How can an energy retrofit help my co-op do more with less?

4 March 2020

Maybe you’re looking to lower your co-op’s energy bills by installing a new high-efficiency boiler or replacing those drafty old windows. The question becomes “Is this the best investment for our co-op?”

Co-ops take different approaches to energy retrofits. Some do one project at a time, perhaps by replacing each worn-out item with an energy-efficient model. Other co-ops do a full energy retrofit of the entire building. Either way, a good starting point is to commission an energy audit. Then your board can review the audit report to see what retrofit projects  are possibilities for your co-op.  

Once you have your energy-audit report in hand, you’ll notice that the consultant provides you with a simple payback analysis. A simple payback analysis shows you the number of years that it takes for an investment to pay for itself. For instance, let’s assume your co-op is considering spending $10,000 on additional attic insulation that will save your co-op $1,000 a year on energy costs. Your reports says that, for this project, the simple payback is ten years. That means it will take ten years for your co-op to recover the initial cost of the investment.

Below is a sample of the recommendations for energy retrofits that you might find in an energy-audit report.

Energy Conservation Measures Breakdown Annual Energy Cost Savings Capital Cost Simple Payback (years)
Retrofit the common-area lighting $1,000 $3,900               3.9
Install high-efficiency DHW - condensing type $1,550 $17,400               11.2
Install high-efficiency toilet & low-flow showerheads $2,500 $12,500               5.0
Install high-efficiency boiler $2,400 $68,800               28.7
Retrofit the in-suite lighting $2,200 $7,100               3.2
Install programmable thermostats $550 $10,600               19.3
Training for members $1,700 $2,000               1.2
Total $11,900 $121,500               10.2

As you can see in the table above, the simple paybacks range from 1.2 years to 28.7 years. Often, a co‑op is tempted to retrofit only items that have a quick payback time, so as to recoup its initial investment faster. However, with this approach, some savings are left on the table because the co-op does not complete all the projects it could.

Instead, if your co-op does all the recommended retrofits together, the savings will spread out across the entire project landscape, which shortens the payback period for more expensive items. In other words, savings from one project will finance the cost of another project. In our example, the payback is only 10 years when all projects are done together.

Some argue that a simple payback analysis does not give a full picture of costs and benefits. It does not allow for the time value of the money; the additional savings due to the increase in energy cost over time; or the maintenance and labour savings resulting from the installation of new equipment.  However, regardless of what method of analysis one uses, all experts agree that more saving is generated when energy retrofits are bundled. And of course the environment benefits more, as well as the co‑operative.

Good Vacancy Loss

Some vacancy loss is by choice, because units are being refreshed for new members. So only a loss in name. Actually an investment.