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Creating a better quality of life through sustainable community development

Créer une meilleure qualité de vie grâce au développement de collectivités viables

during implementation and greater likelihood of

Sudbury, Ontario: Strategic Energy Planning
reaching efficiency targets.

The Regional Municipality of Sudbury, Ontario (now Importance of the issue

the City of Greater Sudbury) is located on the
Canadian Shield 400 kilometres north of Toronto. A strategic energy plan allows municipal
Comprising two cities (Sudbury and Valley East) and governments to take an integrated approach to
five towns (Capreol, Nickel Centre, Onaping Falls, energy management. A project-by-project
Rayside-Balfour, and Walden), the Region’s approach leads to many projects appearing
population is 165,000. It ranks third among Canada’s less cost effective. An integrated approach,
25 biggest cities in terms of the amount of parkland however, allows municipalities to include
per capita. The Region is best known as home to one projects with varying cost effectiveness to
of the largest integrated mining complexes in the achieve an overall rate of return. The process
world. establishes a baseline for energy use. This
detailed knowledge strengthens a municipal
government’s negotiating position with
Goals
contractors and energy service companies.
• Reduce energy consumption by 32 per cent and
optimize municipal operations. Abstract

• Identify and implement extensive energy-retrofit In January 1995, Sudbury Regional Council
initiatives with an overall simple pay-back (total agreed to a strategic planning report to identify
project costs divided by anticipated annual energy all potential energy-efficiency retrofit projects
and related cost savings) of approximately seven and options for funding. The resulting strategic
years. energy plan identified technical and financial
options. Council subsequently approved the
Plan and implementation is now under way.
Issues Addressed
This case study shows how strategic energy planning Case study
can help municipal governments maximize energy-
saving opportunities. In 1993, Sudbury’s commitment to develop a
strategic energy plan was followed by Council
resolutions of support and the appointment of
Key Management Concept two Council members to work with staff.
Sudbury’s experience with an initial
A thorough and methodical process of quantifying
assessment of facilities encouraged it to
potential energy efficiency, combined with council
proceed with the development of a
involvement, leads to better program design, stronger
comprehensive strategic energy plan designed
support for initiatives, added negotiating strength
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Creating a better quality of life through sustainable community development

Créer une meilleure qualité de vie grâce au développement de collectivités viables

to reduce energy use at facilities, with implementation Results

costs recoverable through energy savings. A
non-profit firm, ICLEI Energy Services, was retained 1. Thirty facilities representing 89 per cent of
to complete the strategic energy plan. the Region’s electrical consumption and 87
per cent of its natural gas consumption
Strategic energy planning activities included: were audited for energy-efficiency and
cost-savings opportunities.
benchmarking existing carbon dioxide (CO2) 2. Eighty-six energy and/or energy
emissions from facilities owned and operated by the cost-saving measures were identified.
Region; 3. The audited facilities identified $990,844 in
• projecting emissions reduction as a result of the annual savings, or a reduction of 28 per
energy retrofit activities; cent in the current annual energy bill of
• analysing existing energy management funding $3.4 million.
activity and comparing cost/benefit of both internal 4. Cost of the identified measures was
and external funding options; estimated at $4.23 million, including project
• analysing the proposed retrofit activity with engineering and contingencies.
reference to existing capital maintenance plans 5. The simple aggregated pay-back was 4.27
and Region-operated programs; years.
• identifying and evaluating partnerships that would 6. Analysis indicated that the identified
maximize technical capacity and improve the measures could result in the reduction in
cost-effectiveness of program activities; carbon dioxide emissions of 24 per cent.
• analysing the local economic impact of each 7. Implementation of the strategic energy plan
proposed retrofit activity; was estimated to create 300 local jobs.
• analysing the non-financial resources necessary 8. A financial model was created that
for each proposed retrofit activity; and established the cash flow resulting from a
full capital commitment to the identified
• carrying out a financial analysis of the incremental
retrofit potential. The model also assessed
cost of post-retrofit monitoring and verification,
various implementation schedules with
and the expected post-retrofit benefits.
reduced capital commitments.
The success of the strategic energy plan depended 9. The financial model showed that with an
on: 18-month staged implementation schedule,
• thorough collection and analysis of relevant the capital commitment to the project could
energy-use data, not standard industry estimates; be reduced by $500,000, compared to
• extensive consultation with Regional staff; and immediate full implementation. This was
• reducing plan development costs by maximizing made possible by implementing short
services available from partners represented on a pay-back projects first and reinvesting the
steering committee comprising Council and related savings in the projects with longer
regional staff, provincial and local utilities, and pay-back.
external consultants.
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Creating a better quality of life through sustainable community development

