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Go slow or go home when it comes to renewable energy

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by Peter Kenter last update:Sep 11, 2014

Wind and solar energy projects continue to attract property owners and developers. But starting small may be the best way to reduce project risk and gain experience in the renewable energy (RE) market, says Bryan Taylor, chief development officer with Mindscape Innovations Group, a green construction and renewable energy consultancy with head office in Kitchener.

“Everybody thinks that owning a big solar or wind project is exciting and sexy,” says Taylor.

“But it’s not often where we recommend starting.”

Taylor notes that if the project owner’s goal is to reduce energy bills in an existing building, then energy audit, conservation and retrofit programs—in tandem with government incentive programs and depreciation write-offs—often provide the best return on investment.

“We usually put together a five-year plan for clients that starts with low-hanging fruit that has a short payback time,” says Taylor.

“We suggest they take 50 per cent of the energy cost savings from the first year and set it aside to do bigger and better things the second year. Typically, in five years we can generate a large budget for doing major retrofit projects.”

Once efficiency issues have been addressed, RE systems become more economically viable. However, project owners need to ask themselves why they want to initiate these projects.

“Is it to generate a revenue stream, is it to offset peak loads or connection surcharges on your energy usage, or is it to create a green image?” Taylor asks.

“The mix of those hings will change project priorities.”

Before embarking on an RE program, Taylor recommends that proponents: scope out the project to determine technology options; perform a feasibility assessment; research permitting requirements; research grants and incentives; and engage an RE consultant or turn-key original equipment manufacturer or distributor.

Typical technology options available to RE system customers include photovoltaic, photovoltaic thermal hybrid systems, building-integrated photovoltaic, solar domestic hot water, and integrated structural solar walls, which collect or disperse heat as needed.

“Typically the RE options people view as the latest and greatest tend to have the highest capital cost per kilowatt hour produced,” he says.

“Sometimes the less sexy bricks and mortars stuff has a better payoff.”

Both fluctuating capital costs and shifts in government policies, such as declining returns from the Ontario Power Authority’s Feed-in Tariff (FIT) program, are affecting RE project choices.

“We’ve seen the capital cost on solar dropping aggressively to less than half in the last five years, but we’ve also seen the FIT program procurement pricing drop in half in the last three years,” says Taylor.

“Wind has been pretty stable, although small wind is still one of the most expensive ways of generating electricity and typically doesn’t fall within the payback requirements of most businesses.”

Other RE project options present their own challenges. Micro-hydro sites involve extensive permitting and regulatory loopholes.

Biogas projects can produce significant energy compared to capital outlay, but require a steady supply of fuel and demand more attention to maintenance and operation.

“Geothermal can be very good, if it’s done right,” says Taylor. “If not, it can be more expensive than anything else.”

Taylor recommends hiring a professional to negotiate any projects involving an impact on neighbouring properties, even to the point of offering neighbours a small stake in project benefits.

“If done right, you could create lots of good engagement with the community,” he says.

“If the first project goes poorly, the chances of being able to do a second or third project are almost non-existent.”

last update:Sep 11, 2014

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