The Corporation of the Town of Milton

Transcription

1 Report To: From: Council M. Paul Cripps, P. Eng., Commissioner, Engineering Services Date: July 23, 2018 Glen Cowan, Director, Finance Report No: Subject: Recommendation: LED Streetlight Replacement Program THAT Council approve the single source award(s) to Milton Energy and Generating Solutions Inc. (MEGS) for the installation of an estimated 2,851 Light Emitting Diodes (LED) luminaires to replace existing cobra head fixtures at an estimated cost of $2,373,165 (excluding net HST), as well as on-going software licensing and maintenance at an estimated annual cost of $11,000; EXECUTIVE SUMMARY AND THAT subject to review by the Town s legal Counsel, the Manager, Purchasing and Risk Services be authorized to execute the contract(s) as outlined by the purchasing bylaw, and the Mayor and Town Clerk be authorized to sign any required paperwork; AND FURTHER THAT the project budget for the Streetlight LED Replacement (C410201) be reduced by $2,394,022 (from $5,191,552 to $2,797,530) through a decrease in the budgeted debenture financing. Light Emitting Diodes (LED) lighting on municipal roadways provides an opportunity to introduce adaptive controls, reduce greenhouse gas emissions and realize savings over the lifespan of the equipment. Given the limited number of manufacturers of LED decorative light fixtures, the Town will proceed by primarily replacing cobra head fixtures at this time. MEGS undertook a request for proposal process that identified Ducon Utilities Ltd. as the preferred vendor to undertake the work. The Town will execute an agreement with MEGS, who will manage the project and report on results. Based on the replacement of an estimated 2,851 luminaires, the Town can expect initial annual budget savings of approximately $23,258, with further financial benefit once the debt has been fully retired after a 10-year term.

2 Page 2 of 7 REPORT Background The streetlight network within the is comprised of approximately 9,000 fixtures varying in wattages, styles and age. Halton Region owns additional streetlights within Town limits within certain right-of-ways. With the recent advances in technology, the use of Light Emitting Diodes (LED) has become a common and accepted practice within the streetlight industry. LED s are semiconductor devices that emit light when an electric current passes through them. They are designed for better control resulting in low current consumption and less heat output than the traditional high pressure sodium fixtures. These type of lights tend to have a long lifespan, low overall maintenance costs and result in significant energy savings. LED lighting on municipal roadways provides an opportunity to realize savings in electrical and maintenance costs over the lifespan of the equipment. In addition, LED lighting is well suited to controls. LED lighting is dimmable, rapidly turns on and to full illumination and does not decrease in service life from frequent on/off cycles. Adaptive streetlight control can be considered the first generation of smart street lighting. Adaptive controls can automatically adjust light output in response to daylight conditions or motion detector triggers, as well as scheduled output during specific periods. Discussion In order to best facilitate the design and replacement of the existing inventory of streetlights, the Town entered into discussions with Milton Hydro to take advantage of their expertise in the areas of streetlight design and energy savings. As a result of those discussions two important decisions were made; 1. Given the limited number of manufacturers of LED decorative light fixtures (coach lights) it was determined that the Town would only proceed with the conversion of existing cobra head fixtures, primary located in the older parts of Town as well as along collectors and minor arterials at this time. In addition, as certain areas of Town are serviced by streetlights that are out of date, or no longer manufactured, these fixtures will also be replaced and upgraded to LED. As well, conversion to LED in several Town-owned parking lots (example Milton Sports Centre) will also be considered. The replacement of the coach lights may be undertaken at a future date when a greater number of suppliers are available and greater cost savings may be realized.

3 Page 3 of 7 2. Milton Hydro (under their affiliate corporation Milton Energy and Generation Solution Inc. (MEGS) will manage the project on behalf of the Town, ensuring that all work is done to current electrical standards and that the projected energy savings are realized. Subsequently MEGS issued a Request for Proposal (RFP) for companies interested in providing all of the necessary services to undertake and complete the supply and replacement of the existing Town owned cobra head and outdated fixtures. It should be noted that Halton Region is also expected to undertake the replacement of cobra head fixtures on Regional roads, under a separate agreement with MEGS. Six responses were received by MEGS as a result of the RFP, four of those respondents were invited to set up pilot demonstration projects on both local streets and Regional roads to demonstrate; Lighting levels, Energy savings and, Disbursement patterns As a result of the bid analysis and the demonstration pilots, MEGS identified Ducon Utilities Ltd. as the preferred vendor. Ducon has a long history working for the Town and is very familiar with the Town s standards and equipment in the field and are therefore acceptable to the Town as the contractor for this project. One of the important features of the recommended streetlight system that is included in the specifications is an adaptive management system. This system will provide the Town with the ability to control lighting levels via a wireless network generating the following benefits: Further energy savings through the dimming of streetlights. During the initial years after installation, new fixtures routinely generate higher than required lighting levels. The adaptive management system allows the Town to reduce the light generation and thus reduce energy consumption during these periods. Remote lighting control to facilitate operational needs. This would allow for lighting levels to be adjusted for special circumstances such as public events or inclement weather. Identification of outages in the system reducing the response times for repairs, improving customer service. Establishment of a Town wide network would be another step in moving towards a Smart City or Intelligent Community. Control systems have evolved to become the base platforms for intelligent systems. New applications are being considered and investigated utilizing sensors and actuators for uses such as; o Monitoring parking, o Wi-Fi hotspots in public spaces,

