BACKGROUND BROCK UNIVERSITY Report to the Capital Projects and Facilities Committee Information Item TOPIC: Ontario Energy Efficiency Opportunities March 25, 2010 Cassie Kelly Director, Maintenance and Operations Facilities Management Sustainability, green energy, carbon footprint. These topics are the subject of many conversations and are hot in the media. Rapid technological development, government subsidies and the potential for revenue generation, have resulted in Brock University, and specifically the Facilities Management department, recently receiving a large volume of offers, proposals, and requests to participate and partner on green energy initiatives. Sustainability brings together the concept of balancing to meet three competing criteria: Ecological/Environmental least impact, carbon neutrality & increased renewable content Social Community Leadership, Local Development Economic reduce operating costs, extend equipment life & Funding ROI models With one third of the operating budget spent on energy related costs, this topic is very top of mind for Facilities Management. Recently completed energy projects have included fluorescent light replacements (ballasts & lamps), installation of modulating devices (Variable Frequency Drives) for fans and some of the large pumps, as well as change-outs of older equipment for energy conserving type. As a system is replaced or a new project is designed, energy efficiency is incorporated. Indeed the ongoing Project Plan lists many items from the Utilities Master Plan for implementing better operations to the campus. The challenge in implementing more projects is the competition for funding for all renewal & capital projects, as well as deciding which projects warrant further attention. In mainstream corporate world, projects are judged on compliance with certain criteria, as well as payback analysis. For many companies, projects with paybacks > 3-5 years are NOT considered a high priority, even though the buildings and systems have life spans of 20-40 years. But in evaluating many energy projects, some paybacks range from 1-2 years (known in the industry as low hanging fruit ) to more than 20+ years. Factors to consider include initial cost, expected life of the improvement, normal hours of operation among others. Knowing this, and in an effort to avoid cost in upgrading and renewing the infrastructure, public utility companies and the provincial & federal governments have developed incentives to make certain energy projects more attractive to institutional, industrial and residential users. For example lighting changes for 24 hr/day, 7 day/week can result in savings of up to 30% decrease in consumption, and resultant savings with a typically 3 year 1
payback. In recent years, the incentives have sometimes been in the range of 10-30% of the upfront investment amounts. (We are hearing that additional subsidies, perhaps in the range of 30-70% of initial investment will be announced by the OPA shortly.) The stated objectives of the Green Energy Act (May 2009) and the FIT Program established by Ontario Power Authority (OPA) announced in October 2009 are: Make Ontario a global leader in renewable energy (local content is required) Facilitate development of world-class green energy economy Streamline approvals process The FIT (Feed-In-Tariff) program is designed for green energy projects over 10 KW. With the current incentives framework, there are many companies wanting to help us through the energy landscape. It is the role of Facilities Management to vet these offers, and determine which ones present real opportunities for the University and which do not, along with assessing the staff effort that is required to be committed, and duration, in light of competing priorities and their risks and cost/benefits. Typical Paybacks Years 45 40 35 30 25 20 15 10 5 0 Biomass Small Scale PV Solar Thermal Air Geothermal Small Scale Wind Solar Thermal Water 0 2 4 6 8 Energy Savings Projects To that end, this report will: a. Summarize Green Energy technologies available today b. Detail their costs and paybacks and incentives c. Present a strategy to green Brock University by leveraging performance contractors and ESCOs 2
CURRENT GREEN ENERGY TECHNOLOGIES SOLAR PHOTOVOLTAIC Solar Photovoltaic (PV) electricity generation is the technology of the moment. Solar panels, mounted on the roof of a building, convert energy of the sun directly into electricity. Thanks to the incentives of the OPAs FIT program, this technology has the lowest payback of all the green energy options. In October 2009, Maintenance & Operations staff was asked by the AVP Facilities Management to assess the feasibility of roof-top solar installations for Brock. Although the Main Campus has over 200,000 SF of roof area, with potential for up to 900 KW of installed panels, projects over 500 KW are not usually financially attractive for a single property, as a larger installation affects the subsidy. The smaller the project, the higher the incentive offered to make the project more attractive: A microfit residential project (<10 KW) may be eligible for $0.802/kWh, a small scale solar PV project <250 KW garners $0.713/kWh, a mid size project 250-500 