2011-Q4

Q4 2011 Newsletter

Welcome to TSI's Q4 2011 newsletter, a quarterly publication distributed to our valued clients, strategic partners, and colleagues. Highlights of this issue include:

  • Feature Article: Impacts of the Jenkins Report on the SR&ED program and the innovation landscape in Canada
    • The highly anticipated Jenkins report has been released that includes recommendations to parliament on how to modify the SR&ED program. Find out how this might impact your organization.
  • Company News: TSI announces energy cost reduction consulting services
    • TSI is pleased to announce the launch of a new service offering that helps companies reduce their energy costs via energy audits, energy reduction initiatives, and fixed/variable energy contracts.
  • Funding Program Profile: saveONenergy Demand Response Program
    • Profiling the save-On-energy Demand Response program designed to incent and pay commercial and industrial companies for curtailing power usage during peak demand periods.
  • Industry News: New funding program announcement - IRAP Digital Technology Adoption Pilot Program
    • The National Research Council has released preliminary details regarding the launch of the new DTAPP program to help companies adopt digital technologies to help improve productivity. Find out if this program can benefit your organization.

Best regards,

Jason Schwandt, Vice President, Business Development

Feature Article: Impacts of the Jenkins Report on the SR&ED program and the innovation landscape in Canada

By Jason Schwandt

Recent reports from the Organisation for Economic Co-operation and Development (OECD) have suggested that Canada's position in terms of global business expenditures on R&D ranks well below the average for OECD countries (20th amongst 38 developed and developing countries), and is continuing to worsen. As a result, in October, an expert panel commissioned by the government provided recommendations to Canadian parliament in terms of shaping Canada's innovation landscape that call for a simplified and more focused approach to the nearly $7B of annual R&D funding distributed by the federal and provincial governments. Recommendations were derived from consultations with key stakeholders and business leaders across Canada, as well as with global innovation experts. Amongst other findings, the report concluded that "there are also significant gaps that hinder the ability of our businesses to grow and that keep Canada from taking full advantage of this country's innovations", and suggested that the federal government's Scientific Research & Experimental Development (SR&ED) program was "unnecessarily complicated and confusing to navigate". The report, along with other innovation policy analyses such as those from the Mowat Centre and C.D. Howe Institute, also suggested that although in many cases research is being conducted well in Canada, as a country we are failing to capitalize on the work and bring it to commercial success.

Important recommendations from the report that attempt to address this shortcoming, and that directly impact Canadian businesses include:

  1. Creating an Industrial Research and Innovation Council to help streamline the more than 60 R&D programs spread across 17 government departments, and to offer a more convenient method for businesses to access these programs.
  2. The suggestion to simplify application to the SR&ED program by including only labour costs as eligible expenses, and offsetting the decrease (by excluding materials, contractors, and capital costs) via increasing the funding rate. This would in many cases benefit labour-intensive organizations (such as software developers) and reduce the potential benefit to manufacturers.
  3. Reducing the refundable (cash) portion of SR&ED claims, as well as extracting more efficiencies from the program, and redirecting the savings to more direct-funded applications that would be specific to R&D and commercialization. The IRAP (Industrial Research Assistance Program) would be a prime example. For many organizations who rely on the SR&ED program to bolster cash flow, this change would represent a significant impediment.
  4. Encouragement of government to utilize its purchasing power to encourage Canadian innovation by encouragement of "home-grown" innovation as part of procurement policies.
  5. Encouragement of the Business Development Bank of Canada (BDC) to work closely with angel investor groups to help fill the funding gap for startup companies via establishment of new risk capital funds.

Over the next year, it remains to be seen which recommendations will be adopted or modified by the federal government, but it remains clear that significant change is necessary to correct Canada's current direction in terms of global innovation.

The full report is available online at www.rd-review.ca

 

Company News: TSI launches energy cost reduction consulting services

The Ontario government is forecasting electricity price increases of 7.9% over the next five years and 3.5% per year for the next 20 years to upgrade production and transmission infrastructure. In addition, many companies who operate only during regular daytime hours are now being placed on Time-Of-Use metering and pricing systems, which, given the premiums charged during daytime hours, often result in significant cost increases. As a result, TSI has launched a new service offering to assist companies to stabilize or reduce their overall energy costs. This is done by connecting them with flat rate or lower-cost variable rate energy providers, and/or facilitating cost-reduced energy-saving facility modifications.

