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MCAC 2023: Stay engaged to gain entry to retrofit market, delegates told

Don Wall
MCAC 2023: Stay engaged to gain entry to retrofit market, delegates told
DON WALL - Christine Gustafson of Harbourgreene Consulting advised MCAC delegates on strategies to succeed in the retrofit market at MCAC’s recent California conference.

It was a familiar refrain at the recent Mechanical Contractors Association of Canada (MCAC) conference held in Napa, Calif., that mechanical contractors will have ample opportunity to shine as Canada pursues its decarbonization goals.

But during a session on retrofitting, Christine Gustafson of Harbourgreene Consulting took the discussion a step further by explaining how the delegates can create their own pathways to success.

The session was billed as What Does the Green Retrofit Market Mean for Mechanical Contractors? Canada will rely heavily on mechanical contractors as it strives to reach net-zero emission targets for the whole economy by 2050, Gustafson said.

“Those commitments represent an enormous challenge and opportunity to target those critical barriers to get the emissions reductions,” said the British Columbia-based consultant. “Building performance needs to be part of that.”

To get their share of the pie, said Gustafson, mechanical contractors must stay connected, upskill and reskill, provide meaningful support to their owner partners and promote the trades.

“Certainly there are new skills that are going to be needed to manage this change,” she said. “So I encourage you to look at your teams, understand where the strengths and the deficiencies lie, then look for opportunities to upskill and reskill.”

The mechanical contractors who prosper will be those who are engaged in all facets of the evolving sector and become leaders and facilitators, Gustafson said. Become a prime source of information for building owners, she advised.

“You’re the cornerstone, you are the people in the buildings, the eyes and the ears, the boots on the ground,” said Gustafson. “For capital projects, work closely with building owners and managers to support them with your new knowledge and skills on clean energy retrofits, and help them understand the mechanical systems in their buildings.”

The Canada Green Building Council (CAGBC) says for Canada to achieve its 2030 and 2050 climate targets, building owners and operators will need to upgrade, retrofit and ultimately decarbonize hundreds of millions of square metres of space, Gustafson noted.

“The good news is that there’s a positive business case,” she said, citing CAGBC analysis of metrics such as internal rate of return and capital cost and carbon abatement. “Nearly all the office building archetypes they looked at, they found that they could reach the targets with a positive net present value. And they also found positive internal rates of return for like 45 of the 50 archetypes they looked at.”

Mechanical contractors have to develop allies and partners and learn which doors to knock on to unleash the billions in supports that are available right now, Gustafson said. The scorecard of key actors in the sector includes utility companies, government, financiers, industry advocates and product and service providers.

“The mechanical contractors are the products and service suppliers,” Gustafson said. “Really nothing is going to happen without you guys.”

The Canada Infrastructure Bank (CIB), which has been given the mandate to support attaining emissions goals, offers mechanical contractors several entry points into retrofit projects.

Projects will develop through CIB participation in direct investments in entities such as REITs, investment trusts, retail chains and corporations; and in project finance, through Energy Service Companies (ESCOs) and contractors, property management firms, third-party investors, and C-PACE (commercial property-assessed clean energy).

Other sources of support include on-billing financing, public sector spending and institutions such as universities and hospitals; and participation agreements.

The CIB offers incentives to push boundaries through an interest rate mechanism — financing is often directly tied to a project’s success in reducing carbon emissions. There is standardization in the savings estimates through the Investor Ready Energy Efficiency certification program (IREE).

“It makes it easier for financiers to evaluate the project,” Gustafson said of the standardization. “It also makes the underwriting easier and it allows for scale across the country.”

Become familiar with Super ESCOs, project aggregators, as a gateway to the sector, Gustafson advised. “Each one seems to have their kind of niche market.

“They’re very common in the United States, not so common in Canada, but that’s growing and a good option for building owners and managers who want to have an alternative to financing your project.”

Other strategies mechanical contractors should investigate include financial supports such as credit enhancements, incentive programs, building benchmarking and disclosure, performance standards, strategic energy management and capacity building.

Energy Star Portfolio Manager is a benchmarking tool that is more popular in the U.S. than Canada but it too is growing here, Gustafson said.

Follow the author on Twitter @DonWall_DCN

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