{"id":4582,"date":"2020-12-11T14:59:16","date_gmt":"2020-12-11T19:59:16","guid":{"rendered":"https:\/\/informatech.colpron.com\/?p=4582"},"modified":"2021-07-21T15:34:37","modified_gmt":"2021-07-21T20:34:37","slug":"understanding-the-additional-cost-notion-to-better-evaluate-the-return-on-investment-of-energy-efficiency-projects","status":"publish","type":"post","link":"https:\/\/dev.informatech.colpron.com\/?p=4582&lang=en","title":{"rendered":"Understanding the &quot;additional cost&quot; notion to better evaluate the return on investment of energy efficiency projects"},"content":{"rendered":"<div id=\"pl-4582\" class=\"panel-layout\">\n<div id=\"pg-4582-0\" class=\"panel-grid panel-no-style\">\n<div id=\"pgc-4582-0-0\" class=\"panel-grid-cell\" data-weight=\"1\">\n<div id=\"panel-4582-0-0-0\" class=\"so-panel widget widget_sow-editor panel-first-child panel-last-child\" data-index=\"0\">\n<div class=\"so-widget-sow-editor so-widget-sow-editor-base\">\n<div class=\"siteorigin-widget-tinymce textwidget\"><span class=\"intro\">In 2018, &Eacute;nergir introduced the notions of <em>additional<\/em> <em>cost<\/em> and <em>reference<\/em> <em>scenario<\/em> in its guides and request for financial assistance forms. These two items enable &Eacute;nergir to better evaluate requests and ensure that its grant programs remain pertinent, understandable and simple &ndash; qualities much appreciated by engineers and customers. However, it seems that these notions are still unclear for some applicants. We therefore propose to clarify these terms in this article to make your work easier.<\/span> <span class=\"titre-sous\">Reference scenario, efficiency scenario, and additional cost<\/span> <span class=\"texte-courant\">To clearly understand what is meant by a reference scenario, think of it as the &laquo;&nbsp;baseline&nbsp;&raquo; scenario, i.e., the one with the least technological, financial and\/or geographic constraints.<\/span> <span class=\"texte-courant\">In the case of an energy efficiency project, this is the scenario that prevails:<\/span>\n<ul style=\"list-style-type: disc;\">\n<li><span class=\"texte-courant\">before the implementation of energy efficiency measures, <strong>if the current situation can be maintained<\/strong> (existing systems and\/or equipment still good for a few years);&nbsp;or<\/span><\/li>\n<li><span class=\"texte-courant\"><strong> if the current situation cannot be maintained<\/strong> (equipment or systems at the end of their useful life or they have to be replaced, new construction or installation), when the installation of new equipment or systems corresponds to standard energy market practice.<\/span><\/li>\n<\/ul>\n<p><span class=\"texte-courant\">The <strong>efficiency scenario<\/strong>, on the other hand, includes the energy efficiency measures and is the subject of the request for financial assistance.<\/span> <span class=\"texte-courant\"><strong>Additional cost<\/strong> &ndash; also called &laquo;&nbsp;eligible expenses&nbsp;&raquo; &ndash; is therefore <em>the difference between the cost of implementing the reference scenario and the cost of implementing the efficiency scenario<\/em>. If the cost of implementing the reference scenario is zero (i.e., the equipment and\/or systems are still viable), then the additional cost corresponds to the cost of implementing the efficiency scenario.<\/span> <span class=\"texte-courant\">How do these notions work in real life? That is what we will see in the next section, using different examples.<\/span> <span class=\"titre-sous\">Project No. 1: High efficiency drying<\/span> <span class=\"texte-courant\"><strong>Background:<\/strong> A customer has to replace the grain dryer<sup>1<\/sup> since it is over 30 years old. Continuing to repair it to keep it working would cost more than changing it. He has heard talk of a drying technology that uses less energy but is more expensive and he would like to benefit from an &Eacute;nergir grant to help him replace the old dryer by the new technology.<\/span><\/p>\n<table style=\"width: 100%;\" border=\"0\" align=\"center\">\n<tbody class=\"tableau-texte2\">\n<tr>\n<td class=\"tableau-entete2\" style=\"text-align: left;\"><span class=\"texte-courant\">Reference scenario:<\/span><\/td>\n<td class=\"tableau-texte2\" style=\"text-align: left;\"><span class=\"texte-courant\">Replace the dryer by standard market technology.<\/span><\/td>\n<\/tr>\n<tr>\n<td class=\"tableau-entete2\" style=\"text-align: left;\"><span class=\"texte-courant\">Additional cost (eligible expenses):<\/span><\/td>\n<td class=\"tableau-texte2\" style=\"text-align: left;\"><span class=\"texte-courant\">Cost of high efficiency dryer &ndash; cost of standard dryer.