Natural Resources Committee on March 12th, 2009

[The Chair, Conservative, Leon Benoit]

Good afternoon, everyone. We are here today to continue with our study on the contribution of integrated approaches to providing energy services in Canadian communities.

We have four groups represented here today, with several members to each group. What I'll do is introduce the person who I believe will be making the presentation from each group and have you introduce the rest of the people you have with you. Before that, I would just like to say that we will end this part of the meeting at five o'clock. We have bells at 5:15 p.m., so we'll have about a quarter of an hour to deal with the two motions that I understand will come before the committee today.

Let's start, then, with the main agenda. From the City of Guelph we have Karen Farbridge, mayor. From the City of Vancouver, we have Sean Pander, program manager for climate protection. From Drake Landing Solar Community, we have Brendan Dolan, representative, and vice-president of ATCO Gas. From Dockside Green, we have Jamie James, representative, and partner in Windmill Development Group Limited.

As I said, as you start to make your presentations, could you introduce the others with you? I would really appreciate it. There are four groups, so I'd ask you be sure to keep your comments under 10 minutes, and if you can, to five. That would be helpful. If you can't adjust your presentations to less than 10 minutes, that will be fine, but please don't go beyond that.

We will go in the order that you are on the agenda, starting with Karen Farbridge, mayor of Guelph. Go ahead, please, for up to 10 minutes.

[Dr. Karen Farbridge, Mayor, City of Guelph]

Thank you very much.

It's our pleasure to be here. I'm joined by Jasmine Urisk, vice-chair of Guelph Hydro Inc., and Janet Laird, our director of environmental services at the City of Guelph.

Just to give you a quick orientation with our second slide, we're a mid-sized city just 100 kilometres west of Toronto. We have 121,000 residents and we are planning to grow to 175,000 in 25 years. We've been identified as an urban growth centre in the Greater Golden Horseshoe regional growth plan.

Sustainability is one of our key principles, so we're happy to be here to talk about our community energy plans that we're working on. This started in 2004, when a consortium of private, non-profit, and public sector organizations came together to develop a community energy plan. In particular, I want to note the involvement of our utilities, Guelph Hydro and Union Gas, because that has been key to us in moving forward. Together with our consulting team, Garforth International, we developed a community energy plan that was adopted unanimously in 2007 by city council.

On the next page, just very briefly, the five goals of the plan are shown. One is to be recognized as a location of choice for investment. Second is to have a variety of reliable, competitive energy, water, and transportation services for all. Third, we set a high standard, in that we want our energy use per capita and resulting greenhouse gas emissions to be less than the current global average. Fourth, we also want to ensure that our energy and water use per capita will be less than comparable cities in Canada. The last one, which I think ties into my final slide, is that all publicly funded investments will visibly contribute to meeting the four goals of our community energy planning.

The next slide graphically shows the paradigm shift that was key in the city of Guelph and that we needed to make to get to our community energy plan. We have an energy supply system where we lose up to 90% of the energy before we even get to using it in our homes and buildings. The community energy plan is about flipping that around, getting access to that lost energy, and increasing the efficiency of the energy system.

To do that, we have a series of five priorities in our order. First is energy efficiency: if you don't need it, don't use it. Next is heat recovery. If it's already there being produced and just put out into the atmosphere, why not use it for good uses? Third is cogeneration. Why waste fuel at the power plant? Generate heat and electricity at the same time and use both of them. Fourth is renewable energy. If it makes sense, go carbon-free. Finally, we're working and teaming with our utilities to invest where it makes sense to optimize the grid and energy efficiency and use.

The next page lists our strategies. I won't go through them in detail. At the back of your package, there's even more detail on how we're achieving them. The first three speak to efficiency. Then we talk to heat recovery and district energy systems. For us, biomass and solar are the most positive in terms of renewables. Then we talk about how we organize ourselves around a multi-utility and establish some scale projects that we can link across the community. This list of strategies will look different depending on what community you are and what you have in place; it would be a mixture of these strategies and different implementation plans to achieve them.

The next two slides are here to demonstrate the cumulative contribution of these strategies to achieving our goals as a community. I put them here to show you that we looked at efficiency and renewables, but they didn't add up to get us to where we needed to go. That's where the integrated component comes in. That's where we start looking at local generation and local district energy systems in order to achieve the targets that we set for ourselves. Here, you can see the contribution both to reducing our energy consumption as a community and to reducing greenhouse gas emissions as well.

It would be wrong to think that you could pull out one of these strategies and achieve the goals. They're integrated, so each one depends on the other one in terms of being successful.

To quickly summarize this plan we're working on, after 25 years we'll use 50% less energy despite seeing a growth of 54,000 people, so there's a decoupling of energy consumption from population growth. Also, there will be 60% less greenhouse gas emissions, along with an affordable energy supply to attract new investment and reduce the city's costs.

