Tax Breaks for Ice Air Conditioners? A Proposal Is in Congress

Install an ice maker; get a tax break.

Congressional representatives Mike Thompson (D-CA), Wally Herger (R-CA) and Earl Pomeroy (D-S.D.) have introduced the Thermal Energy Cooling and Heating Act of 2009 (HR 3918) that would give a 30 percent tax credit and accelerated depreciation to individuals or businesses that install thermal energy systems that reduce peak demand.

The primary thermal energy system on the market today that fits this description is the ice cooler marketed by both Ice Energy and Calmac. In these systems, ice is made at night when power is cheaper (or generated but not consumed). It then melts during the day: Heat exchangers allow the chilly vapors to circulate through the building and cool them.

The definition also seems to include solar air conditioners, which use heat collectors and evaporating refrigerants to cool buildings. Chromasun is working on those.

There are a couple of trends wrapped into this bill:

1. Energy efficiency is getting more attention. Right now, businesses that install solar receive a 30 percent tax credit. You can get an 30 percent tax credit for energy efficiency retrofits, but only for the first $1,500 of work. The Thermal Act provides what seem to be comparable incentives. Secretary of Energy Steve Chu has long been a supporter of improving building energy efficiency.

2. Waxman-Markey may get piecemeal'ed. The bill hasn't passed yet, of course. And if it doesn't, expect to see a flurry of bills that concentrate on very specific parts of the overall bill. Efficiency enjoys bipartisan support. It cuts power consumption and generally can help create jobs because much of the revenue is generated from installation.

3. Air conditioning is cool and lots of new companies have come into the market (see the cavalcade here). In all, air conditioners gobble up around 5.2 percent of the total energy in the U.S. and about 10 percent of the electricity. (Building operations account for around 39 percent of U.S. power according to the Department of Energy and 13 percent of that power in residential and commercial buildings goes to air conditioners.) Not only are air conditioners themselves inefficient, the sensors and other mechanisms often aren't networked property for dynamic control. Walk around your building and count the female co-workers who are wrapped up in Snuggies sometime.

4. Air conditioning is going to get even cheaper. Utilities are currently contemplating programs under which they would pay for new AC units. A rebate and a tax credit? What CFO could say no?