R&D Tax Incentives for Building & Construction

R&D Tax Incentives for Building & Construction

Energy consumption in commercial buildings makes up approximately 40% of the world’s total energy demand. Of which, 70% of the energy usage and 63% of the greenhouse gas emission is contributable to a building’s HVAC system. This typically accounts for half of the total energy cost. In recent years, the urban development industry has come under immense pressure to develop more sustainable designs to address concerns about greenhouse gas emission and climate change. This trend has been given greater impetus by the economic imperatives associated with rising energy costs.

In Australia, these pressures and trends have found expression in government initiatives such as the National Australian Built Environment Rating System (NABERS). The NABERS rates a building on the basis of its measured operational impacts on the environment and provides a simple indication of how well these environmental impacts are being managed.

Cool Change recognized that developing NABERS design expertise would provide it with a clear competitive advantage and benchmark it as an industry leader in sustainable HVAC systems. The company thus made a strategic decision to develop capability in NABERS design. Its first opportunity to research and develop this NABERS design capability was in respect of a large shopping centre upgrade that was seeking to achieve a “5 Star” NABERS rating.

 

Core R&D Activities

At the outset of the project, Cool Change evaluated existing technology options and ran energy consumption simulations under a number of different proposed HVAC designs. Results indicated that a “5 star” NABERS rating prima facie could not be achieved. Cool Change thus had to come up with an innovative design approach, combining both solar photovoltaic cell technology (connected to the power grid) and solar thermal collectors (capturing solar radiation directly from the sun) in order to achieve the desired energy efficiencies.

NOAH helped Cool Change understand how the design, simulation and analysis of the modelled results could be characterised as core, experimental R&D activities. The challenge was to explain how the running of theoretical scenarios around different permutations of the proposed solar power system design could constitute “an experiment”. In this context, it was suggested that the hypothesis being “tested” through the simulations was that if the appropriate solar power and solar collector technologies were appropriately selected, configured and combined and controlled in a particular manner then the energy consumption of the overall HVAC system would be reduced significantly.

 

New Knowledge

At first blush, Cool Change struggled to identify any new knowledge that had arisen from the project work given that the solution was based on existing technology elements.

NOAH explained how the new knowledge requirement could, however, be satisfied in circumstances where new information was gained about existing technology elements, where that new information was not a simple progression from what was already known.

After further consideration, Cool Change began to appreciate that through the course of the NABERS project work it was indeed gaining new insights into the nature of the inter-relationship between the operational variables that had to be factored into a NBAERS design. This encompassed levels of occupancy, the different air flow requirements, mixed use of facilities and the building’s physical structure and aspect.

 

Supporting Activities

After the simulations, the conceptual design went through a detailed design phase before construction and testing to practical completion.

Here again NOAH’s advice was invaluable in terms of distinguishing between the production testing of the as-built system that was being conducted for the dominant purpose of validating the design concept and the more routine commissioning that was required simply to fulfil the company’s commercial obligations.

A further question about project characterisation that NOAH was also called upon to resolve concerned whether the production testing that was to be claimed should be regarded as a directly related supporting activity or as part of the suite of core, experimental activity. This required an assessment of the extent to which project and business case documentation could be sourced that addressed “dominant purpose”.