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Financial Considerations I Annual Operating Expense Impacts <br />Annual Operating Expense Impacts <br />Electrification & Building Utility Cost Impact <br />Electrification can lead to increased annual utility costs due to the existing utility rate structures, <br />where electric demand charges are high and the cost per unit energy of electricity is typically <br />higher than natural gas. Specifically for Xcel energy, electric demand charges($/kW) are <br />particularly high. This makes demand reduction strategies particularly important. Electric energy <br />($/kWh) charges for Xcel are lower than most utilities, but are still approximately 50 % higher than <br />gas on a $/kBtu basis. <br />Building Demand Charges <br />Hybrid gas systems will also provide value by reducing annual demand (kW) costs in comparison <br />to an all -electric alternative. Gas -backup systems have the option to lockout the primary heating <br />(heat pumps)when temperatures are lower to avoid potentially costly demand (kW) charges. This <br />strategy can help alleviate some of the demand penalty associated with the all -electric option, but <br />it will also incur slightly more energy usage and more fossil fuel combustion. <br />Renewables <br />Renewable PV systems account for the majority of the utility cost savings at the building level. <br />Adjusting utility rate schedules based on the recommended PV array was analyzed as part of this <br />study. <br />Efficiency &Load Reduction <br />Efficiency & load reduction measures typically have positive utility savings as they do not involve <br />fuel switching. <br />Co -Benefits & Avoided Costs <br />Additional benefits realized through the process of electrification. Annualized co -benefits and <br />avoided costs are shown in the figure to the right. <br />Annual Savings Over Time <br />(2024-2040) <br />Total Annual Utility Savings w/ <br />Co -Benefits & Avoided Costs($) <br />$500k <br />$400k <br />$300k <br />$200k <br />ME <br />. Fleet Annual Fuel Savings($) <br />.Total Building (PV + Electrification + Efficiency) <br />Utility Savings ($) <br />Total Annual Utility Savings <br />w/Co-Benefits ($) <br />2023 2030 2035 2040 <br />CITY OF LOUISVILLE I FINAL REPORT V3 1 INTERNAL DECARBONIZATION PLAN 124 <br />37 <br />