“The city could save more than $80 million over the next 20 years if it invests more than $3.5 million now, a committee heard Tuesday.”
This was reported in the Guelph Mercury yesterday. To be fair to the staff who delivered a well-researched and solid business case, this is not quite the whole story.
The three year program asks for $3.5 M in capital and $290,000 per year for the various operational aspects of the program. This gets our energy use under control and managed and will save $400K, per year in today’s dollars.
Subsequent to the 3 yr program start-up, the ten year plan calls for $1 million per year in continual capital improvements along with continued operational support, at the same level – all designed to continue pursuit of energy use reductions.
Together this will avoid an accumulated $7 to11 million in energy costs over the next 10 years – NET of all capital and operating investments. Further the program will address the expected tripling of our current $7.8 million energy bill by 2023 (to $27 million annually), if we were to continue with business as usual.
The $80M is a twenty year number that begins to really demonstrate how avoided costs exponentially accumulate in a highly inflationary environment. That is why our staff showed this analysis to us. However, it has speculative aspects to it. There is strong confidence in the projected inflationary trend for the first 10 years but when you push out a further than 10 years there are many more variables as play.
It is fair to say at this time, as our staff did, with a capital investment in the range of $1 million a year, conservatively (and I stress conservatively), we are set on a course to avoid a accumulated minimum of $7 million in energy costs, above and beyond our investments, by 2023.
Should energy inflation trends continue after 2023, the proposed energy management program could avoid as much as $80 million in accumulated avoided energy costs over the next 20 years.
Council will be considering the request for funding of this initiative during its budget process. Our budget decision making is much better informed with strong businesses cases like this one.