The Home Improvement Store EPAct Opportunity

Home Improvement Retailers & Large LED Lighting Tax Incentives

The U.S. residential sector’s economic rebound is improving the business results of the nation's leading home improvement chains. Since the economic recession, LED lighting technology has greatly improved and LED lighting is a major sales category for these chains. Now that the chains are seeing their customers embrace LED lighting, the home improvement chains themselves should be giving strong consideration to their own store LED lighting upgrades. These upgrades are eligible for large tax incentives often at the $1.80 per square foot level if completed by December 31, 2013.

EPAct – Code Section 179D

Under Code Sec. 179D, as enacted by the Energy Policy Act of 2005 (EPAct) , building owners who make qualifying energy-reducing investments can obtain immediate tax deductions of up to $1.80 per square foot.

If the building project doesn’t qualify for the maximum of $1.80 per square foot immediate tax deduction, there are tax deductions of up to $0.60 per square foot for each of the three major building subsystems: Lighting, HVAC, and the Building Envelope. The building envelope covers every part of the building’s exterior perimeter that touches the outside world including roof, walls, insulation, doors, windows and foundation.

Long Life

LED lighting provides substantive energy cost reduction and reduced maintenance costs. Many utilities offer rebates for energy efficient LED Lighting, especially if the lighting technology has been approved by the DLC (Design Lights Consortium).

Energy Efficient HVAC for Retail Distribution Centers

The HVAC technologies that will typically produce favorable EPAct tax deduction results for these types of facilities include:

1.Chillers in facilities less than 150,000 square feet

2.Bearingless Chillers

3.Energy Recovery Ventilation (ERV)

4.Demand Control Ventilation (DCV)

5.For facilities 150,000 sq ft or greater, combinations of very efficient chillers, ERV, and/or DCV

The following tables present the potential EPAct tax benefits available for Home Depot, Lowe’s, and Menard’s.

Table 1: Home Depot

Table 2: Lowe’s

Table 3: Menard’s

*Retail Store square footage is based on an average 200,000 sq ft per store.

Home Improvement Stores in Mandatory Benchmarking Jurisdictions

Most of the home improvements store footprints exceed 50,000 sq ft. Seven major jurisdictions now mandate building benchmarking at the 50,000 sq ft level or greater. Those seven jurisdictions are:

1) California 5) Seattle

2) Austin 6) Philadelphia

3) Washington DC 7) Minneapolis

4) New York City

It is crucial for their core business image and branding for home improvement stores to achieve a percentile score of 75% or better. After all, you can't seriously be in the improvement business if you yourself, need improvement.


The home improvement retail sector operates large square footage facilities that are eligible for large EPAct tax savings for LED lighting upgrades. As their customers step up to LED lighting during the residential sector rebound these major retailers should strongly consider doing the same energy and maintenance saving LED upgrades in their own stores. The best customer testimonial is for the vendor to invest in the same technology that it recommends to its customer base.

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