The Inflation Reduction Act of 2022 (IRA) has provided new guidelines and incentives to advance the use of clean energy in the public sector, which includes many educational institutions. Touted as the most significant climate legislation in U.S. history, organizations planning energy related projects can take advantage of lucrative tax credits for upcoming capital improvement projects.
Identifying Eligible Projects
Tax credits for certain energy projects will be effective through 2032 – the longest U.S. energy policy to date. Public sector owners will receive a direct payment from the IRS, up to 40%, after the installation of systems. For systems placed in service on or after January 1, 2025, the Clean Electricity Production Tax Credit and the Clean Electricity Investment Tax Credit will replace the traditional Investment Tax Credit and Production Tax Credit. Eligible building project examples include:
- Geothermal HVAC systems
- Solar and wind energy
- Energy storage technology
- Combined heat and power system (CHP)
The IRA also makes school buses eligible for electrification funds through a new Clean Heavy Duty Vehicles program run by the EPA to support sustainable transportation.
Why Choose Geothermal
Geothermal HVAC systems are now more affordable than other traditional systems and are recognized as the most energy-efficient and environmentally safe heating and cooling system by the EPA. Need to know more about what a geothermal HVAC system involves? Read more about utilizing geothermal for education facilities.
K-12 school districts with bonds voting in 2024 or later can begin planning now for these future energy savings and IRA incentive. Higher education institutions are also eligible for these federal funds. Partnering with GMB and our team of certified GeoExchange Designers can ensure you are maximizing the long-term benefits for your specific building needs, help achieve your sustainability objectives, and/or also assist in providing commissioning services for your systems, and training for your staff. Additionally, GMB will assist with documentation needed for the IRA application process.
The current IRA incentive, paired with energy savings, will mean more dedicated funds can be allocated towards updating school facilities, adding technology, and improving teaching and learning spaces. Read more about our partners at Allendale Early Childhood Center (pictured) who utilized a geothermal HVAC system to help achieve their sustainability objectives.
Economic Comparison Case Study
The table below outlines a high-level comparison of a conventional HVAC system, which does not qualify for the IRA incentive, against implementation of a geothermal HVAC system that does qualify for the IRA incentive. While a conventional HVAC system and a geothermal HVAC system include different pieces of mechanical equipment, they also share a lot of similarities in ductwork, piping, controls, and more. Due to the similar nature of the scope of work happening ‘inside’ of the building for both systems, we’ll assume these costs to be equal for this analysis.
Historically, the premium cost of any geothermal HVAC system is the cost of the work happening ‘outside’ of the building including the installation of the ground heat exchanger (GHX) piping. The IRA incentive of up to 40% is applied to the cost of the entire geothermal HVAC system and includes the scope of work both inside and outside of the building. The costs included in this analysis are based on historic project data for educational facilities in the Midwestern United States.
GMB has almost 30 years of experience designing geothermal HVAC systems and has transformed HVAC systems at more than 40 education facilities across the Midwest. Our team has multiple Certified GeoExchange Designers on staff who have implemented these HVAC solutions for our education clients and are available to discuss your next energy related project.
