Evidence of meeting #9 for Natural Resources in the 40th Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was heat.
A recording is available from Parliament.
Conservative
David Anderson Conservative Cypress Hills—Grasslands, SK
Do you folks from Drake have anything to add? You talked about having to bring people in from outside to do some of your maintenance. I'm just wondering what the projected life cycle on your system is.
Representative, Vice President, ATCO Gas, Drake Landing Solar Community
The complicating factor with this is that there are a number of different facilities or a number of different units to this. Solar panels have a lifespan, and I can't pick the specifics out, but I believe it's somewhere in the neighbourhood of 20-plus years. For the energy system centre itself, with maintenance, the tanks will last a long period of time because they were well built. The same is true for the energy field and its handling units. I think the biggest risk from our perspective, or the component that will likely have to be replaced first, is the solar panels, which will have to be maintained as they wear out.
Conservative
Program Manager, Climate Protection, City of Vancouver
I want to address the comments on both the longevity and the risk.
The biggest investment in most of a district energy system is the pipe in the ground. Again, I wanted to stress in my presentation that it's the backbone. It's the biggest capital cost, and it is really the thing that enables. The technology can change, and so there is some longevity to the heat pumps. There may be some technology breakthrough that will make energy even cheaper than using a little bit of electricity to extract the heat out of the sewer system. You see that in Scandinavia. They had made a major investment into ground source heat pumps. Electricity got so expensive that they've moved now to more of a biomass type of technology.
So as far as longevity goes, yes, the systems can last a long time, but the biggest investment is the pipe. It will last a long time, and it doesn't need to change. I think that's a really important point for us to make.
Conservative
David Anderson Conservative Cypress Hills—Grasslands, SK
Was a cost-benefit analysis of any major concern to you folks? Most of you have what I call demo projects. I'm just wondering if you are aware of whether that was done in your projects and whether it came into play.
Program Manager, Climate Protection, City of Vancouver
There is a very fine nuance, in our opinion, to the difference between risk and cost-benefit. We have a very professional financial manager in the city, and he said that we had to make a utility-grade return on investment. We made these investments. The system is going to cost the city about $30 million.
We talk about some risk, and a lot of it has to do with timing. There may be some technology risks. We adopted a technology that had slightly lower risks. The risk for us was that if we invested in the capital, built this energy centre, and put the pipe in the ground, but we didn't have customers hooked up and generating revenue.... You can do a projection that says this development will come online three years out, or that development will come online six years out, but especially in those early years, if you don't have as much customer load as you anticipated, that's where the risk comes in, from our perspective.
Conservative
David Anderson Conservative Cypress Hills—Grasslands, SK
Can I add a second part to that question and let the other folks answer?
Conservative
The Chair Conservative Leon Benoit
Mr. Anderson, there are two individuals who have asked to respond to that.
Conservative
David Anderson Conservative Cypress Hills—Grasslands, SK
This has to do with that.
How much of a premium, then, do you expect your units to have compared to the market? I guess that's in the context of the other question on the cost-benefit. We've heard it's $136,000 on one project. I guess you folks don't have all your financials sorted out there yet, but do you have an idea at what premium those units will come onto the market? Are they on the market for sale?
Conservative
The Chair Conservative Leon Benoit
Mr. James, maybe you can go ahead, and then, Mr. Pander, we'll go back to you, if you'd like.
Go ahead.
Representative, Partner, Windmill Development Group Ltd, Dockside Green
In response to the very first part, we came up with our plan for the district energy system and then we basically tendered it. We knew that we were going to be part investors in the third party energy company that was going to own and operate the system, but we wanted to bring in a knowledgeable third party that could operate it.
What this meant was that it was vetted competitively by the private sector. We got some very good bids back and ultimately selected a party that not only wanted to operate and take some risk on the operation side, but that actually put capital into the project, so they're taking a risk on the equity side as well. I think that's a pretty good barometer.
From the perspective of the cost to live in Dockside Green, Victoria went through a very robust cycle in the market, so prices were very high to begin with, but from the point of view of being competitively priced within the market, Dockside Green, although on the higher end, is competitively priced on the purchase side.
