October 14, 2016

Interview with CAE’s David Héon

In 2016, energy efficiency and industrial production go hand in hand. CAE has demonstrated this with an Integrated Energy Performance Contracting (IEPC) project, which proved to be an excellent investment for its flight simulator factory. The results speak for themselves: recipient of CIPEC’s Leadership Award, a 30% energy bill reduction, simpler maintenance, increased comfort, and so on. In order to better explain the benefits and advantages of this integrated project, we’ve gone to the source—the man who propelled this project from the inside, David Héon: CAE’s Manager of Facility Services / Health, Safety and Environment. Olivier Matte, Ecosystem’s Training and Awareness Coordinator, had the honor of speaking with him.

Olivier Matte: “David, you headed the integrated energy performance project that was implemented with Ecosystem’s help. Can you sum it up in your own words?”

David Héon: “At our building in Montreal’s Saint-Laurent neighborhood, we installed thermal plants, reduced the number of ventilation units on the roof, modernized our controls, and added heat recovery equipment. All of these changes have yielded very impressive results. In the first year following project implementation, we reduced our energy costs by 27%, and we are currently projected to exceed the 30% mark in energy savings for our second year.”

OM: “Before the project, what were the challenges you faced?

DH: “Employees had been complaining about comfort levels. They were saying, ‘It’s too hot; it’s too cold…’ The building had over 160 uncoordinated rooftop units, so there were frequent problems with heating and cooling equipment working against each other.

Maintenance became a challenge with our small team. It was difficult to provide good service and to replace, for example, a compressor on the roof or motors. These pieces of equipment are very large, and in order to repair them we needed a crane, handlers, refrigeration engineers, etc. Consequently, our reaction time was very slow.

Moreover, our stock of equipment was old. Ninety percent of the rooftop units were more than 15 years old. Some of them were even 30, 35 or 40 years old. Our team kept them functional for a very long time, but finding replacement parts became challenging. When we called suppliers, they would often reply, “You still have that equipment?”

OM: “At what point did you realize that an energy efficiency project could solve these problems?”

DH: “The maintenance challenges we constantly faced finally led us to one conclusion: we had to completely reconfigure all of our heating and cooling systems. Undertaking a comprehensive project with an integrated approach, therefore, became an interesting option. It required a significant investment, but the project was eligible for subsidies from Hydro-Québec and Gaz Métro. Furthermore, the savings generated are so significant that the project will eventually pay for itself – in this case, within the next 7 years. So when we talk about generating value, which was the main criterion for CAE, we can say that this project was an exceptionally smart investment.

OM: “And the savings were even guaranteed…”

DH: “Exactly! We were the ones investing, but the energy efficiency company guaranteed the subsidies and maintenance savings. When I showed the case study to the management, it was easier to reassure them because the risks were even lower than with a traditional project. CAE had done more traditional projects in the past, but there had never been any difference in our energy bills. The integrated project we implemented has much more credibility since the rigorous measurement and verification process confirms that the savings are real.

OM: “At CAE, what was the process for approving the capital for the energy efficiency project?”

DH: “At CAE, optimizing the capital envelope is very important. We invest a lot each year. During a round table, we compare all of the potential projects that could benefit the company, including those submitted internally. The energy efficiency project was quickly selected because its rate of return was advantageous compared to other proposed investments. Moreover, because the savings were guaranteed, the risk level was very low.

OM: “What were the steps following CAE’s acceptance of the proposed model?”

DH: “As soon as the capital was approved, the first thing I did was secure an accompanying firm: TST Energy Systems. They helped us create an RFP that laid out the main parameters such as maximum investment, the desired rate of return, etc. The energy efficiency firms bidding on the project could decide which measures they wanted to propose.

OM: “Did the net present value enable you to compare projects that were really different?”

DH: “Absolutely. How do you compare firms when one proposes geothermal solutions, another solar walls, and yet another a water-glycol network? By referring to the net present value, we can compare projects whose costs and returns on investment are very different from one another. Ecosystem’s project generated the greatest value for CAE. And that’s why it was chosen.

OM: “If you had to summarize the lessons you learned from this project, what would they be?”

DH: “First and foremost, you can’t be afraid of the sizeable investment that this type of project implies. Because we had considerable challenges and long way to go at CAE, it gave us an incredible opportunity to really reconsider the configuration of our mechanical systems.

In addition, environmental considerations are becoming increasingly important. Rising energy costs and regulations about refrigerant phase-out provide us with plenty of motivation to undertake energy retrofits.

If you go ahead with a major project, then I strongly recommend you enlist the services of the best in the industry and choose a reliable company that is known for delivering results. I also recommend working with a third-party accompanying firm that can guide you throughout the entire process, and can ensure that savings are actually achieved and validated according to international protocols recognized by the industry. For this project, we worked with TST Energy Systems, and also with l’Association des gestionnaires de parcs immobiliers (AGPI), who helped us write a standard agreement.

Five years later, we’re more knowledgeable about guaranteed return projects. We are also very proud of this progress.

Interested in learning more?