By Glenn Miller
Long before Justin Trudeau committed Canada to achieving net-zero by 2050, cities across the country were already hard at work devising community energy plans to reduce emissions generated by urban development. Many of the boldest plans centred on creating or expanding district energy (DE) projects—thermal grids of underground piping, in most cases connected to a central plant, that distributes hot water for heating or chilled water for cooling.
Nowhere are plans for expanding the role of district energy to achieve climate goals more ambitious than in Markham, Ont., which boasts two separate DE systems operated by Markham District Energy Inc. (MDE). The largest of MDE’s two DE systems—the fast-growing Markham Centre—got its start 25 years ago when IBM Canada decided to locate its major data centre there. Markham Centre today serves nearly 250 buildings, totalling 14.3-million square feet of development, with the potential to grow to 40-million square feet of industrial, commercial, residential and institutional space.
World’s largest WET project
In July, MDE broke ground on its Low Carbon Energy Centre (LCEC), which includes what promises to be the “largest wastewater energy transfer (WET) project in the world,” said Bruce Ander, president and CEO of MDE. The project accelerates “our path to becoming a net-zero district energy supplier,” demonstrating “co-operation and strategic support from all levels of government.
“Creating a thermal grid to serve mixed-use, compact development is an essential condition to meeting net zero targets,” continued Bruce Ander. When constructed, the WET project is expected to reduce MDE’s carbon emissions from the production of thermal energy by more than 30,000 tonnes per year, significantly advancing its goal of becoming net-zero by 2050.
In addition to the WET project, the LCEC features two other alternative fuel sources. The first, completed last year, is a 500 kW biomass boiler, funded in part by the Federation of Canadian Municipalities (FCM), that burns wood pellets. A second investment is a heat recovery heat pump that recovers waste heat from MDE’s cooling network to generate hot water.
MDE leveraged funding from several programs offered by the federal government, including $16.7 million from the Low Carbon Economy Fund, $8.2 million from the FCM’s Green Municipal Fund, and a $135 million loan facility from the Canada Infrastructure Bank combined with a $135 million facility with CIBC, to support the expansion of its district energy network.
The WET project utilizes Noventa’s WET Systems, which in turn is anchored by HUBER ThermWin technology. The plan is to extract energy from York Region’s trunk sanitary sewer, located adjacent to MDE’s head office. The WET project will deliver 18.5 MW of heating energy, and 4,000 tonnes of cooling energy annually.
“It’s all about timing,” says Ander. “We always knew the York sanitary sewer was there, but it is the WET technology that makes it practically and financially feasible.” The project scores on three fronts, he adds. “It connects to the electricity grid (with combined heat and power), the thermal grid, and soon, the wastewater sewer grid.”
Wave of investor confidence
Moving district energy plans from the drawing board to reality has always been—and continues to be—notoriously difficult. A key benefit to assuming the risk related to investing in DE, however, is that, theoretically, district energy is agnostic when it comes to the source of energy needed to generate heating and cooling. This flexibility—again, in theory—allows the system operator to switch to alternative sources likely to result in reduced emissions, which is the strategy employed by MDE.
A dozen or more DE projects are being planned or constructed across Canada, so what sparked this flurry of investment in district energy? The reality is that DE’s overnight success has been percolating for two decades. Dennis Fortinos, who was Enwave’s president and CEO when Toronto’s unique deep lake water cooling project (DLWC) launched in 2004, is now the president and CEO of Noventa Energy. He is the first to acknowledge that a key decision by a Canadian pension fund was a turning point in how “blue chip” investment funds—and, as a result—government decision makers viewed risk-prone, complex projects like district energy.
“If it hadn’t been for OMERS (Ontario Municipal Employee Retirement System), and others agreeing to purchase a money-losing steam system to anchor an unproven technology,” he says, “deep lake water cooling likely wouldn’t have happened.”
Fortinos believes that DLWC was transformational for the DE sector because it demonstrated that, properly managed, district energy could provide the scale necessary to make new, exciting technologies possible. “I would argue that the OMERS investment was the catalyst for the financial sector’s new-found interest in district energy, which in turn led to significant growth in DE across Canada.” It was this philosophy that inspired Fortinos to establish Noventa in 2018.