But then there's the operating cost side of it. When you're paying your utility bills, are you paying more than the people next door who don't live in Dockside? In some respects, it's a self-regulating process because this is a multi-phase program. As the developers, if we're selling product that costs more to own and operate, that's going to erode our marketability for future projects. We were very aggressive in influencing what the price of the commodity was going to be, the commodity being hot water, and ensuring that it wasn't going to cost our residents more than if they lived somewhere else.
Conservative
David Anderson Conservative Cypress Hills—Grasslands, SK
So it's comparable to what's in the neighbourhood.
Representative, Partner, Windmill Development Group Ltd, Dockside Green
British Columbia actually has the advantage, although not necessarily from our perspective, of it being under a regulated commission, the BCUC. This is also ensuring that the algorithms we use to determine what the price should be are fair and competitive.
Program Manager, Climate Protection, City of Vancouver
For us, there is a small incremental cost to the actual green building approach. Within the utility itself there's an incremental cost up front, but it doesn't get borne out in the unit price, right?
We recover the cost of the utility through the rates we charge, but that is a utility approach. That's what utilities do. They invest a lot in capital up front and they recover that investment over time through the rates they charge. The actual NEU itself isn't adding any incremental costs to the taxpayers or to the purchasers of these units.
Conservative
Conservative
Conservative
David Anderson Conservative Cypress Hills—Grasslands, SK
That's what I thought. I'd like to follow this up, but--
Conservative
Liberal
Geoff Regan Liberal Halifax West, NS
Thank you very much, Mr. Chairman.
I don't think I've heard from the group from Guelph in terms of my last question. I don't think the other questions that you've been asked have raised the same thing, but if they have, just say so. If you've already answered this, please say so, and I'll ask the other three guests to answer.
What has been the significance in your projects of federal energy policies? What would be the top two changes in federal policy you would recommend in order to have these things happening more across the country?
Why don't we start with Vancouver?
City Manager, City of Vancouver
From our perspective, the federal government can play a key role on a number of levels.
First of all, we've talked a little about the feasibility, the planning, and the mapping of the opportunities. We have a lot of work to do and there are a lot of opportunities. We have a lot of new, innovative private sector partners who want to get involved, but if the city doesn't have a coherent plan, then you're not going to get the value out of it. This is one area where I think that might speed up the uptake across the country.
The second thing, obviously, is funding for infrastructure and technology. It's critical. As our colleagues from Guelph talked about, these are integrated initiatives, and the stovepiping of one little project or one piece of a project after another isn't very helpful in actually getting this going in a systematic way across a municipality or a city. An integrated strategy to allow us to bring these integrated projects forward would very much help in terms of an infrastructure investment plan.
On building the networks, Mr. Pander has talked about putting the pipe in the ground and enabling a district utility, as an example, to actually bring on many other customers, whether they're new customers in new developments or retrofit customers in existing buildings. That's a huge infrastructure investment. That's where the majority of our costs are.
This would be helpful. It takes a much longer time to get your return on those kinds of investments. That's where some of the significant risk is.
Finally, it takes land to actually establish a neighbourhood utility. Sometimes that's hard to find in urban centres. City governments have land. We bring land to the table for some of these things. That's one of the things we can offer. The federal government owns a lot of land. That's an in-kind of bringing to the table that may be something you haven't thought of. Even for whatever you're developing in terms of your capital facilities, role modelling and actually doing partnerships would allow you to try out some of this technology. That's another place where I think municipalities that have federal facilities would be very interested in working with you.
Also, I think research and the evolving science are critically important in terms of investment.
Program Manager, Climate Protection, City of Vancouver
Can I add one last comment to that?
When you study how these systems grow, you get these opportunities like windmills in Victoria or Southeast False Creek in Vancouver. But if you study how they grow, you see that most of the growth occurs at the edges of an established utility system.
By becoming customers, if you built federal buildings that were hydronically heated, or developed a system so you could become a customer for someone else's future system, or if you established a system that in turn.... Again, the growth happens at the edges of these established nodes, so you could help all the developments around you and start connecting them up with new and existing developments. It is an important role to establish those nodes, because that's how growth occurs.
Conservative
Liberal