Case Study - Conundrum Capital Cuts Heating Costs 23% in 1300 Apartment Suites

Case Study - Conundrum Capital Cuts Heating Costs 23% in 1300 Apartment Suites

Conundrum Capital Corp. is a private equity fund management firm that acquires and manages Canadian property assets in a range of classes.  Energy efficiency and cost control is a key part of their strategy to deliver superior returns to investors, primarily pension funds.

In early 2007, Conundrum acquired 8 high-rise apartments (1361 suites) in the Toronto area, all about 35 years old.  They immediately developed a strategy to improve the energy performance by replacing the aging heating plants.  With the help of Efficiency Engineering Inc., Conundrum considered a variety of options, ultimately arriving at an optimal custom implementation and technology approach for each site.  Design got under way in the summer and construction in the fall, managed by Conundrum’s property manager, Realstar Management Partnership. 

A capital investment of k$1,632 has decreased gas consumption by 23% resulting in annual cost savings of k$364. So Conundrum Capital, while replacing systems that were beyond the end of their useful lives, was able to simultaneously improve Net Operating Income which translates into increased property values of about k$2,350.  According Mike Thomas from Efficiency Engineering, "Conundrum has a great corporate vision and strategy.  They spent more for higher quality equipment, and that’s going to pay them back for many years."  Financial proforma and savings results are available here.
 
Savings results to the end of 2008 show weather-adjusted savings running 44% ahead of projections.  Overall natural gas savings in 2008 are 23%, despite the fact that some less efficient (yet newer) equipment was not replaced, systems were not fully commissioned through the first three winter months, and one of the buildings was not operating according to specification for much of the year.  Conundrum had optimized the energy savings in 2007 by installing building automation systems on the existing plants while the new mechanical systems were being designed and tendered, which were later reconfigured to suit the new installations.

The Conundrum projects incorporated industrial-grade vertical copper tube boilers with modulating burners.  Piping and pumping were completely reconfigured, and the chimneys were lined with stainless steel for structural protection.  For domestic hot water, most sites used semi-instantaneous heater exchanger tanks.  Large existing storage tanks were cleaned and refurbished where possible to extend the service life.  Except where new equipment was already in place, the new plants are complete replacements, using components that are more efficient and more durable than the original.

Conundrum chose managingenergy.com as their online energy monitoring system for this project, and has adopted it as a corporate standard.  Graphs of the 2008 natural gas performance results are available in PDF format.  The value of the monitoring process proved itself by identifying the performance shortfall at one of the sites as mentioned above. 

Nigel Etherington, COO at Conundrum Property Services, was pleased that early results exceeded the savings targets.  "These were big projects, with significant capital at risk, but the plan is working out well . So well, we are planning plant renewals at other properties, and with the managingenergy.com service we ensure we stay on track, improving and sustaining energy performance for our unit holders."