Elfstrom Engineering can help your business obtain financial incentives under the ecoENERGY Retrofit Incentive for Buildings program. We often get questions as to how it works. Sometimes the extra effort to obtain the incentive isn’t worth the money that you get back. Larger buildings benefit from economies of scale and are more likely to take advantage of the ecoENERGY Retrofit Incentive for Buildings. Assuming all the eligibility requirements are met and a contribution agreement is signed, under this program Natural Resources Canada will provide a one-time incentive amount of $10 per GJ (gigajoule) of energy saved in a typical year, to a maximum of $50,000.

Grant or Incentive?

To be clear, the ecoENERGY Retrofit Incentive for Buildings program is an incentive that depends on predicted energy savings, not a grant. The homeowner’s program, ecoENERGY Retrofit for Homes, is a grant, a fixed amount for installing certain upgrades and reducing air infiltration in a household.

Cost of applying

An energy audit for a small commercial building under 6,400 ft2 by a NRCan Certified Energy Advisor for homes is likely going to cost between $900 and $1,800.

An energy audit for a building over 6,400 ft2 must be done by a licensed Professional Engineer or Certified Energy Manager (not a homes energy advisor) and will likely cost between $3,000 and $6,000, depending on the size and complexity of the building.

It may take a couple of hours to fill out the forms so be sure to add in an hourly rate for yourself as well as for the energy auditor.

Quick incentive estimation

Estimate how many dollars of natural gas you will save every year after the retrofit. The incentive will be roughly this same amount. It’s like getting an extra 12 months of savings. If you expect to save $10,000 of natural gas a year, your incentive will be about $10,000.

Estimate how many dollars of electricity you will save every year after the retrofit. Your incentive will be roughly 35% of that amount. It’s like getting an extra 4 months of savings. If you can expect to save $10,000 of electricity a year, your incentive will be about $3,500.

Add these two together and compare with the costs of applying to see if you will benefit from the incentive.

Similar calculations can be made for propane, oil, biomass and other purchased energy.

In more detail…

Estimating Incentive Amount for Conserving Natural Gas

Natural gas typically costs you between $8 and $12 per GJ.

Determine how much you are paying for natural gas per GJ using the following method: Take a bill for a typical month of consumption of natural gas. Divide the dollar amount by the consumption in m3 for that month, and multiply by 26.137. This is how much you are paying per GJ of gas consumed.

An example using real numbers:

In February 2009, ABC Condo Corporation paid $15,462 for 37846 m3. Dividing cost by consumption and multiplying the answer by 26.137, they determine that they are paying $10.68/GJ. If they spent $91,000 last year for natural gas, that means they consumed $91,000÷$10.68/GJ = 8521 GJ. A boiler retrofit is estimated to lower their gas consumption by 10%, so they can expect to save 852 GJ. The one-time government incentive will be $8521 and the upgrade will save them $9099 every year.

ABC Condo Corporation realizes that it’s very worthwhile to pay for an energy audit and apply for the ecoENERGY incentive.

Estimating Incentive Amount for Conserving Electricity

Electricity typically costs about $28 per GJ, or $0.10 per kWh.

Determine how much you are paying for electricity using the following method: Take a bill for a typical month of consumption of electricity. Divide the dollar amount by the consumption in kWh or that month, and multiply by 277.8. This is how much you are paying per GJ of electricity consumed.

An example using real numbers:

In February 2009, XYZ Rentals Inc. paid $8550 for 84572 kWh. Dividing cost by consumption and multiplying the answer by 277.8, they determine that they are paying $28.08/GJ. If they spent $113,209 last year for electricity, that means they consumed $113,209÷$28.08/GJ = 4032 GJ. Upgrades to lighting and fans is estimated to lower their electricity consumption by 10%, so they can expect to save 403 GJ. The one-time government incentive will be $4030 and the upgrade will save them $11,320 every year.

XYZ Rentals Inc.  realizes that it’s probably worthwhile to pay for an energy audit and apply for the ecoENERGY incentive, because the incentive amounts will likely cover the cost of the energy audit and paperwork. In addition, the energy audit will very likely find other opportunities to save money and increase the incentive amount, such as with natural gas. Sometimes an energy audit pays for itself by discovering utility billing errors. Even if XYZ Rentals Inc. decides to not apply for the incentive, the retrofit should still go ahead if the project has as a favourable internal rate of return.

What the government gets in return

The federal government has a commitment under the Kyoto protocol to reduce green house gas emssions. If they assume the project lasts 20 years, they are paying you $10 per tonne of verified CO2 equivalent emission reductions for natural gas, or $8.50 per tonne of CO2e for electricity, which is a great deal. Even if the project lasts only five years, they are still only paying $40 per tonne, an amount suggested by some governments as a reasonable carbon tax or offset amount.

Conclusion

If you’re the owner of a small building and you’re ready to start a retrofit project immediately, you probably won’t benefit from the ecoENERGY Commercial Retrofit Incentive, and you may not need a full energy audit. The earlier the project is completed the sooner your energy savings will improve cash flow. For small buildings sometimes only major retrofit projects such as installing a ground source heat pump or a full wall insulation upgrade will yield energy savings high enough to make the incentive worthwhile.

If you’re the owner of a medium-sized building, do a quick check to see if it’s worthwhile applying for the incentive by comparing anticipated savings to audit and paperwork costs. An energy audit will usually pay for itself in other identified savings, and will help you identify other incentives & grants and savings.

Larger buildings almost always benefit from the incentive and from an energy audit. However, very large buildings over 20,000 m2 (215,278 ft2) are ineligible.

Even if you’re ineligible for the incentive because of other restrictions, such as owning a building less than five years old, you should still consider an energy audit. On medium sized and larger buildings an energy audit typically pays for itself in a very short time with very little additional expenditure.

Resources

For more information, you can visit: http://ecoaction.gc.ca/retrofit
Fact Sheet: http://oee.nrcan.gc.ca/publications/commercial/m144-194-1-2008e.cfm
Application Guide: http://oee.nrcan.gc.ca/publications/commercial/retrofit
FAQ/Q&A: http://oee.nrcan.gc.ca/commercial/financial-assistance/existing/questions.cfm