KW, $0.635/kWh, while a ground installation 250-500 kwh, only $0.443/kWh, for a fixed term period of 20 years. Optimally then, installations <250 KW pay better than those 250-500 KW (in order to balance the higher installation costs). However, there are hidden risks and costs that may seriously affect the payback period: If the building hasn t been designed for the weight of the panels, and the snow that may also now accumulate below the panels, the cost to upgrade it may be a prohibitive cost implication The age of the roofing is a factor. With a life of about 20 years, the solar panels will need to be moved at least once The solar panels deteriorate over a life of about 25 years, with a result of reduction in capability The installation must be able to face south without any structures or natural features that shade them. There is also an active industry springing up willing to rent the roof, where the company invests in the panels and pays to rent the roof space (so no upfront Brock investment), and typically pays about 30% of the incentive. Potentially: Solar PV installation Assumes rental of roof Rating/Approximate Size of Installation Maximum Incentive (annually for 20 years) Main Campus 500 KW/50,000 SF Possibly up to $30,000 Hamilton 250 KW/25,000 SF Possibly up to $20,000 3
WIND TURBINES Wind energy is also in the news lately, though not always for good reasons. Wind turbines also qualify for the FIT program, though at a much lower rate which hurts their payback. Wind power is also the least constantly available, and takes up a fairly large footprint. Recent installations have heard from surrounding neighours of complaints of noise or vibration. Current guidelines indicate that wind turbines are to be installed at least 0.5 km from residential areas. A wind turbine with an output equivalent to one cogeneration engine would need to be 30% taller than the Schmon tower. Anther issue is the shear height and rotation area of the units. This shows a typical 2 MW unit and 800 KW unit photoshopped to scale next to Schmon Tower. BIOMASS GENERATION This is a catch-all term used to describe energy produced by burning organic matter. Since biofuels sequester more carbon in the earth while growing than they release when burned, the net effect is carbon-neutral to slightly carbon-reducing. This option also has low subsidy rates in the FIT program. Its payback calculation is heavily dependant on a reliable, inexpensive source of biomass. However, due to its high reliance on existing technologies, it often offers a good payback considering the green technologies. Compared to Solar PV and Wind Turbines, the footprint is small, it could be incorporated into Brock s current operations reasonably well, and as well, emerging technologies could provide significant efficiency gains. In March 2010, the Director M&O and technical Services Officer visited a recently completed biomass installation in upper state NY. Learning from the visit include: 4
Need to identify a suitable dirt cheap waste stream, that is guaranteed available for a minimum of 10 years Importance of efficient material handling of the waste stream (including 70 ton trucks making frequent deliveries every day) A substantial footprint: delivered natural gas doesn t need to be stored, and diesel fuel storage has been well developed over the years, but adequate fuel material for a few days/weeks needs to be stored on site COSTS AND PAYBACKS Cost per installed kilowatt of green projects ranges from $2,500/kW for a large wind turbine to $7,500/kW for solar PV. Depending on the technology chosen, Biomass ranges from $2,500 to $3,500/kW. It is the output of these plants that make the difference in the payback. Whereas an 800 kw wind turbine can only generate 1.5 million kw-h in a year, a similarly sized biomass plant will make 7 million kw-h. Due to the high FIT tariff on solar PV, it returns approximately $800-1,000 per kw per year. A wind turbine would return approximately $60 per kw per year, and a biomass plant would return approximately $500 per kw per year. As discussed, Biomass Generation and Solar PV have the lowest simple paybacks of the green energy options, at approximately eight (8) and nine (9) years respectively. Wind power has the longest payback period, at forty (40) years. Another cost to consider is space. A 250 kw solar installation requires approximately 25,000 SF, or the entire roof of the Walker complex. An 800 kw wind turbine would be taller than the Schmon Tower, and is required to be at least 500 m away from any residence. There is nowhere on the main campus that meets this criteria. An 800 kw biomass plant would require an area similar to the CUB. Allocating a large amount of space to one technology for twenty years would limit opportunities to incorporate new technologies as they become available, and could limit future expansion of the university. PERFORMANCE CONTRACTING Twenty years ago, companies were formed as ESCOs or energy savings companies. These firms made an audit of the facility, formulated recommendations which the client ort hey implemented, and the ESCOs tried to collect part of their fees from the cost savings the clients experienced. That s where the arguing