Very briefly, in some key projects that we have, the scale projects that we're working on, there are two components that are similar in each of these projects. One is that they include an integrated energy master plan and energy zoning. The other one is that they have cogeneration and district energy as part of it, therefore speaking to the multi-utility aspect of our plan.

One is with the University of Guelph. Guelph Hydro has a partnership with the university to bring in a gas-fired turbine to provide heat to the district energy system and generate electricity at the same time. You can see that there are savings for the universities and savings in emissions. There are some other benefits here, in particular for Guelph Hydro and Hydro One, in reducing load capacity in the area.

We're also working on feasibility plans with the hospital district. That will be the anchor of a district energy system that will then move out into our downtown and will be part of our downtown redevelopment and intensification in the urban core.

Then there is the Guelph Innovation District, a 1,000-acre brownfield, which will we also work on towards an integrated energy master plan, a district energy system cogeneration. Those lands will be to leverage employment in the community.

The next slide gives you a visual illustration of what you can achieve. In the middle of the graph, you can see the cogeneration facility. That is in place. That's owned by Guelph Hydro. We are currently putting the landfill gas through this facility and generating electricity.

As for what we're working on now, we have another opportunity for an industrial anaerobic digester to add more methane gas into this facility, so we'd be increasing the productivity of this facility. At the moment we're just wasting the heat, so we're also looking at how we can capture that heat. We're in discussions with a local developer about piping that heat to a new subdivision development and using that to heat the homes. This is just a small illustration of how you can sort of plug these things together and get great benefit out of what has traditionally just been waste.

In regard to building momentum, since 2007 and approving the community energy plan, we've seen incredible momentum. We're working on 60 individual projects in the community.

Guelph Hydro has taken the lead on the feasibility studies for the scale projects. I mentioned the partnership with the University of Guelph. We've also partnered with the Ontario Centres of Excellence to take not only the plan itself but the implementation and develop a template that can be scaled to other communities and replicated in other communities. This spring, we're organizing a think tank to move our implementation forward further.

What are some of the barriers that we find?

One is that we need new processes for integrated thinking. We haven't been thinking this way. Our processes tend to be linear. We need those templates to assist other communities in terms of how to scale this.

Also, at the provincial level, some of the delays in clear rules are holding us back. The university project is being held back until we find what the clean energy standard offer price is. We need to get some clear rules in place.

At the federal level, we find that we have to de-bundle integrated projects because the funding is done in a siloed way. That's a barrier for us.

From the public and private sectors, we need new models of partnering to create and replicate this multi-utility model in our community.

For the federal roles, we see that one role is to understand that this is actually happening. There's a lot of momentum at the local level. It's real. Another is to promote a national vision of sustainable, reliable, integrated urban systems across the country.

Another one is to help contribute to that momentum through the funding that is provided, and through the policies, the program funding, the technology, and the research and development being directed towards integrated urban energy systems. Sustainable practices at the community level would certainly assist us in moving forward and maintaining that momentum at the community level.

Thank you very much.

[The Chair, Conservative, Leon Benoit]

Thank you very much, Mayor Farbridge.

We will now go to Sean Pander, program manager, climate protection, from the City of Vancouver.

I understand you had very short notice for this. I really appreciate your making the trip on such short notice. Go ahead, please, with your presentation, for up to 10 minutes.

When we have heard all four presentations, we will go to questions.

[Sean Pander, Program Manager, Climate Protection, City of Vancouver]

Thank you very much.

I'd like to introduce Penny Ballem, our city manager. She'll do some introductory remarks before I move into the body of the presentation.

[Dr. Penny Ballem, City Manager, City of Vancouver]

Thank you very much. We are delighted that the Chair and the committee invited us here.

Thank you so much. In the absence of our mayor, I bring greetings from Vancouver and I thank you very much for the invitation to present today.

Vancouver has a very strong commitment to being a sustainable city, and what we'd like to do today is present you with a very concrete example of a major development that many of you have probably read about, the Olympic Village on Southeast False Creek, which, in spite of some of the challenges we face with it, is a very interesting and innovative example of taking integrated planning and sustainability and actually putting it into a whole community that will be a model community in this particular area for the city of Vancouver.

I'm going to ask Mr. Pander, who is our program manager, to walk you through the work we've done on this community and how it represents an example of many of the things that my colleague the mayor spoke about.

[Sean Pander]

I'm going to move fairly quickly. We're going to focus mostly on the Southeast False Creek development, which is the home of the Olympic Village, to illustrate how we're doing integrated energy planning and deploying those systems. I'll talk a little bit about what we see as the benefits, and then I will give you just a taste of how it's not just a single project but is actually changing the way we do business throughout the entire city and how we look at planning and development in the city.

