Energy Retrofits – Value and Financing

October 2019

Condo corporations are under continuous pressure to keep from raising fees while the cost of energy and maintenance demands increase.  The way to succeed is by improving building efficiency.

Improved building efficiency provides benefits that include reduced energy and maintenance costs.  Less considered are lifestyle enhancements that include improved air quality and more comfortable internal temperatures.  Another consideration should be making a condo building, and its suites, more appealing for potential buyers.

While the benefit of reducing energy consumption is clear, condo corporations are confused by the myriad of options, cost and funding considerations.  When confusion reigns, the most common result is to do nothing.  Communities generally choose to live with their current and known costs, and continuously raise fees, rather than undertake a concerted effort to become more efficient, improve lifestyles and reduce expenditures.

Data from energy retrofit projects intended to reduce energy consumption generally result in savings of 15 to 30 percent.  To achieve these savings, communities may need to invest hundreds of thousands of dollars.  A mid-level figure may be in the range of $300,000 and a high-level figure in the millions of dollars.

While these amounts may seem daunting savings add up quickly and may only require three to seven years before payback is achieved.  Post payback, the community including all residents financially benefit from these savings.

One way to fund a major energy retrofit project is to utilize prior year surpluses.  Another is to increase fees for a period of time and set aside this money to fund these retrofits.  Since energy retrofit projects can take years to complete, a small increase in monthly fees may be sufficient.  A third option is to obtain external financing to be repaid over a ten-year period.  Savings from energy retrofits should reduce corporation costs by more than the cost of financing thus keeping fees lower than they otherwise would have been.

During the payback period, residents benefit from these initiatives.  Better lighting, more comfortable internal temperatures and improved air quality are all worthy goals.  Depending on the current status of your building infrastructure programmable thermostats, air sealing and weather stripping, updated heating or cooling systems, or a new hot water boiler may be important considerations.

Among the most beneficial energy retrofits for many communities are a new building automation system, improved lighting and myriad changes to control voltage and/or water pressure.

The best way to determine which energy retrofits can be most impactful for a  community is to undertake an energy audit utilizing engineers experienced in this area.