Post on 04-May-2018
Community Energy Planning:
Broadening the Business Case
The direct and indirect financial gains
from improved energy efficiency and
alternative energy sources
1
Wolfville, NS
14 May 2015
Purpose
Distill the economic case for CEP• Review economic benefits associated with CEPs
(existing economic studies, case studies)
• Snapshots of communities, and the different
opportunities that exist
What are the direct economic benefits?
What are other economic benefits?
• Proviso: benefits are project and context
specific and are not universally relevant
2
IEMOC Studies
• Goal: Analyze impacts of:– population/employment growth on energy use/costs;
– land-use/transportation planning decisions on future decisions about buildings and equipment;
– building and transportation energy efficiency measures on energy consumption
• 4 Ontario municipalities – Guelph (1st to participate), Hamilton, Barrie, and London
• Collaborative initiative: Canadian Urban Institute, Ontario Power Authority, CanmetENERGY (NRCan), Ontario Centres of Excellence, and participating municipalities and local distribution companies.
4
Community energy
costs: significant & growing
Expected cost of supplying energy, community-wide (base year to 2031, BAU case)
$427 million to$500 million
$630 million to$829 million
$254 million to$367 million
$245 million to$359 million
17%
32%
44%47%
London Hamilton Guelph Barrie
5
Three integrated scenarios
• Scenario 1: Maximizing cost effective building
energy efficiency improvements and
technologies, IRR> 6%.
• Scenario 2: Maximizing GHG reduction using
proven technologies with a cost <$78/t
• Scenario 3: Maximizing the reduction in the
consumption of fossil fuels
6
2031 Energy cost savings:
London
7
41% 41%
0
100
200
300
400
500
600
Scenario 1 Scenario 2 Scenario 3
Co
st
of
su
pp
lyin
g e
ne
rgy
($ m
illio
ns
)
65%
Net full time jobs: 3400 3400 6200
Base year population: 359,000
2031 Energy cost savings:
Hamilton
8
28% 24%
0
100
200
300
400
500
600
700
800
900
Scenario 1 Scenario 2 Scenario 3
Co
st
of
su
pp
lyin
g e
ne
rgy
($ m
illio
ns
)
51%
Net full time jobs: 2400 2500 4400
Base year population: 515,000
2031 Energy cost savings:
Barrie
9
19% 22%
0
50
100
150
200
250
300
350
400
Scenario 1 Scenario 2 Scenario 3
Co
st
of
su
pp
lyin
g e
ne
rgy
($ m
illio
ns
)
35%
Net full time jobs: 1200 1600 2500
Base year population: 128,400
Buildings and Transportation
Cases
• Simulated high efficiency and ultra high efficiencycases
• We will overview buildings component
• Evaluated in terms of:– Feasibility: internal rate of return
– Acceptability: payback period
• Variety of building archetypes
• Impacts very community dependant
10
Financial Performance of Improvements
High Efficiency Ultra High Efficiency
London Hamilton Barrie London Hamilton Barrie
Office – New
Office – Retrofit
Retail – New
Retail – Retrofit
Institutional Low Density – New
Institutional High Density – New
Institutional Low Density – Retrofit
Residential Low Density - Retrofit
Residential Medium Density- New
Residential High density – New
Industrial – New
Industrial – Retrofit 11
Financial Performance of Improvements
High Efficiency Ultra High Efficiency
London Hamilton Barrie London Hamilton Barrie
Office – New
Office – Retrofit
Retail – New
Retail – Retrofit
Institutional Low Density – New
Institutional High Density – New
Institutional Low Density – Retrofit
Residential Low Density - Retrofit
Residential Medium Density- New
Residential High density – New
Industrial – New
Industrial – Retrofit 12
Financial Performance of Improvements
High Efficiency Ultra High Efficiency
London Hamilton Barrie London Hamilton Barrie
Office – New
Office – Retrofit
Retail – New
Retail – Retrofit
Institutional Low Density – New
Institutional High Density – New
Institutional Low Density – Retrofit
Residential Low Density - Retrofit
Residential Medium Density- New
Residential High density – New
Industrial – New
Industrial – Retrofit 13
Financial Performance of Improvements
High Efficiency Ultra High Efficiency
London Hamilton Barrie London Hamilton Barrie
Office – New
Office – Retrofit
Retail – New
Retail – Retrofit
Institutional Low Density – New
Institutional High Density – New
Institutional Low Density – Retrofit
Residential Low Density - Retrofit
Residential Medium Density- New
Residential High density – New
Industrial – New
Industrial – Retrofit 14
Financial Performance of Improvements
High Efficiency Ultra High Efficiency
London Hamilton Barrie London Hamilton Barrie
Office – New
Office – Retrofit
Retail – New
Retail – Retrofit
Institutional Low Density – New
Institutional High Density – New
Institutional Low Density – Retrofit
Residential Low Density - Retrofit
Residential Medium Density- New
Residential High density – New
Industrial – New
Industrial – Retrofit 15
Edmonton’s Energy Transition
Reflects 3 goals in city council’s environmental plan:
