The Journey to Energy Efficiency Retrofit Success - Part 2

In phase 1 – Assess, we examined the three key steps to initiating an energy retrofit and identifying the key energy efficiency measures for a building: the leadership buy in, benchmarking, and the role of an energy audit as well as the experience and knowledge of the energy professional were highlighted. You can check our phase 1 post on our blog.


Phase 2 – PLAN

In phase 2 – Plan, we continue to examine the framework proposed by NRCan. The framework breaks down the planning phase into 4 main stages and follow a staged approached or integrated design approach:

Stage 1 – Staging the Retrofit Project Measures:

A building is a group of interconnected systems that affect each other’s energy utilization and are affected by the building envelope. When approaching an energy retrofit, a single system cannot be considered in isolation from the other systems in the building, especially when embarking on a major equipment replacement or energy systems deep retrofit. For instance, single pane windows or poor window frame sealing might cause high heat loss, making a boiler work harder and possibly be oversized by design. If the boiler is replaced for a similar boiler at the end of its life without addressing the inefficient windows, it will be replaced by another oversized boiler and will continue to run higher energy bills over time.


Energy professionals use the same process recommended by NRCan where energy retrofits are staged:

  1. Reduce loads through improving the run schedule of building equipment.

  2. This can be done manually, using timers, or a building automation system.

  3. Larger buildings typically have a building automation system (BAS) which yields significant energy savings by optimizing building equipment usage based on occupancy, weather data, etc.

  4. Improve efficiency.

  5. Lighting or simple re-lamping with more efficient bulbs. However, when it comes to LED lighting, not all LEDs are created equally and vary widely in quality. It is important to consult an energy professional or a lighting specialist before purchasing LED fixtures or bulbs to ensure the LEDs are of good quality, will last the planned lifetime, and provide sufficient lighting.

  6. Ensuring proper maintenance of equipment such as checking that air filters are replaced regularly and cleaning heat exchangers.

  7. Optimize the heating and cooling energy supply when performing a deep retrofit.

  8. If a cooling or heating item needs to be replaced, it should be replaced by a more energy efficient item that is properly sized for the building’s demand.

  9. Heat recovery should be considered whenever possible. You can learn more about effective heat recovery techniques in Mult-unit residential buildings in this example at this video link. In this particular heat recovery retrofit example, performed by Mann Engineering and Aris Building Technologies, several boilers were eliminated by using a primary-secondary loop, and yielded significant savings on gas.

In the staged approach, each of the stages will impact the retrofit in the following stage, similar to the example presented in the beginning of this article.


NRCan recommends following the stages as illustrated below:

NRCan - Major Energy Retrofit Guidelines for Commercial and Institutional Buildings: Principles
Source: NRCan - Major Energy Retrofit Guidelines for Commercial and Institutional Buildings: Principles – pg.10

In addition, NRCan recommends consulting the National Energy Code of Canada (NECB) for Buildings before planning a major retrofit to ensure all major equipment and building envelope components meet or exceed the energy efficiency minimum requirements.


Stage 2 – Timing the Retrofit Project Measures:

Once staging is complete, implementation of a deep retrofit involving high price tag items should be timed carefully. Most organizations have a capital expenditure plan and energy retrofits should be incorporated into it. Aligning an energy retrofit purchase with an existing item replacement in the capital plan, reduces that cost to only the difference between the planned conventional equipment and the higher price of a more efficient equipment. For instance, if a boiler was already planned to be replaced in 2 years due to the end of its service life, replacing it with a condensing boiler will yield an increment of only the net cost between the original boiler and the higher efficiency condensing boiler, as opposed to buying the condensing boiler at a time when no boiler replacement budget was allocated at all.


Other instances where timing can reduce the cost of retrofit are:

  • When a building is newly acquired and the project cost can be financed as part of the acquisition at an attractive borrowing rate.

  • When there is a major change in occupancy of a building, and the new tenants have an interest in the retrofit and can share the cost of the project.


Stage 3 – Creating the Business Case for the Retrofit Project:

The third stage is Creating the business case. This stage's success depends highly on choosing the right financial tool that best aligns with the organization’s opportunity evaluation method. Your energy professional can help select the right financial tool and build the business case for your organization with your guidance. Some tools listed below:

  1. Simple Payback Period

  2. For quick decision making, and in cases where the organization leases the facility’s space and the leased space is not sub-metered or the owner of the building is responsible for energy cost, they may prefer that the project’s payback period is shorter than the lease period.

  3. In general, it has been reported by many energy professionals that Simple Pay Back is a project killer. It diminishes the value of the cash flow generated by the project, and it is highly recommended to always examine cash flow and Net Present Value of an energy retrofit.

  4. Net Present Value (NPV)

  5. If the organization has borrowing power, they may prefer to use this to discount the value of future cash flow generated by energy savings.

  6. Internal Rate of Return (IRR)

  7. Useful for ranking investments or projects.

Once the energy investment is analyzed, other factors should be considered when evaluating and comparing options. These include costs and benefits as well as benefits beyond energy savings, such as productivity or comfort of tenants, reduced maintenance cost, building value, higher rent rates and occupancy rates, life cycle costing and certainty of future savings. Finally, risk should be also considered. Risk is a very wide topic and is an integral part of any investment. Different organizations have different appetite for risk, however, when it comes to energy retrofits, choosing an established measure with proven savings, working with qualified consultants and contractors, utilizing risk sharing contracts when possible can all reduce the risk.


Selling the business case is the last step in this stage, and the key to getting buy-in from stakeholders is understanding their interests in the project and highlighting the benefits that is specific to each stakeholder group to them.


Stage 4 – Financing the Retrofit Project:

The final stage of the plan phase is planning financing. Each organization will choose the option that is available to it and will provide a positive cash flow. Small retrofits can be purchased by cash, while larger ones will require some form of financing such as a mortgage secured against the property but the savings from the retrofit will need to cover the debt service (interest), Green loans, Energy performance contract to reduce the risk, and of course grants and incentives that can finance a significant portion of the project’s cost.


How We Can Help

One last important measure to consider in both the planning phase is micro renewable energy projects that can be integrated into the retrofit project. Whether it is Solar coupled with the net metering program, Energy Storage for reducing peak consumption from the grid, or Geothermal for reducing gas consumption, they can be assessed for feasibility and return as part of the larger retrofit project. The size and return of these projects should be calculated after taking into account the savings from the retrofit project but planned and executed as a whole.


Mann Energy Solutions is a professional consulting engineering company that specializes in energy management, including energy audits, mechanical/electrical engineering and implementation and has a long working relationship with utilities and Enbridge. We are experts at helping clients realize the highest value for their retrofit investments, and selecting the right incentives for their projects.


Some of our services include:

  • Free site walk-through by our experienced engineers and technicians to provide an initial site assessment

  • Engineering feasibility studies

  • Incentive study and application

  • Engineering, Procurement and Construction (EPC) for a turnkey project

For more information or a complimentary assessment contact us through the main site, info@mannenergysolutions.com, or call (416) 201 9109 x 158.


Resources

Carbon Tax Presents a Strong Case for Accelerating Energy Retrofits

EnergyStar - Portfolio Manager

CAN-QUEST

RETScreen

Save on Energy - Programs and Incentives

Efficiency Canada - Retrofit Mission


References

  1. NRCAN – Major Energy Retrofit Guidelines for commercial and Institutional Buildings PRINCIPLES

  2. NRCAN – Major Energy Retrofit Guidelines for commercial and Institutional Buildings OFFICE BUILDINGS

  3. Mann Energy Solutions - Energy Audits

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