<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p><span class=\"titre-sous\">Project No. 2: Heat recovery from a process<\/span> <span class=\"texte-courant\"><strong>Background:<\/strong> A customer would like to install an air-water heat pump to recover the residual energy released from heating the process water. He has learned that &Eacute;nergir offers financial assistance for this kind of project.<\/span><\/p>\n<table style=\"width: 100%;\" border=\"0\" align=\"center\">\n<tbody class=\"tableau-texte2\">\n<tr>\n<td class=\"tableau-entete2\" style=\"text-align: left;\"><span class=\"texte-courant\">Reference scenario:<\/span><\/td>\n<td class=\"tableau-texte2\" style=\"text-align: left;\"><span class=\"texte-courant\">Waste heat not recovered (status quo).<\/span><\/td>\n<\/tr>\n<tr>\n<td class=\"tableau-entete2\" style=\"text-align: left;\"><span class=\"texte-courant\">Additional cost (eligible expenses):<\/span><\/td>\n<td class=\"tableau-texte2\" style=\"text-align: left;\"><span class=\"texte-courant\">Cost of air-water heat pump.<sup>2<\/sup><\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p><span class=\"titre-sous\">Project No.3: Heat recovery and upgrade to meet standard<\/span> <span class=\"texte-courant\"><strong>Background:<\/strong> A customer needs to increase the supply of fresh air in the plant since it does not meet CNESST air exchange rate requirements. He submits a request for a grant for an energy efficient solution, comprising a ventilation unit with a heating coil supplied by heat recovered from the process rather than by natural gas. He would like to obtain financial assistance to carry out the project.<\/span><\/p>\n<table style=\"width: 100%;\" border=\"0\" align=\"center\">\n<tbody class=\"tableau-texte2\">\n<tr>\n<td class=\"tableau-entete2\" style=\"text-align: left;\"><span class=\"texte-courant\">Reference scenario:<\/span><\/td>\n<td class=\"tableau-texte2\" style=\"text-align: left;\"><span class=\"texte-courant\">Add a natural gas ventilation unit (market standard).<\/span><\/td>\n<\/tr>\n<tr>\n<td class=\"tableau-entete2\" style=\"text-align: left;\"><span class=\"texte-courant\">Additional cost (eligible expenses):<\/span><\/td>\n<td class=\"tableau-texte2\" style=\"text-align: left;\"><span class=\"texte-courant\">Cost of an energy efficient solution &ndash; cost of a natural gas ventilation unit.<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p><span class=\"texte-courant\">Of course, these are typical cases and so do not cover all possible situations, but they help you understand what is meant by a reference scenario and by the additional cost of a project.<\/span> <span class=\"titre-sous\">Applicability of grants according to type of project<\/span> <span class=\"texte-courant\">The following table shows the percentage of the additional cost covered by &Eacute;nergir, depending on the grant program and how the additional cost is evaluated in various specific cases.<\/span><\/p>\n<table style=\"height: 100px; width: 100%;\" border=\"0\" align=\"center\">\n<tbody class=\"tableau-texte2\">\n<tr>\n<td class=\"tableau-entete2\" style=\"text-align: left;\">\n<p class=\"texte-courant\"><strong>Grant program<\/strong><\/p>\n<\/td>\n<td class=\"tableau-entete2\" style=\"text-align: left;\">\n<p class=\"texte-courant\"><strong>Additional cost (eligible expenses)<\/strong><\/p>\n<\/td>\n<td class=\"tableau-entete2\" style=\"text-align: left;\">\n<p class=\"texte-courant\"><strong>Responsibility for evaluation<\/strong><\/p>\n<\/td>\n<\/tr>\n<tr>\n<td class=\"texte-courant\" style=\"text-align: left; vertical-align: middle;\">\n<p class=\"texte-courant\"><strong>Implementation assistance<\/strong><\/p>\n<\/td>\n<td class=\"tableau-texte2\" style=\"text-align: left; vertical-align: middle;\">\n<p class=\"texte-courant\">Variable (based on difference between cost of reference scenario and cost of efficiency scenario)<\/p>\n<\/td>\n<td class=\"tableau-texte2\" style=\"text-align: left; vertical-align: middle;\">\n<p class=\"texte-courant\">Applicant<\/p>\n<\/td>\n<\/tr>\n<tr>\n<td class=\"texte-courant\" style=\"text-align: left; vertical-align: middle;\" rowspan=\"2\">\n<p class=\"texte-courant\"><strong>Efficient renovation<\/strong><\/p>\n<\/td>\n<td class=\"tableau-texte\" style=\"text-align: left; vertical-align: middle;\">\n<p class=\"texte-courant\">10% of cost of purchase and installation of new windows<sup>3<\/sup><\/p>\n<\/td>\n<td class=\"tableau-texte2\" style=\"text-align: left; vertical-align: middle;\">\n<p class=\"texte-courant\">&Eacute;nergir, based on cost of project, as presented by applicant<\/p>\n<\/td>\n<\/tr>\n<tr>\n<td class=\"tableau-texte\" style=\"text-align: left; vertical-align: middle;\">\n<p class=\"texte-courant\">100% of cost of purchase and installation, or repair, of roof<sup>3<\/sup><\/p>\n<\/td>\n<td class=\"tableau-texte2\" style=\"text-align: left; vertical-align: middle;\">\n<p class=\"texte-courant\">Applicant<\/p>\n<\/td>\n<\/tr>\n<tr>\n<td class=\"texte-courant\" style=\"text-align: left; vertical-align: middle;\">\n<p class=\"texte-courant\"><strong>New efficient construction<\/strong><\/p>\n<\/td>\n<td class=\"tableau-texte2\" style=\"text-align: left; vertical-align: middle;\">\n<p class=\"texte-courant\">5% of cost of project<sup>3<\/sup><\/p>\n<\/td>\n<td class=\"tableau-texte2\" style=\"text-align: left; vertical-align: middle;\">\n<p class=\"texte-courant\">&Eacute;nergir, based on cost of project, as presented by applicant.