I'll start with Southeast False Creek. It is a compact mixed-use brownfield development that incorporates green buildings, a renewable district heating system, and sustainable and electric transportation planning and systems. I can't stress enough how important compact mixed use of land is. It enables public and active transportation, it facilitates the green buildings, and it really is a key piece in making the economics of district heating and renewable district energy systems work. It's a foundational piece that's quite important.

The Southeast False Creek Neighbourhood Energy Utility, which is the utility for our district heating system, is under construction. We're actually providing heat to the village as construction is completed. The energy centre itself will be done in a few months. It's almost up and running. I'll explain what it is.

Really, it's a heating utility in which heat is distributed through the entire neighbourhood, which at build-out will be home to 16,000 residents. We distribute that heat energy using hot water pipes buried in the ground, and that really is the key part here. I'll come back to that a bit later. That heat is transferred from the heat infrastructure for the neighbourhood to the buildings through heat exchangers, and then the heat is used for hot water or space heating in all the buildings.

Most of the heat is produced at a neighbourhood energy centre, and I want to talk a little bit more about that with an upcoming slide. Before I go on to green buildings, I'll just talk a little bit more about the district heat sources for that.

Again, as I said, the key element of a district system is actually the energy distribution infrastructure. There are many options for producing heat in a sustainable fashion, and there's no one answer that fits all. I really want to stress the idea of not getting fixated on a single technology, because there are many different opportunities, many different technologies that will work in different contexts.

In Southeast False Creek, we looked at quite a variety. We looked at ground-source heat, biomass heat, and sewer heat pumps. In the end we selected or opted to go with a sewer heat-pump system. In essence, we were rebuilding a sewer pump station adjacent to that neighbourhood anyway. We looked at that, and we said that if we extracted the heat from the sewer system using heat-pump technology, we could provide 70% of the heating requirements of that entire neighbourhood with that waste heat source. So that was the technology we selected. That's just to meet the base load, which is most of the load. When it gets really cold and we need a little bit of extra heat, we'll be using natural gas boilers for that peak and backup heat.

The other thing about this backbone of hot water is that it facilitates in-building solutions as well, so three of the buildings in Southeast False Creek will have solar hot water on the roof. When those solar hot water panels are producing more heat than is required in the building, then they can export it to this infrastructure, and the network of hot water piping can distribute it throughout the neighbourhood.

Coming back to the previous slide on green buildings, as the mayor of Guelph previously said, the first approach really is efficiency. In Southeast False Creek, that's where we started. All the buildings in that five million square foot development will be LEED gold or better, so they'll all be developed to LEED gold or better. The community centre will be LEED platinum there. Finally, we are developing a demonstration net zero energy building, and it will be a multi-family senior housing complex when it's completed.

Really, the purpose there is to help us move towards having all new construction carbon-neutral by 2030. Council has given staff a target to have all new development be carbon-neutral by 2030. To meet that objective we have to push the efficiency in building and renewable sources. Again, district energy is an enabling infrastructure piece for renewable energy.

The last piece of the Southeast False Creek example illustrates how we've done sustainable transportation. I've already said how the compact mixed use is so important to enable public transportation and walking and cycling. It's right close to the downtown core, which is the biggest employment centre in the province. The business as usual case of heating those buildings would have been electric baseboard heat. By implementing a district heating system, we've left the transmission capacity into the urban core and the generation capacity of that electricity available for other sources.

One of the applications that we see as very important to our low-carbon future is electrification of transportation, so the buildings in Southeast False Creek will all provide dedicated charge points for electric vehicles. There will also be electrification of public transportation. The new Canada Line, which will soon be open from the airport coming into the urban core, runs on electricity. The city thought it was important enough to fund the development of the station for those neighbourhoods to support the choices, but in addition, we view this as a great opportunity to reintroduce streetcars into Vancouver. During the Olympics, we'll be running a demonstration with the hope that we'll be able to extend that and maintain that demonstration past the Olympics and extend the line into the urban core.

So what do we see as the benefits of integrated energy systems? Really, we see that the buildings, the roads, and the energy infrastructure that we build today are going to be around for 50 to 100 years. These are long-term investments, and we think it only makes sense, if we're going to use public assets, to invest in the challenges of tomorrow and to look at the low-cost life cycle costs of development. Also, when we build things, we build them to address multiple challenges instead of just having one piece of infrastructure addressing one challenge.

So we see these things as important parts of meeting our greenhouse gas reduction targets. We think they're really important for the resiliency of our communities in terms of lowering their dependence on fossil fuels for transportation and heating and energy. We think that's really important. Having this hot water infrastructure and using heat pumps today means the system will be ready to easily accept whatever the technology becomes 15 years from now. We don't know what the technology of tomorrow will be, but the hot water allows for that. It's economically sustainable. This isn't a wild idea that we just pour money into because it looks good. It is funded through the utility charges to the customers, which will be cost-competitive with what they'd pay for electricity. Finally, I think it's really important in that it fosters economic development and an innovation economy.