4 Page 4 of 7 o The creation of electric vehicle charging stations. However, each of these applications would have to be thoroughly reviewed and a proper business case investigated before being approved and implemented. The table below summarizes the energy savings that can potentially be achieved through the conversion, based strictly on consumption differences between the existing fixtures and LED. It is important to note that the estimates below exclude the further savings that may be achieved through metering/dimming of the new LED installations, as those savings will be further evaluated in the next steps. The composition of fixtures by wattage will also be further refined through the more detailed work involved post contract award. Estimated Energy Savings per Fixture (by wattage) Fixture Wattage Cobra Head (existing) kwh Number per of year** Fixtures Energy Consumption* Total annual kwh Fixture Wattage LED (proposed) kwh Number per of year** Fixtures Total annual kwh , ,401-80,268 $ 10, , ,227-8,103 $ 1, , ,295-7,096 $ , , ,543 $ 23, , ,278-2,978 $ , ,013-3,995 $ , ,150, , ,954 $ 101, , , , ,525 $ 38, , , ,976-49,144 $ 6,634 Total 6,833 2,851 2,317,808 Total 3,193 2, ,203-1,368,605 $ 184,762 * Value of savings from energy consumption only. Other financial differences (example: maintenance and replacement) are addressed in Financial Impact section of the report. ** Assumes 12 hours per day, 365 days per year. Difference in annual kwh Estimated Savings (at $0.135 per kwh) In addition to creating cost savings for the Town, this initiative will support energy conservation and generate environmental benefits through greenhouse gas (GHG) emission reductions. Should the recommendations in this report be approved by Council, staff will prepare and execute an agreement with MEGS for the installation of the LED lights and any resulting on-going software cost to support the system. As noted above, MEGS will also be responsible for ensuring that the projected energy savings are realized, and therefore reporting will be provided to the Town to demonstrate the extent of estimated

5 Page 5 of 7 energy and cost savings achieved. The Town will receive warranty coverage of 1 year for defects relating to workmanship, as well as a 10 year manufacturer s warranty on the fixtures. Subject to approval by Council, Milton Hydro expects installation of LED may be able to proceed as early as the fall of Financial Impact Based on the results of the RFP process undertaken by MEGS, along with the other costs quoted by MEGS, the estimated contract value for replacing 2,851 existing cobra head fixtures with LED fixtures is summarized as follows: Estimated Contract Value (excl. HST) Luminaires $1,684,329 Electrical 850,225 Pilot Costs 84,960 Energy Conservation Incentive (246,349) Subtotal $2,373,165 A budget of $5,191, 552 has been approved by Council for the LED initiative with funding from debentures and a transfer from operating. The Town will revisit decorative light fixtures (coach lights) at a future date once the market has further evolved. As such, the project budget will be reduced by $2,394,022. The remaining balance of $2,797,530 provides for the contract award to MEGS, net HST, a 10% contingency, as well as the internal staff and financing costs associated with the project. The expected operating budget impact associated with the award is also outlined below based on the projections provided by MEGS and the Town s projected financing cost. Estimated Annual Savings / (Cost) Annual Energy Savings $184,762 Additional Annual Energy Savings (metering / dimming) 74,987 Annual Maintenance Savings - Luminaires 60,000 Annual Maintenance Savings Wiring 30,000 Less: Annual Software Costs (11,000) Less: Annual Debt Charge / Transfer to Reserve* (315,491) Total $23,258 * Value represents debt charge for a 10-year term, after which it may be converted to a transfer to reserve to fund future replacement or investment in LED assets.

6 Page 6 of 7 It is important to note that the net savings of $23,258 are estimated based on the issuance of debenture with a term of 10 years. As the lifespan of the LED assets will extend beyond that timeframe, the Town can expect to have the opportunity to reinvest further savings once the debt has been fully paid, thereby creating additional future benefit. Adjustments will be made as part of the 2019 Operating and Capital Budget to reflect the savings and costs on the individual line items noted above. As a number of estimates have been made in the capital and operating figures presented above, in order to provide some additional context with respect to potential variations, a sensitivity analysis was undertaken and is included as Appendix A. It shows that hydro rates and the initial capital cost will have the greatest influence on the financial results of this initiative. Further LED replacement within the Town (example replacement of existing coach lights) will be dependent on approval of funding along with an updated business case analysis. The reporting provided from MEGS related to the results of this initial LED implementation (i.e. confirmation of the final number and composition of streetlights that have been converted along with the associated costs and savings) will prove important to informing the Town s future decisions on LED expansion. Respectfully submitted, M. Paul Cripps, P. Eng. Commissioner, Engineering Services Linda Leeds, CPA, CGA Deputy CAO/CFO For questions, please contact: Paul Cripps x2501 Attachments Appendix A: Sensitivity Analysis CAO Approval William Mann, MCIP, RPP, OALA, CSLA, MCIF, RPF Chief Administrative Officer

7 Page 7 of 7 Appendix A: Sensitivity Analysis Estimated Annual Difference from Description Savings / (Costs) Base Scenario Base Scenario $23,258 $0 Hydro Rate - 10% Increase $54,548 $31,290 Hydro Rate - 10% Decrease -$8,033 -$31,290 Energy Reduction Realized - 10% Surplus $37,271 $14,013 Energy Reduction Realized - 10% Shortfall $9,245 -$14,013 Capital Cost - 10% Decrease $54,807 $31,549 Capital Cost - 10% Increase -$8,291 -$31,549 Number of Luminaires Replaced - 10% Decrease $35,741 $12,483 Number of Luminaires Replaced - 10% Increase $10,775 -$12,483