<\/p>\n<\/td>\n<\/tr>\n<tr>\n<td class=\"texte-courant\" style=\"text-align: left; vertical-align: middle;\">\n<p class=\"texte-courant\"><strong>Solar preheating<\/strong><\/p>\n<\/td>\n<td class=\"tableau-texte2\" style=\"text-align: left; vertical-align: middle;\">\n<p class=\"texte-courant\">100% of cost of project<sup>4<\/sup><\/p>\n<\/td>\n<td class=\"tableau-texte2\" style=\"text-align: left; vertical-align: middle;\">\n<p class=\"texte-courant\">Applicant<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p><span class=\"titre-sous\">Better informed, more efficient<\/span> <span class=\"texte-courant\">While the notions of reference scenario and extra cost may sometimes seem complex because of the nature of the project (when costs are consolidated, for example), we hope that this article has helped your understanding and that you will thus be better able to calculate the return on investment of projects in which you are involved in the future, as well as calculate the grants available. However, if you need more support on this subject, DATECH Group advisors can help and advise you.<\/span><\/p>\n<table class=\"tableau-texte\" style=\"width: 100%;\" border=\"0\">\n<tbody>\n<tr>\n<td>\n<p class=\"titre-sous\">A wealth of resources just a few clicks away<\/p>\n<p class=\"texte-courant\">You can find the terms and conditions, information, and request for grant forms in the participant&rsquo;s guides available under &laquo;&nbsp;Grants&nbsp;&raquo; in the <a href=\"https:\/\/www.energir.com\/en\/business\/\" target=\"_blank\" rel=\"noopener\">Business<\/a> and <a href=\"https:\/\/www.energir.com\/en\/major-industries\/energy-efficiency-programs\/energy-efficient-programs\/\" target=\"_blank\" rel=\"noopener\">Major Industries<\/a> sections on our Web site. The <a href=\"https:\/\/www.energir.com\/en\/partners-consulting-engineers\/\" target=\"_blank\" rel=\"noopener\">Engineers<\/a> section also gives you access to energy efficiency training, technical data sheets and practical calculation tools.<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p><span class=\"texte-signature\">Nathalie Bouchard, Eng. DATECH Advisor, Technology &amp; Energy Efficiency, &Eacute;nergir<\/span><br>\n<span class=\"texte-note-ligne\"><sup>1<\/sup> The dryer is for illustrative purposes only; however, this example may apply to other equipment.<\/span><br>\n<span class=\"texte-note\"><sup>2<\/sup>&nbsp; On condition that at least 30% of natural gas remains at the meter and that the building has been connected for at least five years.<\/span><br>\n<span class=\"texte-note\"><sup>3<\/sup> According to best evaluation practices in effect. <\/span><br>\n<span class=\"texte-note\"><sup>4<\/sup> Except in the case of additional ventilation that avoids installing a natural gas unit, since the additional cost in this case would correspond to the cost of a solar wall.<\/span>\n<\/p>\n<p style=\"clear: both;\">\n<\/p><p><a href=\"https:\/\/informatech.colpron.com\/wp-content\/uploads\/v34_n02_surcout-EN_dec2020_epr02.pdf\" target=\"_blank\" rel=\"noopener\"><img loading=\"lazy\" decoding=\"async\" class=\"alignleft wp-image-3985 size-full\" src=\"https:\/\/informatech.energir.com\/wp-content\/uploads\/pdf-e1425302301840.png\" alt=\"pdf\" width=\"50\" height=\"36\"\/><\/a><\/p><\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>In 2018, &Eacute;nergir introduced the notions of additional cost and reference scenario in its guides and request for financial assistance forms. These two items enable &Eacute;nergir to better evaluate requests and ensure that its grant programs remain pertinent, understandable and &hellip; <a href=\"https:\/\/dev.informatech.colpron.com\/?p=4582&amp;lang=en\">Lire la suite<\/a><\/p>\n","protected":false},"author":4,"featured_media":4673,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[198],"tags":[391],"class_list":["post-4582","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-non-classe-en","tag-34-2-3-en-en"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v16.3 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<meta name=\"description\" content=\"This article aims to demystify the notion of additional cost, using concrete examples of energy efficiency projects\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" 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