1. Sources and uses of energy are sustainable.
2. Resilience to disturbances that could affect energy supplies and distribution systems.
3. A carbon-neutral city.
Plan:
• Modeled as a “Low Energy/Carbon Case”– 2035; 23% below BAU, 35% below 2005 levels
– Current fossil fuel dependence: 95% of energy in the city
• Looks at 10 possible community scale programs to better understand their costs and benefits
16
Edmonton’s Energy Transition
• Investment 2018-2021 of $25-30 million per year to implement programs– To 2035, potential net present value of energy cost savings to
building, industry and vehicle owners will be at least $2.5 billion greater than their net investment cost ($3.4 billion if accounting for social cost of carbon emissions)
– Does not include indirect benefits (e.g. diversifying labour market with increase in renewables-related jobs)
• Proposes that Edmonton be ready by 2018 to begin implementing programs with Benefit/Cost ratio of 2.5 or greater
17
Edmonton’s Energy Transition
Residential buildings
Program 3: energy efficiency retrofits and
conservation in existing homes.
18
Cost$27 million
investment 2018-2021
Potential
Benefit$265 million
($500 million with social GHG costs) NPV to 2035
Edmonton’s Energy Transition
Large buildings
Program 8 would encourage renewable energy
uptake in existing large/ICI buildings.
19
Cost$15 million
investment 2018-2021
Potential
Benefit$320 million
NPV to 2035
Edmonton’s Energy Transition
Industry
Program 9 would encourage energy efficiency
improvements to industrial facilities and processes.
20
Cost$44 million
investment 2018-2021
Potential
Benefit$575 million
($645 million with social GHG costs) NPV to 2035
Edmonton’s Energy Transition
Passenger vehicles
Program 10 would encourage the purchase of
private passenger vehicles with electric drive
trains.
21
Cost$1 million
investment 2018-2021
Potential
Benefit$40 million
($55 million with social GHG costs) NPV to 2035
Indirect economic benefits:
Themes and examples
1. Business retention
CEP can change the economics of production, influence firms’ decisions to relocate, remain or close
2. Business attraction
Availability of clean energy important for data center location/relocation
3. Market differentiation
Market preferences for green goods and services
22
Indirect economic benefits:
Themes and examples
4. Neighbourhood revitalization
Revitalized energy systems a core element of revitalized neighbourhoods
5. Energy resilience
Increasingly important: e.g. Calgary floods (2013)
6. Housing affordability
Housing developments benefit from energy savings and cost savings (e.g. district energy systems)
23
Indirect economic benefits:
Themes and examples
7. Employee productivity
Decreased absenteeism at Manitoba Hydro
head office
8. Employee attraction/retention
employees that wish to be associated with
clean companies
24
Other considerations
• Data
– Recognizing importance of data for capturing economic benefits of CEP
– Key to recognize when better/more data adds value vs when it does not.
