Congress Cuts Critical Energy Incentives for Schools

Much has been discussed about the ‘Big Beautiful Bill’ signed into law. What people may not know is that the bill repealed key federal tax incentives supporting energy affordability, security and resilience throughout the U.S. at a time when we need it most, especially if we are going to successfully achieve local and state carbon neutrality goals.

Having worked in the construction sector for more than 25 years, I have witnessed firsthand how tax incentives enable upgrades and improvements to community facilities like schools, while supporting good-paying, union construction jobs and saving taxpayer money that can be reinvested in education.

Menasha Joint School District’s (MJSD) Maplewood Intermediate/Middle School is a great example of what the Inflation Reduction Act (IRA) tax incentives can do. Originally built in the 1970s, the existing Maplewood Middle School was overcrowded. After analyzing several options, MJSD decided to build a new, larger and modern school.

The $99.7 million referendum was passed in November of 2022. Construction began in 2023 and will be open for the 2025-2026 school year. The referendum intended that the building would be energy efficient, including a geothermal heating and cooling system, which would lower the annual energy costs by nearly 30 percent compared to a code-compliant building and the structure of the school would be ready to someday support a roof-mounted photovoltaic (PV) system.

Beyond being high-performing, the referendum was also intended for the school to be healthy. The materials chosen for the project do not contain volatile organic compounds (VOC) that trigger respiratory illnesses. The LED lights are not only energy efficient but are also tied to the occupancy sensors and daylight sensors in the naturally daylit school. The spaces are acoustically sound, allowing the teachers to speak at a normal indoor level.. The ventilation system brings in approximately 30 percent more fresh outside air than what the code requires. Furthermore, the filters on the ventilation system are MERV 13, capturing particulates as small as COVID.

MJSD hadn’t originally planned to use Inflation Reduction Act tax credits, but now expects a 30 percent incentive on geothermal systems, including heating, cooling, hot water, and connected refrigeration units. Now, with a surplice budget resulting from the anticipated tax credit, the project team of Miron Construction Co., Inc. and Eppstein Uhen Architects (EUA), suggested MJSD to move forward with their future plans of installing a renewable energy system that could potentially offset the entire electrical consumption of the all-electric school, resulting in what could be the largest zero-net energy middle and intermediate school in the U.S.

MJSD engaged Eland Electric to design and build the 1.2 MW PV system, consisting of 2,777 solar panels, generating roughly 1,457,875 kilowatt hours (kWh) of clean, renewable energy with no greenhouse emissions. From a resiliency standpoint, the system also has a microgrid system, deploying a battery energy storage system (BESS) that can store 1,000 kWh of energy to reduce energy demand during peak periods and provide backup power to critical loads, which can run on battery power for up to 10 hours.

The entire renewable energy system was also eligible to receive a 30 percent IRA tax incentive. MJSD and their tax consultants anticipate receiving between $3.8 to $5 million in federal tax incentives, which more than offsets the entire cost of the renewable energy system. With these upgrades, the school’s annual energy bill is expected to be $0, saving the district an estimated $190,000 per year in energy costs. This allows the school system to reallocate those local taxpayer dollars to directly benefit the students.

This sustainable directly supports MJSD’s energy efficiency and renewable energy goals, which in turn support the City of Menasha’s goal to be carbon neutral by 2030, directly supporting the state of Wisconsin’s goal to be carbon neutral by 2050. To achieve this goal, it takes every new building being built to strive for zero-net energy.

Unfortunately, the new law phases out the Sec. 48E ITC tax credit for solar projects, requiring solar projects to begin construction within one year of the enactment of the law. Other incentives repealed include the Sec. 30C credit for electric vehicle charging infrastructure and the Sec. 179D deduction for commercial building energy efficiency improvements. That means that many other schools which could benefit from these incentives will not have the chance to because of the time it takes to pass a referendum, design and construct a school facility project. The tax credit for geothermal heat pumps is unchanged and remains available through 2034.

For the tax credits that are repealed, the repercussions will be felt across the country and our economy. Wisconsin was projected to gain more than 25,000 jobs in 2030 in industries like construction and manufacturing, thanks to the federal energy tax incentives. The Menasha Maplewood project specifically supported 300 local construction jobs. These are good-paying, union jobs created in our community because of the additional investment spurred by the federal incentives. The repeal of these incentives means future projects and jobs are now in jeopardy.

The repeal also comes at a time when regions across the country are facing more extreme storms and need to build more resilient infrastructure. It is disappointing that many of our elected officials in Washington chose to repeal tax incentives that were spurring investment in our infrastructure and our future, which positively impacted regional climate neutrality goals.

Still, the Menasha Maplewood project shows what a sustainable vision can look like for our communities. I hope that schools currently in the design and construction phase are able to leverage what is left of the federal incentives before they go away, so that more communities, taxpayers and students can benefit from the positive ripple effects of sustainable building investments.