There is one last piece I want to introduce. This is a specific example, but the ideas I'm talking about here we are applying on a city-wide basis. We have a green building strategy in which we're using our land use and our building code controls. Vancouver controls its own building code, which is very rare in Canada. We're using those controls to systematically improve the efficiency of our buildings, and we're looking towards starting to use that control to introduce requirements for renewable energy as we move forward. We're doing that on a city-wide basis, and we have the best energy requirements of any code in North America for our detached housing. Our prescriptive path is greater than EnerGuide 80 for all new single-family homes.

The other piece I want to talk about is district energy. Southeast False Creek is nice, but a lot of people say that's just one great big development that's happening very quickly. We started mapping the opportunities for district energy. That involves really looking at existing heat demand, the density of heat demand, as well as future demand of big new redevelopments that will be dense--and there'll be a lot of new demand.

We started looking at waste heat sources. We looked at our sewer heat pumps where we have existing district systems. On the final slide you'll start to see--and I just include it for illustration--that our whole downtown core right now is provided energy through a legacy steam system. Currently it has natural gas boilers, but because that heat production is centralized, it really creates an opportunity for us to work with them and introduce a more renewable heat source there. UBC also has natural gas fired boilers, and they're looking at changing their heat source. We have Southeast False Creek, which is nearing completion. It's right near the Broadway Corridor, which has a big heat load density. It's hydronic, which uses hot water in the buildings, so that should be connectable to a utility. We have the General Hospital just south of there with its steam system, and as you go further south, we have Children's and Women's Health Centre, and then way far in the south of the city we have East Fraserlands, which we've done the feasibility study for.

A renewable district system looks viable, and right now we're negotiating to import heat from a waste incinerator in the adjacent municipality of Burnaby and bring it to provide the heat for that site.

I want to close by stressing that Southeast False Creek is a great story, but it is not isolated. There are multiple opportunities in Vancouver and all urban communities to implement these strategies and approaches.

Thank you.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Pander and Ms. Ballem, from the City of Vancouver.

Now, from Drake Landing Solar Community, we have a representative, Brendan Dolan, who is also vice-president of ATCO Gas. Go ahead, please. And you can introduce any others you'd like.

[Brendan Dolan, Representative, Vice President, ATCO Gas, Drake Landing Solar Community]

Thank you, Mr. Chairman.

Joining me today is Shahrzad Rahbar, from the Canadian Gas Association.

It's my pleasure today to present to you the Drake Landing Solar Community, a project that demonstrates how an integrated energy system using leading-edge technology and using renewable energy is effectively delivering space- and water-heating needs to customers in Okotoks.

I'd like to briefly talk about ATCO Gas. We are an investor-owned utility that provides safe, reliable, cost-effective natural gas delivery service to over one million customers in 300 communities in Alberta. We take great pride in the fact that our employees live and work in our communities and improve the quality of life in the communities we serve. As well, as an investor-owned utility, we are regulated by the Alberta Utilities Commission.

The objective of this project was to demonstrate the feasibility of using seasonal storage of solar thermal energy to provide 90% of a home’s annual space-heating requirements. There are 52 homes in the Drake Landing community. A long-standing barrier to this technology has been the acceptance of solar thermal technology in cold climates, as the sun is noticeably absent during the winter season. Short days, cloudy skies, and snow-covered solar panels are examples of those barriers. This project demonstrates how the effective integration of energy-efficient technologies with seasonal thermal energy storage can overcome these barriers.

This project is built on a foundation of a district heating system designed to store underground the abundant solar energy during the summer months and distribute energy to each of the energy-efficient-built homes for their space-heating needs in the winter. In addition, solar panels have been installed on each home to provide 60% of its annual domestic hot water requirements.

I'll give you an overview of the project itself. Drake Landing Solar Community is the first major implementation of seasonal solar energy storage in North America. It is unprecedented in the world in that it is designed to provide 90% of each home's space-heating needs through solar energy. At the time of construction, it was the largest subdivision of R-2000 homes in Canada. Each is 30% more efficient than a normal home.

The major partners in this project were the Government of Canada, through NRCan; the Government of Alberta; the Federation of Canadian Municipalities; the Town of Okotoks; ATCO Gas; Sterling Homes, the home builder; and United Communities, the developer of the subdivision.

The next slide shows how this system works. Detached garages were built behind the homes. They were connected through breezeways. There were four sets of these garages built. Mounted on those garages were arrays of solar panels, a total of 800 solar panels. District energy loops were built. There's a solar collector loop that gathers all the energy off those solar panels and takes it down to an energy centre, which is really the heart and the central hub of the entire system. Right beside that energy centre is a borehole seasonal thermal storage field.

