Going Beyond our Borders

Border Energy Savings Program

The popular saying “no man is an island” is especially true for the Tijuana-San Diego border region, where one side of the border can have huge impacts – good and bad – on the other. We share the same air, water and energy resources; pollution generated on one side affects the other.

Recognizing our shared economic, energy and environmental impacts, the San Diego Regional Energy Office ( SDREO) created the Border Energy Savings Program. The program will help the manufacturing sector, or maquiladoras, in the Border region with cost-saving measures through energy efficiency and onsite generation.

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Energy Efficiency at the Home Front

Tax credits for homeowners

Have you started planning for next year’s tax season and are looking for ways to reduce your tax liability? Take advantage of the energy efficiency tax credits that went into effect the first of the year. In addition to reducing your 2006 tax liability, these tax credits save you energy and money for the long-term.

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Program Spotlight: Self-Generation Incentive Program

Increased funding and changes for 2006; Applications to be accepted Feb. 10

On Dec. 15, 2005 and Jan. 12, 2006, the California Public Utilities Commission ( CPUC) approved decisions that adopt a number of important modifications to the Self-Generation Incentive Program ( SGIP). Administered by SDREO in the SDG&E service territory, SGIP is a statewide incentive program that provides rebates for qualifying renewable and cogeneration systems.

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Border Energy Savings Program (cont.)

Initially targeting maquiladoras in Tijuana with plans to expand to Mexicali and Tecate, the Border Energy Savings Program has three components: First, SDREO and Tijuana Economic Development Council ( CDT) will identify a list of industrial clients meeting qualifying criteria to receive a free preliminary energy audit. Then, SDREO’s engineering staff will conduct energy audits and provide diagnostic reports, helping facility owners and managers identify and quantify their potential to save energy. Lastly, SDREO will work with the facility owners and managers and North American Development Bank (NADBank) to develop a financing and implementation strategy to install audit recommendations.

According to Susan Freedman, SDREO’s senior policy analyst and manager for the Border program: “Programs often lack the crucial financing link and follow-through to implement audit recommendations. The Border Energy Savings Program provides this missing link, making it unique among programs previously implemented in the Baja California region.”

It is estimated that if one facility reduces energy consumption by 20 percent as a result of SDREO’s audits, assuming a two- to three-year payback, that facility would save 6,000 MWh per year or enough to power about 1,000 average San Diego homes. If all seven facilities participating in this program acted on these savings, the aggregate effect would account for up to 42 GWh per year in electricity savings or enough to power over 7,600 average San Diego homes.

From an environmental perspective, the potential reduction in energy use from one maquiladora equates to approximately 7,449,000 lbs. per year of carbon dioxide (CO2) avoided per facility. That’s like taking over 6,000 passenger vehicles off roads. Just imagine how much CO2 reduction can be achieved if energy efficiency recommendations are installed at all project facilities.

“We hope the program will serve as a solid foundation for the installation of clean energy projects and enhance the global competitiveness for manufacturers in Northern Baja California. This ensures a sustainable energy future for the whole border region,” adds Freedman.

The Border Energy Savings Program receives funding from NADBank and the California Energy Commission, and work is underway in conjunction with CDT and the Secretariat of Economic Development for Baja California, Mexico.

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Energy Efficiency Tax Credits (cont.)

Signed into law by the president this past August, the energy efficiency tax credits encourage and help American families and businesses to reduce energy costs at home, work and on the road. Homeowners can now reduce their 2006 tax bills on a dollar-for-dollar basis up to the allowable amount under the law. For example, purchasing the most fuel-efficient vehicles could reduce consumers’ tax liability by up to $3,400, while installing qualified energy-efficient measures in the home can shave off up to $500 from federal tax bills.

Energy efficiency tax credits are available for buildings or systems placed into service from Jan. 1, 2006 through Dec. 31, 2007. Credits include:

• $50 for high-efficiency fans for heating and cooling systems
• $150 for installing a highly-efficient furnace or boiler
• $200 for installing energy-efficient windows
• $300 for purchasing a highly efficient central air conditioner, heat pump or water heater
• Up to 10 percent of the cost of insulation

Homeowners interested in installing solar systems can receive a credit for 30 percent of the system costs, or up to $2,000 for photovoltaic ( PV) systems and up to $2,000 for the purchase of solar water heating equipment, which doesn’t apply to equipment used to heat swimming pools or hot tubs

Tax credits are also available for hybrid, gas-electric vehicles placed in service starting Jan. 1, 2006. Based on a complex formula determined by vehicle weight, technology and fuel economy compared to base year models, consumers can get an income tax credit of $250 to $3,400. These tax credits will be phased out for each manufacturer once that company has sold 60,000 eligible vehicles. At that point, the tax credit for each company’s vehicles will be gradually reduced over the course of another year. Visit the ACEEE web site for more information and tax credit estimates on qualifying vehicles, which must also meet tailpipe emission criteria.

More information on the new energy efficiency tax credits can be found at the Tax Incentives Assistance Project web site, which is sponsored by a coalition of public interest nonprofit groups, government agencies and other organizations in the energy efficiency field.

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Self-Generation Incentive Program (cont.)

Two changes with the most impact involved increased funding and the California Solar Initiative ( CSI).

The statewide SGIP received an additional $270 million for Level 1 photovoltaic ( PV) projects. This increases the total solar incentive budget to $307.5 million, where close to 13 percent is allocated to the SDG&E service territory. The PV rebate for new applications was lowered to $2.80 per watt from $3.50 per watt. However, those on the 2005 Wait List will receive $3.00 per watt. SDREO will begin accepting applications for the 2006 funding cycle on Feb. 10, 2006. Visit the SGIP’s How Do I Apply? page to download the 2006 SGIP Handbook and Forms.

SGIP incentives for PV projects will be incorporated into CSI on Jan. 1, 2007. Drafted by the CPUC, CSI is a new initiative that commits up to $2.9 billion of incentives toward solar development over the next 11 years. Thus, program year 2006 will serve as a transition year, and to facilitate this transition, the SGIP technologies levels have been reorganized as shown below:

Other key updates involved host customers having exclusive rights to the incentive reservation and limiting the maximum eligible system size for all technologies to 100 percent of the host customer’s historic peak demand. More details can be found in the 2006 SGIP Handbook (PDF).

Visit the SGIP web pages for more information about the program, incentive amounts and application forms.

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