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What to budget for energy conservation? Maybe nothing!

September 19, 2014 - In many companies, Q3 is budgeting season. It’s a good time to plan energy saving activities for the next year. Any work requires budget, so funds have to be requested to be approved in time. Or not. In Ontario, manufacturing companies do not have to spend a penny to get started with energy saving projects. Using incentives and rebates companies can support projects that are being planned or complete a lot more new projects.


September 19, 2014
By Anatoli Naoumov

Topics

The first look at the main business page of the Ontario Power Authority’s (OPA’s) saveONenergy program suggests incentives for various studies at 50-70% level. However, going deeper into the same site we will find that companies are eligible to receive much more:

“Preliminary Engineering Study (PES) Overview
Receive 100% of study costs up to $10,000 in incentive funding for completing a Preliminary Engineering Study for a key process or single industrial system that will identify opportunities for process improvements that can reduce your electricity use. A Preliminary Engineering Study should be done when you are aware of the potential for electrical savings but you are unsure of the approach to achieve the energy savings. The study report must provide electricity savings estimated to an accuracy of +/- 30% and projects costs estimated to an accuracy of +/- 50%.”

See more details here.

How does the OPA incentive scheme work?
If a company would like to get its energy costs under control, but is not sure how to achieve this, a Preliminary Engineering Study (PES) is a good place to start. Here is how it practically works: a company finds an energy consulting company to do the work, together they apply for an incentive for PES. When project is approved by the OPA, company pays the contractor to do the work. When study is completed the final report is to be submitted to the OPA for approval. When report is approved, OPA cuts a cheque to the company for the cost of the study.

What is in the fine print?
An unwritten requirement from the OPA is that costs of study to not exceed annual savings company may reasonably expect to identify. What is reasonable to expect?

A typical manufacturing facility may achieve 5% energy savings from measures that require no or low investment, such as basic maintenance and adjustment of operating schedules. Effectively, a company that spends over $200K per year for electricity may reasonably expect to recover the $10K cost of a study within a year. Only it has nothing to recover, because the cost will be already recovered by the OPA.

What will the Preliminary Engineering Study produce?
Within the maximum incentive PES will estimate how much energy is being wasted (cost of inaction) and recommendations on energy saving measures (cost and benefits of action).

PES typically uses utility meter data for analysis. Much more specific results can be obtained by analyzing data collected by metering consumption of particular machine or group of machines; such data collection method is called submetering and such projects have a separate additional incentive.

Though costs of PES are covered by the OPA at 100% level, company will need to pay consultant first, therefore, the necessary amount has to be budgeted. Time to do it is now.

What comes after the PES?
OPA through local utilities offer incentives and rebates that support a wide range of energy conservation projects: from dock seals and destratification fans to installation of new equipment. Some utility companies, such as Toronto Hydro, Hydro One, Viridian, Welland Hydro and EnWin, train consultants to support incentive application process. Such consultants ensure that applications are processed faster, because they know the process and work in close contact with utilities. Find your Qualified Applicant Representative here.

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Anatoli Naoumov, MBA, MSc, CMVP, has been involved in various areas of business analysis and business development for over 15 years working for companies in Canada, The Netherlands and Russia. He has been certified as measurement and verification professional (CMVP) by The Association of Energy Engineers (AEE) and The Efficiency Valuation Organization (EVO). A managing partner at GreenQ Partners, Anatoli can be contacted at anaoumov@greenq.ca.