In the summer months, solar energy is gathered from those solar panels. They have a glycol-water mixture. It goes into the central heating system, heats the water in these large storage tanks, and then stores the energy in the borehole field.

In the winter months, the energy is still gathered off the solar panels. It runs through the energy centre. It is supplemented by the stored energy in the energy field. It provides heating, heats the water, and sends that water supply through the homes. It heats the homes using an air handling unit, which replaces traditional furnaces.

On the next page, you can see that the solar collectors during the winter months will generate about 50% of the house's needs for energy. Forty percent comes from the borehole thermal energy field, and 10% comes from a natural gas boiler that's in the central energy building for backup.

The next page shows the reduction in GHG emissions that this system provides over a traditional natural gas heating system. Each home reduces its GHG emissions by 5.5 tonnes, and so for the whole community, it's 286 tonnes per year.

This being a demonstration project, there were some significant challenges. First and foremost was the initial capital cost of building this system. It was $7.1 million, which equates to over $136,000 per home. Without some significant government funding, this project would not be possible. It is difficult to convince private companies to invest in high-risk and high-cost projects such as Drake Landing unless there are financial incentives established at both the federal and provincial government levels.

Another difficulty is the coordination between developers, builders, municipal planners, and all levels of government to make this system happen. In addition, there's the skepticism of the consumers. They don't know much about these types of systems. They don't know about the costs, the operations and maintenance, or the reliability and longevity. As for people investing and paying $136,000 more, it wouldn't be possible.

The location also would be a challenge. Okotoks was selected for this project because it is located in a part of Canada that is among those receiving the most hours of hours of sun per year. It's equivalent to Miami. As well, the Town of Okotoks has developed the sustainable Okotoks initiative, which mandates that sustainable principles be applied in all town operations and services.

This is an R and D project. With it, there are inherent unknowns. This is the first time this concept has ever been used on single-family homes. Similar developments in Europe used multiple-family projects, but this is the first time for single-family homes. Ninety per cent is the goal for services provided by solar energy.

From an operations and maintenance perspective, there are also challenges. We needed to train and to gain expertise in our operations with our local staff. That was an issue we needed to develop.

We also had to understand what maintenance was going to be required for the system. There are some unique materials used in this project. For example, the pipe in which this water flows is an insulated steel pipe. If something were to happen, if someone were to put a hole in it, as has happened once so far, resources have to be flown in from Ontario for repair. We need to develop local expertise in order to make this sustainable in the long term.

Our next page shows you that we feel the role of a gas utility is quite significant in these projects. We have a long-standing service. We've been offering services in energy delivery for almost 100 years in Alberta, so we've come to this with reliability and safety as the cornerstone of our operations.

We're also environmentally focused in providing new initiatives. As an example, ATCO Gas recently opened a new operating centre in Viking, Alberta, where we are using geothermal technology to heat our own new building. We want to learn about these technologies and we are committed to reducing our carbon footprint.

We believe that natural gas utility companies are appropriate vehicles to provide alternative energy due to the companies' long track records of providing safe, reliable service to Canadians. Also, the utility model of delivery will bring credibility to these alternative energy projects.

Finally, there is the role of the federal government. It's with federal support that we can replicate these systems in other communities in Canada. Private industry wants to be involved in the alternative energy market; however, the risks and costs of these technologies are still too great. If the federal government would like to encourage this development, they should consider playing an integral role in developing these new technologies with a two-pronged approach.

First is funding: investing in these new green technologies to advance knowledge, reduce costs, and ultimately create a new self-sustaining industry. Second is adjusting government program funding criteria to encourage integration. On policy, the federal government role means introducing favourable fiscal policies, like the accelerated capital cost allowance for integrated systems requiring high upfront capital costs, as well as developing building and housing energy codes that consider full fuel efficiency and encourage fuel flexibility.

I can tell you that at the end of the second season of storing solar energy, which was to the end of July 2008, the houses in the Drake Landing solar project received 55% of their total annual heating needs from solar energy. We're only two years into storing energy, so we believe we're ahead of schedule.

This project is something that we're very proud of, and we know it has a future in Canada.

Thank you.

[The Chair, Conservative, Leon Benoit]

Thank you very much, Mr. Dolan.

Our final group today is Dockside Green. Jamie James is a representative and a partner with the Windmill Development Group Ltd.

[Jamie James, Representative, Partner, Windmill Development Group Ltd, Dockside Green]

Thank you very much for the invitation to present a brief overview of Dockside Green, a sustainable urban redevelopment project that we initiated four years ago in Victoria, British Columbia. I'm joined by our company's founder and managing partner, Jonathan Westeinde.

