By Greg Jones
Many thanks to all of you who responded to my question last month about why people won’t invest in energy efficiency with a 50-100 per cent ROI while they still line up for RRSPs returning three per cent. While the comments were interesting, I don’t think we solved the problem.
By Greg Jones
However, it looks like the Ontario Power Authority took note of the situation. This past week, several utilities held meetings to announce the new Energy Retrofit Incentives. They had some very good news for all those people who’ve topped up their RRSP and have no funds left to reduce electrical energy use.
The new program will provide capital assistance that can be used for almost any kind of project that will provide verifiable electrical energy savings.
Lighting improvements have proven to be the most popular measure implemented. Lighting is commonly referred to as the “low hanging fruit” because everyone has some and it can usually be changed to achieve significant savings with a reasonable payback period. Paybacks typically range from one to three years, depending on the change required and the operating hours.
Last year, the Energy Retrofit Incentives provided financial incentives in two ways – prescriptive and custom. Both have been significantly improved.
Under the prescriptive option, your utility will provide a fixed incentive for a given change. For example, changing a 400W metal halide to a six lamp T8 high bay fixture would qualify for a $40 incentive. Under the new program just announced, the incentive would increase to $120. A change to a four lamp T5 option would see the incentive increased from $35 to $105 per fixture.
The custom option has been similarly improved. Last year the incentive was based on $250 for each kW of demand saved over the “on peak” hours of 7 am to 11pm. Companies operating less than 16 hours per day had their incentive reduced accordingly. Under the new program the incentive will pay up to 50 per cent of the capital cost and the “on peak” window has been reduced to 11am to 5pm. This will ensure virtually all companies will qualify for the maximum incentive.
This new program is sure to increase the interest in implementing energy efficiency projects. Overall payback periods will be reduced by three to six months and even a one-shift operation will have opportunities to save money with an ROI of 40 per cent and the three shift companies could be up to 140 per cent.
Time will tell if people find these returns better than their RRSP but it will make their decision a little more difficult. I would recommend that at the very least everyone should be talking to their suppliers to determine what this new program can do for you. Or, you can contact Nexstar Lighting (www.nexstarlighting.com) for a complementary lighting analysis that incorporates details of these new incentive programs.
Greg Jones (firstname.lastname@example.org) is President of Nexstar Lighting.