Achtung: Inexpensive energy is critical for economic growth !

Humans require energy. Humans in an industrialized and growing / affluent society require more energy than tribal groups with low living standards. Developing nations, be they in S-America, Asia or Africa require far more energy than before. One of my interests always has been energy, the price of energy, renewable energy, nuclear energy, energy conservation but especially solar energy.

Not sure why, but perhaps because I grew up as a son of an HVAC engineer obsessed with turning off lights in every unused room, or because we were discussing various energy options at the dinner table in my teens, or because Germans have always been an inventive lot, or perhaps because I studied under a professor specializing in nuclear energy in my early university years at the Airforce Academy and/or because I used to work for 2 years part-time at the nuclear radiation research society near Munich to top off my then very meager living standards.

The Beyer household, in about 2003, installed one of the first solar thermal systems in Canmore, AB – on our roof. I found it fascinating to have 60 degree hot free water even on a -20 day outside. The two roof mounted solar thermal panels used a glycol based loop that fed into a basement based heat exchanger that would then heat a 3rd water tank.

To this day I actively engage in energy related issues. Let me mention three:

A) the latest UBC sponsored (but misguided) district energy system that I will soon be discussing with BC’s regulated utility commission as a board member of UBC’s residents’ association. The goal of this soon-to-be-installed system in our neighborhood is to reduce “greenhouse gases” as it will eventually tie into Triumf’s particle accelerator’s excess heat. A great idea in principle, but at the expense of higher building cost, born primarily by new residents in to-be-constructed buildings, at the expense of developers that have to install hot water pipes to the 20th floor not only for showers and kitchens but also for all sub-floor heating, and at the exclusion of other modern, energy-efficient and potentially cheaper options such as tankless systems. The central district energy system provides no sub-metering and uses expensive thermal sub-floor heating, even in often unoccupied condos – not uncommon in Vancouver. I’ll report more here or on facebook as this application progresses, and why District Energy Systems are another form of big-government inspired socialism disguised as “greenhouse gas savers” or “good for the environment” and not really an energy saver.

B) We have various boiler and heating systems in our various Prestigious Properties buildings, of course and utility costs are one of our largest annual expenses. Besides water efficient toilets, showerheads and aerators, one system we tried a few years back was a heat sub-metering system in three of our buildings in Edmonton where the tenant would pay for heat independent of rent based on his/her degree of heating. This is common in Europe, but new in Canada. Due to unproven technology – later disallowed by the Alberta government actually – this system ultimately failed with some valuable lessons learned. At least today we always install at least a TechMar system to reduce boiler temperatures. A TechMar system measures the outside temperature and reduces (or increases) the boiler temperature if the outside temperature increases (or decreases respectively), common during many daylight hours or whole weeks even in the cold winters in Alberta. The result: true savings for the environment, landlords and thus co-owners/investors. Truly green: for the environment and the pocketbook !

C) Solar roof mounted systems: Two options exist, namely photo-voltaic (PV) and solar-thermal (ST). As mentioned we did a ST system in Canmore, AB and while useful, it did not provide much savings overall in terms of gas reduction, since gas prices are so low in Alberta. The return on the $15,000 investment was perhaps 1%, or $150/year, barely worth it monetarily. We are however, given the feed-in-tariff over almost 40 cents, evaluating a PV system in Sudbury, ON where we acquired in 2008, on behalf of our LP4 investors, a 93 unit 3 building complex with ample roof space. One such company we are evaluating is Grasshopper Solar. This firm offers both analysis and installation services, as well as leasing options and proven installation capabilities, not available 2-3 years ago when all the hype about solar was en vogue in Ontario. While I am not a big fan of government mandated high energy costs, I do like the incentives the Ontario government offers. We will report back here when we have concrete results.

Germany is often heralded, along with Denmark, as the king of renewables, and is used as an inspiration for other countries such as US or Ontario to invest more into solar systems or other renewables, such as wind, often under the disguise of “global warming” or to be more “sustainable” and “green” or worse, “to create green jobs”. Germany started turning way from the ample nuclear power plants in 1986 after Chernobyl’s nuclear meltdown when many German kindergardens were closed due to radiation blowing in from the exploded Russian nuclear power station 2000 km away. After the 2012 Fukushima nuclear power plant melt down in Japan the German parliament decided (after the most conservative province in Germany elected a green premier) to close all remaining nuclear power plants by 2022, roughly still 25% of the electricity produced in Germany. As such I found this article in August 12, 2014 Financial Post very interesting as it shows the enormous cost to the consumer, in the billions, associated with renewable energy. The electricity cost is roughly QUADRUPLE to QUINTUPLE what we pay here in Canada per kwh, namely roughly 40 cents per kwh whereas most Canadian provinces are anywhere from 6 to 10 cents.

Since a lot of energy is required for a high standard of living, high energy costs act like another tax. One of the core reasons why the US and Canada have a better economy than Europe is primarily the lower cost of energy. This is the key reason why I (and many others) believe Ontario is on the wrong path, not only with excessive debt and deficits but primarily because of the highest energy costs in North America, destroying its energy intensive manufacturing industry, tripling its electricity price in about a decade.

Often I can only chuckle at the feeble attempts in Canada – heralded as high tech or new or innovative –  to reduce “greenhouse gases” or be more energy efficient as anything attempted here has usually been done elsewhere, such as LED lighting, escalators that turn off when not used, lights that turn off when no one is in the room, photo-voltaic subsidies, geothermal systems, sub-metering of water or heat recovery from sewage.

As you know, we invest where there is economic growth, and economic growth is usually dependent on abundant and relatively cheap energy (and not government meddling at huge tax payers’ expense in the energy sector). Once certain energy sources are too expensive, the market will adjust; no need for big government to lead the way with another form of taxation !

 

Thomas Beyer, President
Prestigious Properties Group
T: 403-678-3330 or 604-564-7673