I provided a couple of handouts to give you an overview of the company and some of our other projects in addition to Dockside Green. I'm not going to be following it exactly. I have some prepared remarks here, but that will give you some visuals to back up what I'm saying.

The projects provide an important context as they represent the learning curve of our young, ambitious company, which has sought to raise the standard for urban developments across Canada. To begin with, we're organized around the principles of a triple bottom line of people, planet, and profits. That's a core part of our business philosophy, and it's part of our outlook on what real estate development and urban renewal will look like in the coming decades. The slides provided give examples of the individual buildings we have recently completed. One of our goals is to be the first developer to introduce the highest-rated certified green buildings in each market while also introducing state-of-the-art green technologies.

In Ottawa, for example, our goal was to introduce the new green building model, and that resulted in a LEED gold or platinum development. The featured green technology in that case is a multi-storey solar wall on the south facade—visible from the street—that collects heat from the sun and offsets natural gas heating needs in winter. We also introduced and syndicated a green loan instrument that allowed us to finance the incremental capital costs of energy efficiency by leveraging long-term life cycle operating cost savings. Today, that same model is being used by mainstream developers in major markets, particularly in Toronto and Montreal.

In Calgary we built the first LEED platinum-certified mixed-use condominium development. State-of-the-art boilers, lighting controls, natural daylighting, and passive solar energy all helped to reduce the building's energy consumption by over 45%. It's worth pointing out that our Calgary buildings are located in a redevelopment zone that was master-planned by the city and serviced by the city with conventional infrastructure, just like any other neighbourhood. Basically, all we had to do as developers was to plug in and build our buildings. This approach is like a straitjacket for those of us who really want to innovate and think more holistically about sustainable development. Since we were motivated to do more, the city probably missed an interesting opportunity there from the point of view of integrated energy systems. Fortunately, though, the City of Victoria gave us the latitude we needed to be more inventive.

I've included these lead-up examples in order to illustrate the evolution of our thinking but also to set an appropriate context for the discussion of integrated energy systems, namely that green buildings are a fundamental component of any energy system at any scale. That point has been iterated very effectively by the previous speakers. Buildings are major end-users within energy networks. Understanding, managing, and ultimately reducing their loads will yield the greatest dividends with respect to investment in energy systems.

The reason for this is that operating energy efficiency mitigates investment requirements in generating capacity. This is true at the community scale as well as at the larger grid scale. This message is particularly relevant as different pockets of the country start to mobilize investment in more expensive clean and renewable technologies. It's also a fundamental underlying principle of how we approach Dockside Green.

Some of the slides on the Dockside Green project are provided on pages five through nine of the handouts. To summarize the development quickly, Windmill and our partner, Vancity Enterprises, acquired the 15-acre abandoned brownfield near the shoreline of Victoria's inner harbour in 2004 following a successful bid in a city-managed public tender. The tendering process itself contributed to the sustainability of the project because it was based on a triple bottom line, allowing a firm like ours to compete against prominent local developers.

The plan is to develop approximately one million square feet of new residential, commercial, light industrial, retail, and hospitality construction over the next 10 years, a very dense mixed-use development, similar to what we heard Southeast False Creek is, but on a smaller scale.

To date, the first two buildings and townhouses are completed. During the tendering process and in our discussions with the city, Dockside Green made three important commitments to the City of Victoria.

The first was that each building will be certified to LEED platinum status by the Canada Green Building Council or the developer will actually pay a severe penalty. We agreed to paying a severe penalty for that. To date, the first phases have achieved the highest LEED certification rating of any building in the world.

Second, Dockside Green will be the first community in Victoria to treat all of its waste water on site. To date, we have installed a membrane bioreactor to reclaim all waste water and reuse it in toilets and irrigation systems.

With respect to today's discussions, our third commitment was that each building will be connected to a greenhouse gas neutral biomass district heating system. This is the feature that is of particular interest to the committee's present study of quality urban energy systems.

Our team considered a number of different approaches, including combined heat and power, direct combustion of wood chips, and geoexchange, among others. Given the nature of the location of a central energy plant in the middle of a relatively high-density urban neighbourhood, emissions were a concern. Even though we knew there were contemporary scrubber technologies that could have been sufficient to do the job, they are expensive, and we didn't want to battle perceptions.

In the end, we chose a biomass gasification technology manufactured by Nexterra, a Vancouver-based start-up company. The advantage of their equipment is that, rather than burning wood, it gasifies it first and helps to eliminate the particulate issues that affect most combustion projects. We also have a waste water heat exchanger as part of the overall program, but it's a minor part, and I was going to focus primarily on the biomass system.

Also, knowing that you are going to be investing in a central energy plant is a powerful motivator to think holistically about the entire energy system and discover as many opportunities as possible for keeping the cost of that infrastructure down. We knew we didn't want to build more hot water generating capacity than necessary. That is one of the main reasons all of Dockside Green's buildings are being designed to be 45% to 50% more efficient than code.

