings Solutions (SBESS) program helps businesses address energy efficiency improvements that lower the operating costs from running inefficient systems, including indoor air quality adjustments for healthier workspaces, with flexible repayment terms.

Commercial Property-Assessed Clean Energy (C-PACE)

Commercial Property-Assessed Clean Energy (C-PACE) financing is an innovative way to finance energy efficiency and renewable energy upgrades to commercial buildings. Qualified properties can use C-PACE to receive lower-cost, long-term flexible financing for up to 100% of clean energy property improvements to be repaid as a surcharge on the property tax for up to 20 years. To learn more, visit the Montgomery County C-PACE site.

State & Federal Programs

  • Maryland Clean Energy Center provides attractive financing options for non-profit and for-profit businesses looking to make energy efficiency and renewable energy upgrades. To learn more, visit MCEC’s website.
  • Fannie Mae Multifamily Green Financing Initiative provides mortgage financing to apartment buildings and cooperatives to finance energy and water efficiency property improvements. This program also integrates sustainability considerations into underwriting, asset management, and securitization processes. Learn more about Fannie Mae’s financing options on their website

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Tax Credits

Montgomery County Property Tax Credits

Property Tax Credits for Existing Buildings

The County’s Energy-Efficient Buildings program is a two-tiered incentive of property tax credits for energy-efficient commercial and multi-family buildings. It allows existing building owners to receive up to a 100% property tax credit against County taxes for two years following major energy efficiency improvements. To qualify, existing buildings must have:

  • At least 10,000 square feet of gross floor area
  • Received a Certificate of Occupancy from the Department of Permitting Services
  • Achieved at least a minimum 50% occupancy rate for at least 12 consecutive months
  • Demonstrated energy improvements consistent with the requirements of Montgomery County Code, Section 52-103A

To receive the 1st tier credit: eligible existing building owners must demonstrate a measurable reduction in energy use by setting a 12-month baseline in the ENERGY STAR Portfolio Manager tool, summarizing actions and installations performed to reduce energy use, and measuring improved energy performance using Portfolio Manager. This tax credit allows up to three (3) applications for a single building: one (1) application and two (2) reapplications.

Buildings located in Equity Emphasis Areas receive an additional 10% credit.

 


To receive the 2nd tier credit: Once the 1st tier credit is met, building owners can apply for an additional tax credit for two years, the Building Sustainability Tax Credit, by receiving a LEED, BREEAM, or equivalent (robust, third party certification systems that strive for net-zero buildings) energy efficiency certification. If both the 1st tier and 2nd tier are achieved, the two credits will be aggregated, but cannot exceed 100% per year.

Energy-Efficient Buildings Property Tax Credit – Existing Buildings Application

Property Tax Credits for Newly Constructed Buildings

The Energy-Efficient Buildings program is a two-tiered incentive of property tax credits for new energy-efficient commercial and multi-family buildings. It allows newly constructed building owners to receive up to a 100% property tax credit against County taxes for four years for constructing a new building exceeding current building code requirements with no annual cap. To qualify, newly constructed buildings must have (or will have):

  • At least 10,000 square feet of gross floor area
  • a certification from the Department of Permitting Services within the last 12 months indicating the new building’s percentage performance above current Building Code requirements at time of application (minimum 10% better than Building Code).
  • modeled energy performance consistent with the requirements of Montgomery County Code, Section 52-103B.

To receive the 1st tier credit: eligible newly constructed building owners must achieve a minimum 10% energy efficiency performance above Montgomery County’s current building code requirement. This tax credit allows one (1) application for a single property:

Buildings located in Equity Emphasis Areas receive an additional 10% credit.

To receive the 2nd tier credit: Once the 1st tier credit is met, building owners can apply for an additional tax credit for four years, the Building Sustainability Tax Credit, by receiving an LEED, BREEAM, or equivalent (robust, third-party certification systems that strive for net-zero buildings) energy efficiency certification. If  the 1st tier and 2nd tier are achieved, the two credits will be aggregated, but cannot exceed 100% per year. 

*If a building achieves the Living Building Certification, the property will receive the 75% New Building Sustainability Tax Credit granted against County taxes owed for five (5) years. However, the New Building Energy Reduction Tax Credit will end after four (4) years.

Energy-Efficient Buildings Property Tax Credit – Newly Constructed Buildings Application

Federal Tax Credits

The Inflation Reduction Act provides a number of new and expanded incentives for commercial buildings. Key programs include:

  • Commercial Energy Efficiency Tax Deduction (179-D) is a tax deduction that was significantly expanded starting Jan. 1, 2023, from $1.80 per square foot to a sliding scale of $2.50-$5.00 per square foot, with new pathway for existing building retrofits to access the deduction. New construction must achieve 25%-50% savings relative to the most recent ASHRAE 90.1 standard; retrofits must demonstrate 25%-50% improvement over existing building performance (EUI). The deduction can now be taken on a specific commercial building every 3 years.
  • Federal Clean Energy Tax Credits are available to businesses and for-profit organizations who installed solar energy systems, geothermal heat pumps, or small wind turbines. This 30% tax credit is one of the single largest incentives for the installation of these environmentally beneficial technologies. Learn more about these tax deductions.
  • Federal Tax Credits for All-Electric and Plug-in Hybrid Vehicles are available for commercial businesses, if the qualifying vehicle is purchased for business use. The credit for the business use of an electric vehicle is reported on Form 3800, General Business Credit. Learn more about this credit .

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