– Measurement:• Metric VBECS developed by the Rocky Mountain
Institute
– Often lacking from LCAs
– Business case for retrofits
– Guide: “How to calculate and present deep retrofit value a guide for owner-occupants”
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Here in Nova Scotia
• Initiatives and current status
Tidal energy for communities
OneNS report
Broten Commission Carbon Pricing?• Strengthens the case for energy reductions and cleaner
energy
Solar City stay tuned for the next presenter
26
Upcoming work/next steps
• Further case studies– Canadian
– International
Thoughts? Please get in touch:
Adam Baylin-Stern:
abaylinstern@sustainableprosperity.ca
Stephanie Cairns:
scairns@sustainableprosperity.ca
www.sustainableprosperity.ca
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References
QUEST GTI
www.Gettingtoimplementation.ca
IOMOC studies
http://www.sustainablehamilton.ca/uploads/Hamilton_Integrated_Energy_Mapping_Strategy_-
Final_Report_Reduced_2011_02_22.pdf
http://www.barrie.ca/living/environment/conservation/documents/integrated%20energy%20mapping%20strategy%20-
%20draft%20report%2020110521.pdf
https://www.canurb.org/s/CUIPublicationIntegratedEnergyMappingOntario-wvxc.pdf
https://www.canurb.org/s/CUIPublicationIntegratedEnergyMappingOntario-wvxc.pdf
Edmonton Study
http://www.edmonton.ca/city_government/documents/Report_1-_Cost_of_Energy_Transition.pdf
Vancouver DE Example
http://www.sauder.ubc.ca/Faculty/Research_Centres/Centre_for_Social_Innovation_and_Impact_Investing/Research/Low_Carbo
n_Economy/~/media/Files/ISIS/Reports/Carbon%20Management%20Reports/QUEST-ICES-Business-Case-Southeast-False-
Creek-Neighbourhood-Energy-Utility.ashx
Local references
http://tidalenergy.acadiau.ca/community-business-toolkit.html
http://novascotia.ca/news/release/?id=20141119001
http://onens.ca/report/
28
Scenarios
Three projections for future buildings & transportation energy
consumption:
BuildingsTransportation (varies
between cities)
1) BAURetrofit: No retrofitsNew build: Ontario Code (25% below national code)
Existing mode split, TDM, and other characteristics
2) High efficiency
Retrofit: retrofit all to 10% below BAUNew build: 50% below national code
Increases to transit/walk/cycle mode split, fleet efficiency, Decreases to trip frequency and length
3) Ultra high efficiency
Retrofit: retrofit all to 25% below BAUNew build: max practical efficiency (50-56% below national code)
As with high efficiency but ~twice as stringent
30
Financial performance of energy
efficiency building improvements
Number of building types with acceptable internal rates of return (of 18 building types)
Number of building types with acceptable payback period
(<7 years)
High Efficiency Scenario
London 6 2
Hamilton 8 4
Barrie 6 1
Ultra High Efficiency Scenario
London 3 3
Hamilton 4 2
Barrie 1 032
Three integrated scenarios (building
efficiency, transport and alternative
fuel)
Scenario 1 Scenario 2 Scenario 3
2031energy cost savings ($ millions)
Net full time jobs
2031energy cost savings ($ millions)
Net full time jobs
2031energy cost savings ($ millions)
Net full time jobs
London203
(41%) 3400203
(41%) 3400323
(65%) 6200
Hamilton233
(28%) 2400196
(24%) 2500425
(51%) 4400
Barrie67
(19%) 120080
(22%) 1600125
(35%) 2500
33
Vancouver District Energy Business
Case
Southeast False Creek Neighbourhood Energy Utility
• 2011 study by QUEST and UBC Sauder school
• Well understood environmental benefits: but economic opportunity as well
• Total life cycle costs of neighbourhood energy utility system expected to be equal to or less than BAU alternative: good for consumers
• $21 M capital cost (net of $9.5M grant) to be fully recovered through a fixed energy rate charge to connected users over the 25 year asset life: good for business
34
Theme 1: Business
Retention
• Concerns about competitiveness lead to business relocation in many cases
• Changing economics of energy inputs can influence firms’ outlooks positively or negatively
