SHELBY AMERICAN DRAMATICALLY REDUCES THEIR ENERGY CONSUMPTION: GENERATES AN ENERGY CREDIT AND A TAX BREAK!
The name Carroll Shelby is well known in the world of performance automobiles. The Shelby Cobra is an iconic vehicle many of us dream of owning…and they’re being manufactured today in the deserts of Nevada!
Shelby American, Inc. is a leader in the manufacturing and marketing of performance vehicles and related accessories. Carrying on a historic legacy, they currently manufacture and market authentic continuation Cobras: the Cobra 427 S/C, the Cobra 289 FIA and the Cobra 289 S/C. These are sold as component vehicles; i.e. without engines or drive trains. Additionally Shelby also manufacturers a number of limited edition pre and post title new model year vehicles based on the Ford Mustang through its cooperative relationship with Ford Motor Company. These include the Shelby GT500 and GT350 just to name a few.
Shelby American is currently focused on the production of post-title vehicles and aftermarket parts, the former including the Shelby Super Snake, Shelby GTE and Shelby F-150 truck. Shelby American also sells aftermarket styling and performance parts under the Shelby Performance Parts brand name. Shelby American currently employs approximately 100 full time employees at the production facility, Heritage Center and Gift Shop located in Las Vegas, NV.
Over the last few years Shelby American had been using energy…lots of energy! The use of so much power was affecting the price of the product. According to Gary Patterson, President, the power bills were “through the roof!” Gary contacted the local energy provider looking for help in analyzing the situation and coming up with a fix. He was getting nowhere and was looking for solutions NOW! Nevada Industry Excellence contacted Shelby looking to present the R&D Tax Credit program but Gary asked “can you help me with my energy issues?”
NVIE replied with a full team effort utilizing our energy experts and a local electrical contractor. With NVIE acting as Project Manager we developed a solution that was nothing short of incredible.
After initial discussions between Shelby and the facility owner, it was agreed that they would partner on the project, and each would pay for half the upgrade and refit costs at the facility. Acting as Project Manager, NVIE contracted with our energy specialist to conduct a thorough energy audit and delivery system evaluation as soon as possible. Upon the determination that the Shelby Facility was in major need of a LED lighting upgrade and a major rework of the lighting control system for the entire facility, the client solicited bids from qualified local electrical contractors to perform the upgrades.
As previously noted the building owner was excited about an upgrade to the facility and offered to pay half the costs (about $45,000.) Project costs included the electrical contractor’s bid on the LED Lighting and system upgrade, the energy audit and analysis and NVIE’s management fees. Total costs were estimated to be $106,260.
Expectations were high. The project qualified for two types of savings. Shelby American qualified for Nevada Energy Use Incentives and will expect real-time energy cost savings. The building owner would qualify for the IRS 179D Tax program.
The energy audit findings estimated the lighting retrofit proposed for the shop and museum would save 67,687 watts per year, per data provided by the project electrician. The annual energy consumption cost savings are estimated at $36,000 per year for Shelby. NV Energy Incentives are designed to reward customers who implement projects to more efficiently use and save energy. After implementing the LED Lighting and Power System Upgrade Shelby will receive a $0.30 per watt credit. With the project saving an estimated 67,687 watts per year, that results in a projected energy credit of $20,300 for Shelby American.
Estimated First Year ENERGY savings and credits for Shelby American: $56,300. “From the first meeting to the final signoff, NVIE handled the project seamlessly…” stated Mr. Patterson, upon completion of the project
The shop and museum were modelled per the requirements of 2017 IRS 179D using a baseline, hourly building energy model approved by the IRS and based upon the ANSI/ASHRAE 90.1-2007 energy standard. It is estimated that the Shelby facility will use 50% less energy than the baseline building. In that case the project qualifies for a tax deduction of $1.80/sf (135,000+6,000=141,000 sf) x $1.80. This is $253,800. The deduction is capped at project cost ($90,000) but Shelby had done a HVAC retrofit that was less than two years old. We were able to use this cost of $150,000. Therefore, we can apply for a $240,000 tax deduction. Assuming a 35% tax rate, the tax deduction is worth $84,000.
Total project cost (implementation plus NVIE fees) was $106,260. Project cost minus the tax deduction for the building owner is $22,260. If the owner still pays half the net installation cost, Shelby will be responsible for $11,130. The projected savings in energy costs will cover this balance in four months. If the building owner declines to pay half the net cost due to the tax deduction, Shelby will be left with a balance of $22,260 which, at projected energy saving will be covered in about eight months; yet Shelby American should still qualify for a NV Energy rebate of $20,300! To do with as they wish.
Including NVIE fees, the NV Energy rebate and the tax savings are $1,960 less than the lighting project installed cost. The building owner would receive an $84,000 Tax Deduction to apply towards the project. Shelby should qualify for a $20,300 incentive. Applying this to the project implementation cost of $106,260 this leaves a balance of $1,960 ($106,260-$104,300= $1,960). Nearly all costs would be covered including our fees. If the building owner agrees to pay half, Shelby will be looking at $960!