At the same time, we are motivated to optimize output of the installed capacity. To achieve this, Dockside made a deal with a neighbouring hotel and conference complex to sell hot water at a cost equal to the cost of the natural gas they would have had to buy for their boilers. This means that during the day, when the on-site residential use is low, there are off-site customers to export to. As well, exporting carbon-neutral hot water to displace fossil fuel combustion has a significant impact on our overall carbon budget and helps Dockside to live up to its commitment to being a greenhouse gas neutral development.

It's also important to look beyond the design and construction phase and to think about how the building and infrastructure will behave over time. To create additional incentives for people to manage their energy use wisely, each residential unit at Dockside is equipped with a web-based energy and water monitoring system. Each occupant can track their energy use and even compare it to their neighbours' consumption over time. By raising awareness, we believe we can influence energy consumption even more through load shifting and conservation.

When it comes to intelligent energy systems for communities, we believe that small can be beautiful; however, it comes with significant hurdles. Incumbent utilities have economies of scale and enormous influence when it comes to enabling distributed micro-utility solutions. Therefore, utilities are critical partners.

B.C. Hydro has been a major enabler of Dockside Green's success. They recognize that the decision to avoid using electricity for heating at Dockside Green has quantifiable upstream economic benefits. They correctly view the development as one million square feet of new floor area that will not require incremental investment in centralized winter peaking capacity to meet electricity demand that would be required for only a few weeks out of the year anyway.

Furthermore, the province has already made a commitment to no new fossil fuels for power, so Dockside Green is helping in two respects: (a) avoided peak loads and (b) no incremental impact on the province's carbon budget. B.C. Hydro has translated this logic into incentives that help to support the business model of the central energy plant. Those incentives are calculated based on avoided cost to the province and the utility.

Another major challenge pertains to phasing, especially as our economy slows and, with it, the construction schedule. The heating system has already been installed, but the Dockside Green energy company will not be earning full revenues until complete build-out. Fortunately, the federal government provided a grant and a loan through the technology early action measures program. This project financing helped to make the system more financeable to third party investors, helping to reduce their exposure to stranded capital on the front end of the project.

The rationale for the government support was that there are significant benefits of the system from a technology demonstration and greenhouse gas perspective, but most of these benefits accrue to the public realm as opposed to the private owners. By providing financial support, the government helped to ensure that the private sector investors wouldn't be unfairly burdened with the cost of innovation.

To conclude, we believe that green buildings are a critical component of intelligent urban energy systems and the overall social and economic fabric of Canada's cities. However, integrated design solutions can't stop at the exterior of a building's walls. We have to look at how those buildings behave over time and how they interact with the infrastructure to which they are connected. We need to make responsible and holistic decisions when planning and investing in incremental energy production and distribution systems, and we need to work together and across sectors and jurisdictions. Given the number of stakeholders who are contributing to the success of Dockside, I think it's an urban development example we can all be proud of.

Thank you.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. James.

Thank you all again for your presentations. We will go directly to questioning, starting with the official opposition.

Mr. Regan.

[Geoff Regan, Liberal, Halifax West, NS]

Thank you very much, Mr. Chairman.

I want to thank all the witnesses for these excellent presentations. I understand from the committee staff that there was some concern there wouldn't be many of you available on this short notice, and instead we have an embarrassment of riches.

My first question is, after all the interesting issues you've raised here, can you stay until midnight?

[Some hon. members]

Oh! Oh!

[Geoff Regan, Liberal, Halifax West, NS]

I'm just kidding. Don't worry.

First of all, after hearing about all the remarkable things you're doing in each of these projects, I'm going to ask each of you to answer this, if you would. Are you satisfied that there is, across the country and within municipalities, a sufficient awareness of the fact that these things are being done and that they can be done?

Mr. Dolan, you talked about the risk involved, but the fact of the matter is that these are happening, and they're working. So is the risk all that high?

[Brendan Dolan]

The knowledge of these systems is increasing over time throughout all of our communities. The issue is still the technology. The technology needs to be proven. It needs to be explored. It's one thing to design it, but it's another thing to actually put it into practice and make it happen. Without some significant funding from government levels, and unless there's some help from others, private industry will not be entertaining these projects.

[The Chair, Conservative, Leon Benoit]

Go ahead, Mr. Westeinde.

[Jonathan Westeinde, Representative, Partner, Windmill Development Group Ltd, Dockside Green]

I'm Jonathan Westeinde.

It's a good point, and at the same time, as Windmill, we've been out, for example, touting Dockside for the last four years. I would say the four players at the table, Guelph probably being the most recent introduction, are the common examples of these types of things. It's not like there are a lot more coming out of the woodwork.

