Flowdown (by watersaveco)

Venture partners: Civic Ventures, Globe, DKGI Inc.

Contact person: Derek Ballantyne

What is the project?

Flowdown’s project aims to reduce water consumption in older apartment buildings by 25% over a 5 year period. Targeted to high-rise buildings owned and operated by private landlords, Flowdown can, over time, be extended to the Golden Horseshoe area.

Potable water consumption has three impacts on the environment –

• impact on fresh water source supplies (aquifers and surface water systems);
• energy consumed in treating potable and waste water;
• chemical impacts from water treatment.

Reducing water consumption has a beneficial impact in all three areas.

How does it work?

Flowdown will contract with interested landlords to reduce water consumption in their buildings by:

• installing an electronic water  meter
• measuring water usage and variations including leakage
• reducing  behind the meter leakage
• installing water saving features
• monitoring results and re-commissioning systems where necessary

Flowdown will provide:

• the ability to analyze and determine where water leakage / high consumption exists
• develop business-case approaches for each building
• capitalize the necessary work to achieve savings
• Idea is to capitalize the water reductions
• share in the savings  achieved to achieve a return on investment
• re-deploy earned funds to green programs
• train and employ people living in the communities where the program is targeted – creating green jobs, transferable skills, and local economic development impact

Why is this good for the environment and is a sustainable business?

Toronto consumes close to 400,000 Mega Litres (ML) per year.  438 billion litres are treated each year. A little over half of this consumption is from residential usage. A reduction in 1 ML in consumption not only reduced the impact on source supply, but also results in an estimated reduction of 0.31 tonnes of CO2. Reducing both consumption and treatment extends the life of current infrastructure and creates less impact on the built environment.

Assuming that Flowdown can reach 10,000 units (a modest number of older multi-unit buildings) the water consumption savings are conservatively estimated at over 100 ML.

• This will result in a saving of 3.1 tonnes CO2 per annum
• Specific savings to each building owner in the Toronto area
• A business employing up to 20 people including installers
• A business that will then  expand the energy efficiency options of multi residential buildings

Why older apartment buildings?

There are close to 1,000 older concrete high-rise structures in Toronto, and close to 2,000 in the Golden Horseshoe area. The deficiencies and the need for capital investment in these buildings are well documented through the work of the Tower Renewal initiatives. Some buildings will be refurbished; others will have energy improvements made driven by need for renewal of mechanical equipment and an ability to raise and invest capital to achieve long term reductions in operating costs. Few buildings have targeted water consumption in particular, despite there being a good business case for it, and the ability to have impact without major building system changes.

Owners and operators of older high-rise and mid-rise buildings often do not have the capital available to invest in energy and water efficiency improvements. Capex spending is constrained by revenues, and in some cases competing demands for limited revenues. Providing landlords with an ability to make operating improvements (and therefore cost reductions) with no impact on their operating revenues and draw on capital resources is an important condition to gaining acceptance of the need and desirability of making these improvements.

Assuming that Flowdown can reach 10,000 units (a modest number of older multi-unit buildings) the water consumption savings are conservatively estimated at over 100 ML. This is likely an underestimation of efficiencies that can be achieved. The City of Toronto has estimated savings of about 64 m3 of water per suite per year using 6 litre/flush ultra low flow toilet.  At a rate of $2 /m3, the annual savings per suite is about $128.  Rate is expecting to escalate at 9% annually for multi-res owner.  Assuming an install cost of $250 (contractor labour and materials), it will be payback in 2 years. This installed cost will be lower where materials can be bulk purchased and large scale changes planned in a coordinated fashion. 

What is the evidence this works?

The City of Toronto Water has documented the impact of water efficiency improvements and the impact on GHG emissions. Over the past several years, Toronto Community housing has implemented a water program that measures building consumption (and leakage), implements in suite and building system improvements, and monitors the results. These results are significant – in some cases water consumption savings as high as 35%.

There are two distinct areas of water consumption in multi-unit buildings: in-suite and building plumbing and mechanical systems. Experience shows that while in-suite improvements are relatively easy to make, the efficiency results must be sustained by regular monitoring and re-commissioning of toilets, shower heads, etc. Building systems are not generally examined for water efficiency. Toronto Community housing discovered that in its older multi-unit buildings there was significant system “leakage” through malfunctioning valves, plumbing problems and related system issues. By monitoring water consumption through sub-meters, building system leakage can be detected and corrected.

What is the planned approach?

Flowdown will contract with interested landlords at the outset. Flowdown will, at its own expense analyze the building, develop a business plan, and provided that there is a threshold saving to be achieved, initiative the water efficiency work in conjunction with the landlord. Flowdown will have at risk its initial analysis work, and the cost of improvements up to the point of repayment through savings achieved.

Why are landlords not doing this on their own?

There are limited City programs to encourage water efficiency. The recent elimination of rebates for high efficiency toilets, and operating cuts that impact education programs have limited the ability of the City to change consumption through incentive and influence.  As noted above, landlords have competing demands for Capex investment, and water efficiencies do not generally rise high enough on a priority list to be implemented, and therefore the environmental impacts achieved (as well as landlord savings in operating  costs).

Why Flowdown?

Flowdown is an initiative to commercialize a portion of the water efficiency investments that can be made in Toronto. The goal of all parties is to generate environmental benefits, as well as a revenue stream that is re-invested in environmental improvements in residential buildings, and in particular in the non-profit housing sector, which has limited or no access to capital for environmental upgrades.

Next steps

There is ample evidence that water efficiency provides sufficient savings to offset capital costs required to achieve these savings. The avoided cost of water consumption will accelerate over time as water rates are planned to rise in Toronto.

Three key areas of this idea need testing:

• What is the potential market and how is it best defined?
• What are the legal and operating structures required to achieve the goals of Flowdown and engage willing participants in the building owner/operator community?
• Detailed analysis of sample buildings to develop the business and financial models.

Can it be financially sustainable?

Evidence that significant savings can be achieved from water efficiency in multi-unit residential buildings is clear. The challenge is to have the ability to determine how to achieve these savings economicially and to have sufficient capital to leverage these savings.

Flowdown will require start up funds to complete market research and develop the technology and business partnership model to implement with building owners and operators. Direct investment capital can be leveraged on the basis of the proven savings and by subordinating these to third party lenders if required. Given a sufficient volume of up-take and the relatively quick generation of a positive cash flow form savings, it is estimated that Flowdown can operate on a positive cashflow basis within two years, and within four years generate income surpluses for re-investment in sustainability initiatives. Further testing of the models, and assessment of two or three sample buildings, combined with the already existing data on water efficiency will allow Flowdown to complete a full scale business plan. This plan can then be "bench-tested" on a building, with incremental implementation once the appropriate methodologies are fine tuned. This approach reduces risk of putting out a large amount of capital on un-tested approaches, and allows some portion of the initial work to be funded form realized cash-flows.

The venture team is led by well seasoned managers, with experience project conception, project deveopment, operational management and financial management in start up enterprises. In further development of the business plan, there may be an advantage to seeking out additonal technology or financing partners, willing to share in the capital risk for a portion of the proceeds.

Where is the innovation?

The technologies and approaches to be used in Flowdown are not new. What is innovative is the collaboration between non-profit and for profit (but non-profit motivated) entities that are pushing to occupy a business space that has currently has few players in. The opportunity to generate environmental impact together with the potential to raise additional funds for future initiatives is based on leveraging the skills, experience and commitment of players in a variety of organizations. This project will, on a commercial basis, deliver results that governments have been relied on to achieve but are no longer able or willing to fund.