5. Conclusion & Recommendations
A business case is an assessment of a business opportunity that culminates in a Go/No-Go decision on whether a company should attempt to solve a market problem by producing a product – in this case, standardized energy retrofits – that will successfully compete with other products in the market. In the absence of a “company”, the City of Windsor has stepped up to consider the following market problem and solution.
5.1 The Market Problem
The current energy efficiency retrofit market for homeowners and contractors is relatively unattractive. From the perspective of the contractor, the effort to prepare customized proposals is high and the closing rate is low. Low volumes and the fact that every project is specific to each household means that material costs are expensive and performance guarantees are risky. From the homeowner’s perspective, obtaining understandable bids from various contractors is burdensome. They are responsible for finding their own sources of funding based on their individual credit rating. Finally, the low volumes result in retrofit costs that typically exceed the value of the energy saving, even over many years.
5.2 The Product Solution
The proposed solution is to offer standardized energy retrofits to homeowners at high volumes. Contractors benefit from increased project predictability, improved margins and vastly higher project volumes. Homeowners benefit from a simplified transaction, guaranteed pricing, lower cost pre-financed retrofits and a simple billing and payment mechanism.
5.3 Conclusion
A business case is a description of how a business intends to generate revenues and earn a profit. The case models the revenue streams and costs the business will have. The case is based on reasonable assumptions made about consumer behaviour, the economy and the competitive environment. All business cases have an element of risk because sometimes the assumptions used turn out to be wrong.
Based on the analytical findings and stakeholder engagement, the PWT concludes there are reasonable grounds to fully implement the Residential Deep Energy Efficiency Retrofit Program. This conclusion is made with the understanding that the Entity established to administer the program would need to complete a final Business Plan and gain approval to proceed. However, without establishing an Entity with a mandate to deliver high quality, standardized residential energy efficiency retrofit packages to most Windsor homes, the City’s energy and efficiency goals, as approved in the CEP, are unlikely to be realized.
5.4 Recommendations
The PWT recommends that City Council:
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Endorses the Final Report of the Project Working Team: Windsor’s Residential Deep Energy Efficiency Retrofit (R-DEER) Business Case.
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Incorporates a Municipal Services Corporation to serve as the Program Administrator with a mandate to develop a R-DEER Business Plan.
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Applies for grants including the FCM Community Eco-Efficiency Accelerator program funding to support program set-up and launch, including the development of a final R-DEER Business Plan.
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At the appropriate time, enacts an LIC By-law and enters into an agreement with the Municipal Services Corporation, with appropriate terms and conditions, to make optional LIC financing available to homeowners participating in the program.