To the extent that this is the case, I think awareness is there. The risk aspect is one of initial implementation, which we're seeing. The risk from a finance point of view is the longevity of these projects and the fact that you're looking at financing 15- to 20-year life cycles. To the extent that any of these examples have lasted that long, that's scaring players away from bothering to try, because they can't trust that their capital will not incur significant road bumps along the way. To that degree, there still needs to be some relevant insurance mechanism or something of that nature that will secure those investments through their life cycle.

[Dr. Penny Ballem]

I'm Penny Ballem.

I think that essentially we see that there is still significant risk. To the point that was made by other speakers, it's in the bridging, in the transition to the payback. If you look at the business model for our utility that we described, it's about a 25-year cycle. At about 12 to 13 years we start to be able to recover our costs. That's a long time. I think it's also dependent on our ability to use our network to reach out to further development.

There is a significant risk. We think that senior levels of government can really play a role in helping bridge that risk. Also, for municipalities and communities that are just starting, there needs to be feasibility planning. They need to map their opportunities, and that takes time and capacity. I believe, because of the pressure on us to actually steepen the curve of progress, there need to be some investments up front in that kind of work, as well, to help move things along and increase the knowledge exchange between successful projects and communities that are a bit farther ahead.

It will take time. There is risk, and there are ways that risk can be mitigated, both for the municipal governments and for the private sector, which need to be partners in these endeavours.

[The Chair, Conservative, Leon Benoit]

Next is the City of Guelph.

[Jasmine Urisk, Director, Guelph Hydro, City of Guelph]

Thank you, Mr. Chairman.

Picking up on those points, there is significant risk. There's a requirement for upfront funding. Although the payback may eventually be there, often there are barriers to getting started. To pick up on previous comments, these sorts of projects may be well understood amongst municipalities, but the private developers and the consumers still need convincing.

Another major role that perhaps hasn't been highlighted yet in response to this question is the need to aggregate the information that's available and more broadly broadcast it across Canada, with case studies, performance metrics, and evaluation tools. We need to convince the developers that this is, in fact, an economically effective and efficient way to proceed. They have their own ways of doing business. There are some inertia-type barriers to getting started.

[The Chair, Conservative, Leon Benoit]

Thank you.

Mr. Regan, you have a minute and a half.

[Geoff Regan, Liberal, Halifax West, NS]

Well, okay, I'll do what I can here. Let me start with Guelph this time and then we'll see how far we get.

What was the significance of federal energy policies in the development of your projects? What top two changes would you ask the Government of Canada to make in order to have these successes repeated across the country?

[Dr. Janet Laird, Director, Environmental Services, City of Guelph]

Picking up on your second question first, because it's kind of a lead-in to what I was just speaking about, I think here's what we need from a federal level: vision; leadership; policy support, perhaps with respect to the value of carbon; an increase in the dialogue; and an increase in the communication of the results of some of the successful projects that are already present.

With respect to funding, one barrier we've come across is that most of the available funding is project-specific funding. Really, what most of the projects you've heard referred to today are dealing with are integrated urban energy systems. It's not one project, as we saw from Vancouver. The final slide showed an integration of perhaps seven or eight different projects, really, to turn their entire city into an urban energy system. That's what we're planning for Guelph as well.

To apply for many of the funding programs, we need to de-bundle what we have into nice little packages, which really defeats the purpose of what we're trying to achieve. We're trying to completely change how we look at energy systems so that we change our city into what we call a smart grid.

Throughout our community, we may have a variety of energy sources and a variety of energy sinks, and even at different times of the day. A facility that has a boiler may not be attached to the grid, but after hours when the boiler is not being used to capacity, perhaps it actually provides energy to the grid. We have a whole system of interconnected facilities that are either providing or drawing energy or heat at different points in time. Because it's an urban integrated energy system, the federal programs need to be modified to recognize the benefit of that and the government needs to adapt policy and programs to enable that to happen.

[The Chair, Conservative, Leon Benoit]

Thank you, Ms. Laird.

Thank you, Mr. Regan. Your time is up.

We'll now go to the Bloc Québécois, with Madame Brunelle, for up to seven minutes.

[Paule Brunelle, Bloc, Trois-Rivières, QC]

Good day. Thank you for coming from so far away to meet with us. I have some short questions for each one of you which I hope will shed some light on your presentations.

My first question is for Ms. Farbridge from Guelph. You talked about the federal government's role in promoting a national vision for urban energy systems. The provinces, as you know, have different visions of and approaches to energy issues. In Quebec, hydroelectric power features prominently in energy development plans, while in Ontario, nuclear energy takes centre stage.

On the same page of your presentation, you also referred to federal government funding under the infrastructure program. How do you go about it? Do you respect the provinces' vision?