Project Green District Energy Feasibility Study - Partners in Project ...

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TRCA Pearson Eco-Business Zone District Energy Feasibility Study 10 April 2012 Appendices 20 Appendix J: Canadian Experience of DES Development 20.1 Larger New DE Utility Systems Table 30 lists owners and operators of the larger utility DES that have commenced operation in Canada within the past two decades. They are all planned to serve over 20 MWt of heating or cooling demand (MWt). Smaller systems will also be discussed in the next subsection. The Systems shown in Table 4 are a comparable size and complexity to that envisaged for the Project Green DES and offer relevant experiences. DES Name COD (*) Owners and Operators, where different Calgary District Heating 2010 ENMAX Corporation, owned by the City of Calgary Southeast False Creek Energy Utility 2009 City of Vancouver Regent Park Energy 2008 60% Toronto Community Housing Corporation (TCHC, an agency of the City of Toronto), 40% Corix Utilities Enwave, Deep Lake Water Cooling 2004 Ontario Municipal Employees Retirement System (OMERS) (majority), City of Toronto (minority) Markham District Energy 2001 Town of Markham, through Markham Enterprises Corporation (a for-profit corporation) District Energy Windsor 1996 City of Windsor, through Windsor Utilities Commission – distribution assets only; the EC is owned by OMERS Table 29 Ownership of Larger DES *COD = Commencement of Operation Date Only “utility“ DES serving multiple independent customers are included in this review, as opposed to DES that serve multiple buildings all under common ownership, e.g. at a university or military base. The business dynamics are different. The utility type of DES is most relevant to this study. Examples of private acquisitions of established DES during the previous two decades include Charlottetown, London, Cornwall, Windsor (the Energy Centre) and Enwave in Toronto. In some cases, private investment provided capital needed for a specific integration or expansion opportunity, e.g. in the cases of Charlottetown and Enwave (for deep lake water cooling). The following notes on the experience of the development of the new DES listed in Table 4 provide context for the Project Green DES. 20.1.1 Calgary The initial impetus for the DES in Calgary came from the City Buildings Department related to City goals for GHG reduction and energy self-sufficiency for City owned buildings. The original 150
TRCA Pearson Eco-Business Zone District Energy Feasibility Study 10 April 2012 Appendices plan was to serve a group of downtown municipal buildings. The initial ownership model was seen as either a City owned utility or as a division of ENMAX Corporation, which is the City owned local electricity Distribution Company. District heating with CHP is a complementary business to distributed generation which ENMAX was interested in developing. Hence, it became natural for ENMAX to take over development of the DES with a plan to build distributed generation in the form of CHP supplying the district heating base load. A parallel path in Project Green would be for Enersource to develop the DES. This model, where the local electricity distribution company was the vehicle that took on a DE development project was seen mostly in Ontario in the mid-90’s up to 2003. These were in Cornwall and (from a management perspective) Windsor and Sudbury, as well as in Markham and Hamilton. This type of ownership and operating model was possible, especially for relatively small projects because the municipally owned electric utilities had access to capital and could also tap federal funding, e.g. through the Federation of Canadian Municipalities. Furthermore, they had relevant utility planning and management skills. In all those cases, the initial interest arose in relation to distributed generation. But having DE as a division of an electric utility can result in limitations to growth. DE is not primarily about distributed generation (DG). It is about heating and/or cooling, mainly heating in Canada. DG in the form of CHP is just one option for heat generation and not the main focus of DE development. The business dynamics of electricity distribution and DE are different as DE is not regulated (except in BC) and is not a monopoly. DE must compete for customers and must self-generate or source locally all of its energy. It has a narrower customer base, i.e. a specific group of commercial buildings and would be a small component of an electric utility, possibly suffering from its status as a relatively low priority for the larger utility. In the case of Markham, when Markham Hydro became part of PowerStream owned by Vaughan, Markham and Barrie, the DES was left with the Town of Markham. 20.1.2 Southeast False Creek The City of Vancouver has embarked on revitalization of former industrial lands known as Southeast False Creek (SFC). Some of the lands are owned by the City. After considering other ownership models a Neighbourhood Energy Utility (NEU), directly owned and operated by the City was selected as the preferred option to supply heating in SFC. This decision may have been influenced by the imperative to commence operations in time for the 2010 Winter Olympics. Another factor favouring public ownership in the early stages is that while the Olympic Athletes Village was committed, the rate of build-out of the rest of SFC was uncertain. The cash flow for a DES is uncertain in these circumstances. The DES will become more attractive to private investment as the market develops over the years. BC is the only Province where DE is regulated. City owned DES in BC, such as the SFC NEU, are regulated by their respective city governments. DES not under municipal ownership (such as Central Heat in Vancouver and Dockside Green in Victoria) are regulated by the BC Utilities Commission. 151
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