Community Energy Planning: Broadening the Business...

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

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Direct Benefits

3

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




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

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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


Hamilton

8

28% 24%

0

100

200

300

400

500

600

700

800

900


Co

st

of

su

pp

lyin

g e

ne

rgy

($ m

illio

ns

)

51%




Barrie

9

19% 22%

0

50

100

150

200

250

300

350

400


Co

st

of

su

pp

lyin

g e

ne

rgy

($ m

illio

ns

)

35%



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

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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




Office – New

Office – Retrofit

Retail – New

Retail – Retrofit







Industrial – New


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

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• 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

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Residential buildings

Program 3: energy efficiency retrofits and

conservation in existing homes.

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Cost$27 million

investment 2018-2021

Potential

Benefit$265 million

($500 million with social GHG costs) NPV to 2035


Large buildings

Program 8 would encourage renewable energy

uptake in existing large/ICI buildings.

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Cost$15 million


Potential

Benefit$320 million

NPV to 2035


Industry

Program 9 would encourage energy efficiency

improvements to industrial facilities and processes.

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Cost$44 million


Potential

Benefit$575 million



Passenger vehicles

Program 10 would encourage the purchase of

private passenger vehicles with electric drive

trains.

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Cost$1 million


Potential

Benefit$40 million


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

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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)

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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

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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

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Upcoming work/next steps

• Further case studies– Canadian

– International

Thoughts? Please get in touch:

Adam Baylin-Stern:

[email protected]

Stephanie Cairns:

[email protected]

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


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/

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http://www.gettingtoimplementation.ca/

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 energy mapping strategy - draft report 20110521.pdf



http://www.edmonton.ca/city_government/documents/Report_1-_Cost_of_Energy_Transition.pdf

http://www.sauder.ubc.ca/Faculty/Research_Centres/Centre_for_Social_Innovation_and_Impact_Investing/Research/Low_Carbon_Economy/~/media/Files/ISIS/Reports/Carbon Management Reports/QUEST-ICES-Business-Case-Southeast-False-Creek-Neighbourhood-Energy-Utility.ashx

http://tidalenergy.acadiau.ca/community-business-toolkit.html

http://novascotia.ca/news/release/?id=20141119001

http://onens.ca/report/

Supplementary Slides

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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

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Financial performance of energy

efficiency building improvements

(Barrie)

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)


2031energy cost savings ($ millions)

Net full time jobs


Net full time jobs


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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

http://www.columbia.edu/cu/alliance/EDF-2012-documents/Reading_Fox_3.pdf

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

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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

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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:

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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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