• Low-carbon energy, district energy, cogeneration, and new approaches to waste management can change the economics of production, and influence firms’ decisions to relocate, remain or close
35
Theme 1: Business
Retention
• Example: Magna/Polycon car parts plant
in Guelph
– Guelph’s Community Energy Initiative spurred
support for DE projects
– Guelph Hydro helping to fund project at
Polycon plant
– City vital to supporting this initiative
36
Theme 2: Business
Attraction
• Availability of clean/stable/affordable
energy attracts business for whom this is a
need
– Additionally, this can increase clean energy
infrastructure as capital stock turns over
– Such changes can bring indirect clean
innovation benefits that accompany the
establishment of new businesses and related
infrastructure
37
Theme 2: Business
Attraction
• Example: Data centre location/relocation– Huge source of GHGs
– Energy price/reliability a primary concern, however universities/businesses consider emissions profile of energy (by requirement or preference)
– Possibility/existence of carbon pricing further strengthens the case
– Location/proximity • Scenario analysis by IISD (2010) of relocating university data
centers to communities with low emissions energy supply
• UBC research assessing business case for data centre relocations recommends to build in areas with renewable energy supply
38
Theme 3: Market
Differentiation
• Evolving market preferences for green
goods and services
• Smart energy and emissions performance
allows a development, neighbourhood,
even a city to differentiate itself in the
market
39
Theme 3: Market
Differentiation
• Example: Telus Garden Project in Vancouver
– New development is transforming entire city block into modern building with leading edge environmental performance and design
– Added value to infrastructure improvements
• Firms locating development in communities with clean energy and low emissions characteristics, for CSR
40
Theme 4:
Neighbourhood
Revitalization
• Large cost efficiency benefits from
implementing innovative community
energy systems in tandem with revitalizing
neighbourhoods
• Revitalized energy systems a core
element of revitalized neighbourhoods
41
Theme 4:
Neighbourhood
Revitalization
• Example: River District Energy Utility in
BC
– River District: Former Industrial area in SE
Vancouver
– Unique publicly-regulated, developer-owned
District Energy Utility Increased autonomy,
affordable energy
– The institution is key to/is key contributor to
breathing new life into to the area
42
Theme 5: Energy Resilience
• Increasingly important:
– For both remote and interconnected communities
• Remote: always important, but new possibilities with clean energy have heightened this
• Interconnected: increasing extreme weather events call for greater local energy options
– Resilience needs of specialized customerseverywhere (hospitals, high tech firms)
– Shifting electric systems: disaggregation
43
Theme 5: Energy Resilience
• (Extreme Weather): Calgary Floods of 2013– Highlighted sensitivity and vulnerability in even big cities
• (Remote/off-grid communities): NRCan report– Overview of electricity production and consumption through
Canada
– Highlights vulnerability
– Big role for CEP in remote communities
• (Cooperation and synergy between communities) NY State microgrids– Design competition for connected microgrids that can operate
autonomously if need be to keep hospitals, police stations etc. reliable and to facilitate distributed electricity
Image: http://nyssmartgrid.com/microgrid/ 44
Theme 6: Housing
Affordability
• District energy systems can be core
element of CEP, often accompanying high
density mixed-use development
• Housing developments benefit from
energy savings and cost savings
45
Theme 6: Housing
Affordability
• Example: ENMAX District Energy
affordable housing project in
Edmonton
– Cogeneration facility run by ENMAX