In terms of infrastructure enhancements, it starts with helping companies obtain a professional energy audit from a qualified energy auditor (who evaluates facility lighting, windows, HVAC, equipment, energy controls, etc to identify cost savings opportunities). TSI facilitates the process, and also helps clients apply for government funding programs that co-fund the costs of the audit. In addition, once the formalized recommendations from the audit are provided, TSI can help clients to apply for government funding programs that actually co-fund the implementation of the energy-savings initiatives, as well as project-manage the entire implementation process. Clients can rely on TSI to be a cost effective one-stop-shop for energy savings initiatives, and we are excited with the explosive growth of this new service. For mid-sized companies (especially manufacturers) who utilize significant amounts of electricity, the return on invested capital for energy savings deployments is often surprisingly dramatic.

For more information on how TSI can help you via an energy cost savings or stability program, please contact TSI at 905-738-6770.

 

Funding Program Profile: Save-ON-Demand Response Program

Each quarter we profile a new funding program. This quarter, in the theme of energy savings, we present a summarized profile of the Ontario save-ON-energy Demand Response program.

Program name: save-ON-energy Demand Response Program

Description:

The Demand Response Program is an incentive program sponsored by the Ontario Power Authority to reduce demand in commercial and industrial enterprises when the power system experiences peaks in demand. Companies obtain payments by reducing demand during peak periods through voluntary or contracted participation by powering down non-critical equipment, shifting production to non-peak periods, or using electricity from an on-site generator.

Eligibility Requirements:

  1. Voluntary – earn monthly payments when you choose to participate in activation notices during peak periods
  2. Contracted – earn higher incentive rates for a firm commitment to participate in activation notices

Valuation:

Payments are subject to pricing and discounts based upon site location.

  1. Voluntary incentives: Companies can receive between $2000 and $4000 per MW of weighted average demand response provided over all periods of demand response activation, plus an additional payment for the energy diverted from your facility and delivered elsewhere of up to $170 per MWh.
  2. Contracted incentives: Companies must be operating and available during a pre-defined schedule of 1600 hours per year, in which they select their participation of between 100 and 200 hours per year. Companies receive "capacity" payments for each hour of participation, plus additional "energy" payments for the actual amount of energy curtailed during an event.

Submission requirements:

A save-On-energy application must be submitted to your local utility

Application Acceptance Criteria:

Non-discretionary. Application and compliance with requirements will guarantee payments.

For more information about the Demand Response program or other funding programs, please contact TSI.

 

Industry News: New funding program announcement: Digital Technology Adoption Pilot Program (DTAPP)

In late October, the National Research Council, through its IRAP program, released preliminary details about a new pilot funding program designed to help small/mid-size Canadian companies increase productivity through the adoption of digital technologies. Further details are expected in the coming weeks.

The pilot consists of providing financial assistance for advisory services for the selection, application and implementation of digital technologies. Through partnerships with non-profit organizations and colleges across Canada, the DTAPP program provides expertise in the digital technology adoption field. Based on your company's business improvement objectives and interest in adopting new technologies, this cost-share grant program of up to $100,000 contribution may be applicable. The maximum DTAPP contribution is 75% of eligible costs.

To be eligible, businesses must be incorporated in Canada and have less than 500 employees. Eligible costs include consultant fees related to technology selection and implementation as well as associated internal expenses (i.e. employee wages for training). The program will not fund digital technology capital costs, i.e. digital technology hardware, software and equipment.

If you agree to take part in the DTAPP, you will be expected to work with the DTAPP team throughout the process of adopting a digital technology and provide the necessary information and updates. After you have implemented the digital technology into your operations, you will be asked to provide annual updates on the impact of the digital technology on your firm's productivity, employment and FYE financial information for 3 years succeeding the end of the DTAPP engagement. The pilot ends on March 31 2014.

Contact TSI for further details about eligibility for the DTAPP program.

 

Contact Us
For more information about any of the content in this newsletter, or to arrange a complimentary consultation, please contact Jason Schwandt at 905-738-6770 x2010