Property Biz Canada

Building Owners Have Mixed Reaction To District Energy

Proponents of district energy say reluctance among some property owners and managers is one of the obstacles to growth in the usage of such systems in Canada.

It was one of issues raised at the Canadian District Energy Association’s annual conference held in Ottawa last week.

District energy refers to the use of heating and cooling systems that serve a community or collection of structures, as opposed to buildings having self-contained equipment to meet such needs.

While district energy has been around for a long time, there’s a heightened focus on it now as developers and regulators strive to achieve greater efficiency — for environmental and financial reasons — in newly built structures and renovations.

Building Owners Need Convincing

Dave Rehn who is the vice-president of generation and wholesale for Enmax, a city-owned utility in Calgary, said he has a tough time convincing customers of the business case behind hooking their buildings up to a district energy grid.

“We find that there’s a lot of inertia against (district energy) on the part of building owners, whether it’s new construction or replacement,” he said during a panel discussion at the conference. “We find that we can show economically that it makes sense, but they’ve got relations with suppliers and whatnot that they do not wish to break.”

He added that to connect a building to district energy is an unknown factor for many developers, who fear what the consequences might be for getting their projects done on time.

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Many Benefits of District Energy

Among the benefits touted by district energy supporters is that connecting to a district-energy grid can reduce the required footprint of a building because it does not need to house heating and cooling equipment. In some jurisdictions, there are financial incentives available for smaller footprints because it fits the municipality’s objective of higher-density development. As well, the responsibility for maintaining the heating and cooling systems can often be offloaded to another authority that’s responsible for the district energy grid.

Rehn also said that developers should realize that benefits are something to be had over the long-term.

“What we’re really talking about is a 50-year business (plan),” he said. “This is not something that you’re going to find in the first quarter of operations you’re wildly successful in.”

Enmax has a district energy facility in downtown Calgary that started operating in 2010, which it says has the capacity to heat 10 million square feet of existing and future residential and office buildings. It does this with pipes that circulate hot water to connected facilities.

District energy systems can also be run on steam, natural gas, biomass or other energy sources, and can be adaptable to different things, which is also one of such systems’ touted benefits.

Should District Energy Be Mandatory

There was discussion during the conference of ways to encourage property developers and operators to connect to district energy grids, and whether it should be voluntary or not.

The Canadian District Energy Association’s stated position is that, by 2030, 30 per cent of Canada’s buildings should be connected to a district energy grid and such systems should become part of all urban planning.

Rehn said that while the City of Calgary is enthusiastically promoting district energy, it has refrained from making it mandatory out of fear such policies would hurt economic development.

Jan Carr, a director with Guelph Hydro Inc. in southern Ontario, said it might be warranted to require new developments in some areas to hook up to district energy and charge a tariff up front to pay for the infrastructure.

“It might be a good idea to basically say this area of land is going to be served by district energy and this is the tariff,” he said during a video presentation shown at the conference in Ottawa last week.

“In the early stages, you might want to be a bit more prescriptive,” Carr said.

Public Works and Government Services Canada A Major Ally of District Energy

The cause of district energy has at least one major ally and user — Public Works and Government Services Canada, which among other things, manages or owns federal facilities throughout the country.

Currently, Public Works operates a system in the Ottawa area that involves seven heating-and-cooling plants, five distribution networks and 40 kilometres of pipeline that serve more than 100 buildings, including the Parliament Buildings.

The department is currently considering a major overhaul of the system to find further efficiencies, both environmentally and financially.

John McBain, assistant deputy minister of Public Works’ real property branch, said partnerships with the private sector would be key to this.

He said two separate requests for information in recent years have shown significant interest from the business community in participating in the project, and some have suggested expanding district energy connections “beyond the federal portfolio” of buildings.

“A broader district energy solution would help green the national capital and be beneficial to the local community,” McBain said during the district energy conference.

However, he added that “this project, like any other, is part of other government considerations. Our government has clearly enunciated its deficit-reduction objectives and plans, which are now being implemented. As a result, the current economic conditions have created an environment in which requesting project funding requires increased efforts.”

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