There is evidence to suggest that Fortinos may be right. The combination of relatively recent technological innovations and a growing appetite and understanding of how to manage the risk of switching to alternative fuels helps explain why in Canada today, there are at least five low or non-carbon fuel sources being considered, planned or implemented that will replace or minimize the need for natural gas as the primary fuel source in district energy systems.
Just a few years after OMERS’ “big bet,” the City of Vancouver elected to invest in an early version of sewage heat recovery in South East False Creek (which served as the Athlete’s Village for the Olympics). The city’s Neighbourhood Energy Utility, using technology developed by Sharc Energy, has been supplying low carbon energy for heating and hot water since 2010, and continues to expand. It now serves more than six million square feet of mixed-use development, including the relocated Emily Carr University.
Then, in 2014, another DE company, Vancouver’s Central Heat Distribution Ltd., was rebranded as Creative Energy with the aim of taking on additional district heating projects. One of the most ambitious local projects to date is a partnership in Vancouver’s Kitsilano neighbourhood with the Squamish Nation, where the company is developing a “zero-emission district heating and cooling system for Sen̓áḵw, a 3,000-unit rental residential project designed to leverage sewer heat recovery as a low-carbon source of thermal energy by extracting heat from one of Metro Vancouver’s nearby sewer trunk mains. When operational, the project is expected to eliminate 140,000 tonnes of GHG emissions over a 30-year period.
Meanwhile, in its home province of Ontario, Enwave Energy is celebrating the 20th anniversary of its unique deep lake water cooling district energy network, which uses frigid water from the depths of Lake Ontario to provide cooling to more than 200 commercial, residential and institutional buildings in downtown Toronto. The latest innovation involves a state-of-the-art thermal storage facility underneath the recently opened The Well—a three-million square foot mixed-used community—consisting of a large temperature-controlled tank that is fed by the DLWC system which has the capacity to hold 7.6 million litres of water. The system can store energy at night during off-peak times, easing strain on the electricity grid.
Less well remembered is that Toronto’s original district heating network is still in place, using natural gas to generate steam heat for the city’s downtown hospitals. According to the Boltzmann Institute, Enwave broke ground in 2023 on a new low-carbon heating facility at its Pearl Street Energy Centre in downtown Toronto. The project will recycle district waste heat to produce hot water via electrification, using dual-use heat pumps, electric feeds and generators. Enwave Energy’s CEO, Carlyle Coutinho says “the new facility will eventually provide enough low carbon hot water heating equivalent to converting 10 million square feet of office space to net-zero.” The bonus of green heat for reputation-sensitive landlords is Zero Carbon Building standard certification from the Canada Green Building Council.
Low-density thermal energy solutions
While this sampling of DE initiatives demonstrates the potential of larger projects to reduce GHG emissions, what are the prospects for smaller developments to benefit from similar innovations? Planning consultant Dan Leeming, a long-time advocate for environmentally responsible urban design, points to another project underway in Markham, where Mattamy Homes is working with Enwave Energy to establish the Springwater Geoexchange Community as a third mini district energy venture in that city. Enwave has drilled 144 interconnected boreholes more than 250 metres deep that, when operational, will deliver near net-zero heating and cooling for more than 300 single-family houses.
The final word goes to Fortinos, whose company Noventa launched its first WET project at University Hospital Network’s Toronto Western Hospital last summer.
“Decarbonizing the world through disruptive innovation is the cornerstone of [our] mission,” Fortinos insists. “We stop innovating at our peril.”
Glenn Miller, FCIP, is a frequent contributor to ReNew Canada. He is a senior associate with the Canadian Urban Institute.
[This article appeared in the September/October 2024 issue of ReNew Canada.]
Featured image: Toronto’s mixed-used community, The Well, includes a state-of-the-art thermal storage facility underneath, consisting of a large temperature-controlled tank that is fed by the DLWC system and has the capacity to hold 7.6 million litres of water. (Enwave Energy)