started. Initially, the energy costs may not have been well documented or bench-marked. The demands of the client for consumption may have changed. Weather may have been a factor. The quality of the equipment or installation may have been a factor. So some of these companies became performance contractors where they implemented the projects and, and in many cases operated the installations, to ensure the performance. As many of the projects involved installation of Building Management Systems, it isn t surprising to see that the large controls manufacturers (i.e. Honeywell & Johnson Controls) became big implementers. They had fairly deep pockets, and had good legal teams to write the contracts (and Terms & Conditions) and good engineers to design and/or operate the installation. Many public and private companies have had a rough time over the past decade. There has not been a lot of renewal maintenance implemented, and many of the installation/facilities are deteriorated as renewal and repairs have not been done, as funding wasn t available. Brock isn t alone in this situation. 5
But over the years (some of) the clients became more knowledgeable too about energy savings and looked for creative ways of handling their upgrades. Today it is more common to see a hybrid type contract combining energy savings project with deferred maintenance projects, married to the vendor company in a long term project, where the client buys the services they need, whether it is the technical expertise to identify the opportunities, the project management skills to implement, the know-how to operate, and of course the deep pockets to fund the project. STRATEGY FOR GREENING BROCK UNIVERSITY After evaluating the various and varied proposals that have been received/reviewed relating to green energy and considering the experiences of other universities, Facilities Management is developing the following approach for adding green energy, and improving the energy efficiency of Brock University. In the first stage, it is proposed that the Hamilton Campus will be selected, as it is a standalone facility with easily measured utility services. This building has an identified major repair need, windows replacement of $1.5 million. Proposals for energy efficiency improvements would be solicited, using unspent carryover funding from the utilities budget from 2009_10 (a mild winter has saved us some $60,000 here) which would be requested as seed money for application fees, consultants fees and legal effort. A contractor (consultant or ESCO) would then be selected, through an RFP process, to prepare an Energy Master Plan (EMP) for those projects, identifying the cost and potential savings of the required building upgrades, as well as any revenue potential of a green energy installation. Brock University would buy the EMP outright. PROCUREMENT & FINANCING The approach is seen as occurring in 3 stages for individual sites or bundled facility, each requiring an RFP/tendering process: Creation of an Energy Master Plan Selection and installation of Upgrades Procurement of financing The next stage of the process would be to go out for tenders to ESCOs to perform the upgrades, including the project management aspects. The ESCOs would be probably be paid up front, but would guarantee the energy savings of the upgrades. If a project did not show the expected energy savings, the ESCO would write Brock a cheque to cover the shortfall. Finally, with the ESCO agreement in place, guaranteeing the minimum rate of return, a third tender would be pursued to secure financing for the project. The ongoing utility savings and guaranteed savings would be used to pay back the loan. Once the loan is paid back (probably over 15-20 years), Brock enjoys the benefits of the upgrades for the remaining life of the installation or facility. As this process requires long term commitments from the ESCO, part of the project Risk Assessment is for Brock to develop selection criteria for the projects and the partners, working with companies who have a reasonable chance of being around in 20 years. 6
With the multitude of companies now in the business, selection criteria would prefer the larger, more stable expert companies with a proven track record. Horizon Utility provides power and water/sewer to Brock at the Main Campus. Initial discussions with Horizon indicate they are very interested in partnering with Brock for successful implementation of energy projects, especially Solar PV. Further, the long term commitment required of this type of arrangement requires that Brock University get it right before committing on a large scale. With the pilot project undertaken on Hamilton Campus, the three stage process will be completed and monitored. Once Brock is comfortable that the process is sufficiently robust, FM will deploy it on the Main Campus. CONCLUSION Brock University has some interesting challenges ahead, with anticipated increasing student populations and expanded curriculum programs, aging building, and the indeterminate provincial funding levels. Pursuing selected energy projects with the right partner(s), will mean lower operating costs, better facilities and a demonstration of Brock s commitment to Sustainability. 7