– Seniors residence
– Collaboration of City of Edmonton, Metis
Capital Housing Corporation, YMCA, and The
Holmes Group
46
Theme 7: Employee Productivity
• Evidence that energy efficient retrofits increase the physical comfort of the work environment, leading to improved employee productivity
– Notable study on increasing productivity with energy-efficient design highlighting 8 case studies, including:
• Post office lighting retrofit 6% boost in productivity
• Prototype store with enhanced daylight with skylights on one side higher sales
• Engineering and design facility cost savings accompanied by 15% boost in productivity, 15% drop in absenteeism
• Community energy plans promote such energy-efficient retrofits
http://www.columbia.edu/cu/alliance/EDF-2012-documents/Reading_Fox_3.pdf 47
Theme 8: Employee Productivity
• Example: Manitoba Hydro Place
– Sustainable design aspects including passive energy technologies at their head office, healthier work environment benefits employees and energy performance(LEED platinum in 2012)
– Co-benefit of improved employee productivity (mostly anecdotal) and lowered absenteeism (1.25-1.5 days/year/employee)
– CEPs can promote such buildings
48
Theme 8: Employee
attraction/retention
• Attraction/retention benefits come to
companies with positive environmental
and energy practices
– In particular young employees that wish to be
associated with clean companies
– But it’s difficult to quantify such effects
49
Theme 8: Employee
Attraction/retention
• Infrastructure Canada site (2011):
– Business case for CSR: “Since many workers feel that they are greener than their employers, environmental initiatives allow them to bring their values and their ideas to work […] costs a business approximately $3,500.00 to replace one $8.00/hour employee.”
• Example: NetImpact study on employee tradeoffs:
50
References (additional slides)
THEME 1
http://guelph.ca/wp-content/uploads/011514_DistrictEnergyStrategicPlan_web.pdf
http://news.ontario.ca/mei/en/2014/04/energy-program-supports-agricultural-industry.html
http://globalnews.ca/news/1327795/auto-jobs-in-canada-in-pretty-steep-hole-right-now/
http://guelph.ca/wp-content/uploads/GuelphFDIAttractionRetentionStrategyActionPlan.pdf
http://guelph.ca/wp-content/uploads/TheGuelphdifference_economicgrowthandprosperity.pdf
http://kitchener.ctvnews.ca/minister-touts-guelph-company-s-double-duty-hydro-project-1.1770133
THEME 2
http://www.iisd.org/publications/university-data-centres-policy-and-business-case-reducing-greenhouse-gas-emissions
http://circle.ubc.ca/handle/2429/48376
THEME 3
http://westbankcorp.com/telus-garden-0/?design
THEME 4
http://www.riverdistrict.ca/awards/district-energy-utility/
http://www.straight.com/life/river-district-breathes-life-south-vancouver
http://www.riverdistrict.ca/awards/sustainability/
THEME 5
http://www.cleanegroup.org/assets/Uploads/2014-Files/Clean-Energy-for-Resilient-Communities-Summary-Feb2014.pdf
http://sustainablecitiescollective.com/lmtozer/202416/powering-energy-revolution
http://www.questcanada.org/sites/default/files/publications/NCR-3765116-NRCAN_OFF-GRID_REPORT_EN_.pdf\http://nyssmartgrid.com/microgrid/
THEME 6
http://www.aeea.ca/pdf/bohan-chp-district-energy-aeea-20130207.pdf
http://www1.toronto.ca/wps/portal/contentonly?vgnextoid=81d86d820a926410VgnVCM10000071d60f89RCRD
THEME 7
https://www.hydro.mb.ca/corporate/mhplace/features.shtml
additional info from personal communications with MB Hydro
http://www.healthyheating.com/Productivity/Productivity.htm#.VNKk1GjF91Y
http://www.rmi.org/retrofit_depot_deepretrofitvalue
THEME 8
http://nbs.net/knowledge/three-reasons-job-seekers-prefer-sustainable-companies/
http://www.forbes.com/sites/jeannemeister/2012/06/07/corporate-social-responsibility-a-lever-for-employee-attraction-engagement/
https://www.ic.gc.ca/eic/site/csr-rse.nsf/eng/rs00176.html
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