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2001 Sudbury Strategic Energy Planning

2001 Sudbury Strategic Energy Planning

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Published by Green Sudbury
summary of the Federation of Canadian Municipalities $170,000 funded energy audit of municipal buildings
summary of the Federation of Canadian Municipalities $170,000 funded energy audit of municipal buildings

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Published by: Green Sudbury on Feb 05, 2011
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1Creating a better quality of life through sustainable community developmentCréer une meilleure qualité de vie grâce au développement de collectivités viables
Sudbury, Ontario: Strategic Energy Planning
The Regional Municipality of Sudbury, Ontario (nowthe City of Greater Sudbury) is located on theCanadian Shield 400 kilometres north of Toronto.Comprising two cities (Sudbury and Valley East) andfive towns (Capreol, Nickel Centre, Onaping Falls,Rayside-Balfour, and Walden), the Region’spopulation is 165,000. It ranks third among Canada’s25 biggest cities in terms of the amount of parklandper capita. The Region is best known as home to oneof the largest integrated mining complexes in theworld.
Goals
Reduce energy consumption by 32 per cent andoptimize municipal operations.
Identify and implement extensive energy-retrofitinitiatives with an overall simple pay-back (totalproject costs divided by anticipated annual energyand related cost savings) of approximately sevenyears.
Issues Addressed
This case study shows how strategic energy planningcan help municipal governments maximize energy-saving opportunities.
Key Management Concept
A thorough and methodical process of quantifyingpotential energy efficiency, combined with councilinvolvement, leads to better program design, stronger support for initiatives, added negotiating strengthduring implementation and greater likelihood of reaching efficiency targets.
Importance of the issue
A strategic energy plan allows municipalgovernments to take an integrated approach toenergy management. A project-by-projectapproach leads to many projects appearingless cost effective. An integrated approach,however, allows municipalities to includeprojects with varying cost effectiveness toachieve an overall rate of return. The processestablishes a baseline for energy use. Thisdetailed knowledge strengthens a municipalgovernment’s negotiating position withcontractors and energy service companies.
Abstract
In January 1995, Sudbury Regional Councilagreed to a strategic planning report to identifyall potential energy-efficiency retrofit projectsand options for funding. The resulting strategicenergy plan identified technical and financialoptions. Council subsequently approved thePlan and implementation is now under way.
Case study
In 1993, Sudbury’s commitment to develop astrategic energy plan was followed by Councilresolutions of support and the appointment of two Council members to work with staff.Sudbury’s experience with an initialassessment of facilities encouraged it toproceed with the development of acomprehensive strategic energy plan designed
 
 
2Creating a better quality of life through sustainable community developmentCréer une meilleure qualité de vie grâce au développement de collectivités viables
to reduce energy use at facilities, with implementationcosts recoverable through energy savings. Anon-profit firm, ICLEI Energy Services, was retainedto complete the strategic energy plan.Strategic energy planning activities included:benchmarking existing carbon dioxide (CO2)emissions from facilities owned and operated by theRegion;
projecting emissions reduction as a result of theenergy retrofit activities;
analysing existing energy management fundingactivity and comparing cost/benefit of both internaland external funding options;
analysing the proposed retrofit activity withreference to existing capital maintenance plansand Region-operated programs;
identifying and evaluating partnerships that wouldmaximize technical capacity and improve thecost-effectiveness of program activities;
analysing the local economic impact of eachproposed retrofit activity;
analysing the non-financial resources necessaryfor each proposed retrofit activity; and
carrying out a financial analysis of the incrementalcost of post-retrofit monitoring and verification,and the expected post-retrofit benefits.The success of the strategic energy plan dependedon:
thorough collection and analysis of relevantenergy-use data, not standard industry estimates;
extensive consultation with Regional staff; and
reducing plan development costs by maximizingservices available from partners represented on asteering committee comprising Council andregional staff, provincial and local utilities, andexternal consultants.
Results
1. Thirty facilities representing 89 per cent of the Region’s electrical consumption and 87per cent of its natural gas consumptionwere audited for energy-efficiency andcost-savings opportunities.2. Eighty-six energy and/or energycost-saving measures were identified.3. The audited facilities identified $990,844 inannual savings, or a reduction of 28 per cent in the current annual energy bill of $3.4 million.4. Cost of the identified measures wasestimated at $4.23 million, including projectengineering and contingencies.5. The simple aggregated pay-back was 4.27years.6. Analysis indicated that the identifiedmeasures could result in the reduction incarbon dioxide emissions of 24 per cent.7. Implementation of the strategic energy planwas estimated to create 300 local jobs.8. A financial model was created thatestablished the cash flow resulting from afull capital commitment to the identifiedretrofit potential. The model also assessedvarious implementation schedules withreduced capital commitments.9. The financial model showed that with an18-month staged implementation schedule,the capital commitment to the project couldbe reduced by $500,000, compared toimmediate full implementation. This wasmade possible by implementing shortpay-back projects first and reinvesting therelated savings in the projects with longer pay-back.
 
 
3Creating a better quality of life through sustainable community developmentCréer une meilleure qualité de vie grâce au développement de collectivités viables
10. A discount rate of 8 per cent was applied todetermine net present value and benefit/cost ratiofor investments. This is approximately equal to theRegion’s cost of capital from external sources.
Funding
The Region’s finance department opted to fundretrofit activity from internal sources. Two internalfunding scenarios then were further examined.These included:1. Funding from current capital budget: Funding theretrofit measures entirely from the current capitalbudget would include a repayment scenario; allsavings resulting from the measures couldimmediately reduce operating budget energycosts. The Region could re-invest all savings thatresulted from the measures in other regionalinitiatives.2. Funding from a combination of current capitalbudget and reserves. In this scenario, it wasassumed that the Region was prepared to useapproximately $1.2 million of its current capitalbudget towards the retrofit measures. In order tominimize interest costs for the retrofit program, itwas assumed that the first $1.2 million would bemade available at no interest. In addition, a drawof up to $3 million was assumed to be availablefrom corporate reserves at an annual interest rateof 4 per cent. Interest was calculated monthlyduring the 24-month construction period, andannually thereafter. It was also assumed that allenergy savings would be used to repay thereserves.The Region chose to finance the retrofitprogram from the capital budget.
Outcome
In 1998, Sudbury Regional Councilapproved $4.23 million from internal fundsfor the implementation of the municipality’sstrategic energy plan.
The implementation schedule ultimatelydepended on the availability of projectmanagement, engineering and contractor skills over the course of the program. It wasdetermined that phasing in theimplementation would not have a strongimpact on the long-term financialperformance of the measures since themeasures have higher rates of return thanthe cost of borrowing for the program.
A monitoring and verification program wasestablished to ensure energy-efficiencysavings are realized.
Lessons learned
1. A municipality committed to energyefficiency can go beyond the conceptualstage of identifying energy savings andproceed with full implementation.2. Strong Council support by way of resolutions, appointment of two Councilmembers to a steering committee andregular Council updates, ensuredcontinuing support of the program.

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