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

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.
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