Créer une meilleure qualité de vie grâce au développement de collectivités viables

10. A discount rate of 8 per cent was applied to The Region chose to finance the retrofit
determine net present value and benefit/cost ratio program from the capital budget.
for investments. This is approximately equal to the
Region’s cost of capital from external sources.
Outcome

Funding • In 1998, Sudbury Regional Council

approved $4.23 million from internal funds
The Region’s finance department opted to fund for the implementation of the municipality’s
retrofit activity from internal sources. Two internal strategic energy plan.
funding scenarios then were further examined.
These included: • The implementation schedule ultimately
depended on the availability of project
1. Funding from current capital budget: Funding the management, engineering and contractor
retrofit measures entirely from the current capital skills over the course of the program. It was
budget would include a repayment scenario; all determined that phasing in the
savings resulting from the measures could implementation would not have a strong
immediately reduce operating budget energy impact on the long-term financial
costs. The Region could re-invest all savings that performance of the measures since the
resulted from the measures in other regional measures have higher rates of return than
initiatives. the cost of borrowing for the program.

2. Funding from a combination of current capital • A monitoring and verification program was
budget and reserves. In this scenario, it was established to ensure energy-efficiency
assumed that the Region was prepared to use savings are realized.
approximately $1.2 million of its current capital
budget towards the retrofit measures. In order to Lessons learned
minimize interest costs for the retrofit program, it
was assumed that the first $1.2 million would be 1. A municipality committed to energy
made available at no interest. In addition, a draw efficiency can go beyond the conceptual
of up to $3 million was assumed to be available stage of identifying energy savings and
from corporate reserves at an annual interest rate proceed with full implementation.
of 4 per cent. Interest was calculated monthly
during the 24-month construction period, and 2. Strong Council support by way of
annually thereafter. It was also assumed that all resolutions, appointment of two Council
energy savings would be used to repay the members to a steering committee and
reserves. regular Council updates, ensured
continuing support of the program.
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Creating a better quality of life through sustainable community development

Créer une meilleure qualité de vie grâce au développement de collectivités viables

3. Meetings between supervisors and operating staff

introduced the program and helped solicit input
and support.

4. Initial cost estimates may seem daunting but

strong Council support and thorough analysis of
potential savings and financing estimates ensure
well-designed energy-efficiency programs that
achieve savings.

5. A monitoring and verification program is an

integral part of the total energy-management
program helping ensure savings are realized.
Monitoring and verification programs are also
deemed critical by financing institutions.
Key contacts:
Paul Graham
Regional Municipality of Sudbury
Phone: 705-674-4455, ext. 4161
Fax: 705-673-5173
email: paul.graham@region.sudbury.on.ca

Rob Kerr
ICLEI Energy Services
100 Queen Street West
City Hall
Toronto, Ontario M5H 2N2
Phone: 416-392-0238
Fax: 416-392-1478
email: rkerr@iclei.org
Web site: http://www.iclei.org/ies

Louise Comeau
Federation of Canadian Municipalities
Telephone: (613) 244-6017
Facsimile: (613) 241-7440
email: lcomeau@fcm.ca