If you were a cash-strapped community of communities looking to cut your greenhouse gas emissions and had $100,000 to spend, how would you spend it?
Would you blow the boodle on a preliminary study for a “district heating and cooling system” in Sydney’s downtown core? A system that would service 12 buildings (six of which don’t actually exist) from a “plant” — potentially including a biomass boiler — in the new regional library?
Because that’s what the CBRM did with the $100,000 it received from the Green Municipal Fund (GMF, a fund financed by the federal government and administered by the Federation of Canadian Municipalities) and the provincial Department of Energy.
I am trying to find out where the idea originated — I’ve asked CBRM spokesperson Jillian Moore who decided this would be a priority and applied for the public money to fund the study. She promised to look into it for me, but as of press time, I had not received a response. The guidelines for GMF grants say they are available to “all Canadian municipal governments and their partners,” and those partners can include “private sector entities” but only in cases where a municipal government will “lead the capital project.” (More on this later.) The FCM will fund 50% of a feasibility study up to $175,000.
While we’re waiting to discover whose idea this study was, let me tell you what I’ve discovered about the project since it first streaked across my radar last week, beginning with the best time-line I can construct for it:
April 2014
A 99-page Municipal Climate Change Action Plan (MCCAP) prepared for the CBRM by engineering consultants CBCL contains precisely one sentence about district energy; it is found on the very last page of the report where it is item number eight in a nine-item list entitled “Other possible Energy Management Opportunities to investigate”:
Investigate a district energy network for the downtown of Sydney including the Civic Centre.
6 March 2018
David Brushett, the CBRM’s original Efficiency Nova Scotia on-site energy manager, tells a special budget session of CBRM council that an unspecified “we” has received $100,000 from the GMF and the NS Department of Energy to study a district energy project.
Brushett says a private company, Enwave, is prepared to make a “substantial investment” in a system that would “utilize waste heat” from Centre 200 and geothermal heat from the harbor to “provide cheap, clean heat and electricity to buildings downtown.”
He says the feasibility study will be submitted to the municipality “later this summer.”
May 2018
The CBC reports that “experts in green energy heating” are meeting with the CBRM to “discuss the potential for a district system for downtown Sydney, NS.”
The CBC says the CBRM is “partnering” with Efficiency NS and Enwave Energy Corporation and that the options being considered NOW include “geothermal heat from water in the harbour, recovering heat from sewage and using bio-gas from the waste treatment plant to produce heat.”
2 April 2019
Ken LeBlanc tells council during its regular monthly meeting that the feasibility study is complete (Enwave is just “crossing their t’s and dotting their i’s” on it) but has not yet been submitted.
LeBlanc says Enwave had presented to staff earlier in 2019 and “indicated they believe there is a viable project to be had here.”
A slide about the project NOW states that “piping treated wastewater from Battery Point” to a “facility downtown” is the best option financially while a “biomass facility” is the best option environmentally. (More about the environmental value of biomass in a moment.)
Despite the investment of $100,000 in public money, LeBlanc tells council:
Right now, it’s a private company doing private business and the CBRM is just going to support that and await their decision on how to move forward.
20 January 2020
During a MCCAP Update Workshop, the “district energy” project appears on a slide but is not discussed. Nothing is said about the feasibility study.
Nothing was said about the study, but it turns out it was completed — I received a copy of it (dated 5 April 2019) from LeBlanc via the Municipal Clerk’s office.
I will post it here for your reading pleasure:
Enwave - Sydney Harbour_Final
Private sector
What jumped out at me immediately was the list of buildings included as possible “candidates” for the district energy network. As noted above, half of them do not currently exist. Before I go through the list, though, I need to add a few more developments to the project timeline:
November 2017
Harbour Royale Development Ltd (HRDL), a company led by Sydney businessman Martin Chernin, submits a plan to develop the Sydney waterfront on behalf of a “consortium” that he says includes Trifos Design, CBCL, Canderel, Ambassatours and the Westmont Hospitality Group. The proposal (the only one the CBRM receives) includes:
- a publicly funded regional library
- an expanded Holiday Inn and relocated casino
- a marine interpretive center
- a residential tower
- a commercial tower
I will also note that Chernin owns the building housing the Justice Centre on Charlotte Street and the Commerce Tower on Dorchester Street.
2 February 2018
On the recommendation of John Phelan, then-CBRM manager of economic development, council agrees to allow HRDL to proceed to prepare “a more detailed” proposal for developing the site including “full costs” and “possible funding mechanisms.” Phelan notes:
I just want to reiterate that this is an expression of interest process and there’s no financial commitment by CBRM, our commitment is to work with the developers in the next phase.
26 June 2018
During the regular regional council meeting on 26 June 2018, council approves a motion discussed during an in camera session earlier that day to enter an 18-month “pre-development agreement” with HRDL.
December 2019
Council agrees to extend HRDL’s contract an additional 18 months although there has been no progress in waterfront development.
Source: District Heating and Cooling at Sydney Harbour
Got that? Good, now here are the buildings that were considered for inclusion in the feasibility study but dismissed for various reasons (I’m going to use commie red to mark the publicly owned buildings in these lists):
- Joan Harriss Cruise Pavilion
- Sydney Government of Canada Building (Citizenship & Immigration)
- YMCA of Cape Breton
- Centre 200
Here are the buildings that were included with the idea that they would be “partially” supplied by the district energy plant:
- Holiday Inn
- Vista Heights
Here are the existing buildings that were included without qualification in the study:
- CBRM Civic Centre
- Justice Centre
- Commerce Tower
- Cambridge Suites
And here are the as-yet non-existent buildings that were included:
- New College (i.e. the Marconi Campus of the NSCC, at the time the report was drafted, the waterfront location had not been confirmed)
- Waterfront Development Casino & Hotel Tower
- Waterfront Development Residential Apartment Tower
- Waterfront Development Marine Interpretive Centre
- Waterfront Development Library
- Waterfront Development Commercial Office Space
If this report was all but done in March 2018, then the authors were told to include HRDL’s waterfront development project in their assessment before council had officially approved HRDL’s waterfront development project.
Which means we, as a municipality with “no financial commitment” to the project spent $100,000 on it — GMF and Department of Energy funding that could have been directed to other municipal priorities.
Given that eight of the 12 “candidate buildings” in this study are privately owned and that the district heating system under consideration would be privately owned, we basically spent $100,000 to determine if one private company could make money servicing other private companies (one of which, HRDL, would own half the buildings).
I would like to know how much the private developers involved contributed to this study.
I would also like to know how this project meets the criteria for GMF projects, which are intended to help municipalities “make [their] residents’ lives more secure and affordable.”
Details
The feasibility study was completed by the Danish consulting firm Ramboll, which characterized it as “a preliminary design of a district heating and cooling (DH&C) network including production facilities at Sydney, Nova Scotia.” The authors explain in the introduction how the “candidate buildings” for the study were chosen:
These candidate buildings were selected by Enwave based on consultation with CBRM, FC Scriven O’Neill, building owners and Ramboll.
As you can imagine, much of the information about the imaginary buildings was imaginary:
No energy demand information was available at the time of writing for the college, the new harbourfront renewal project or the library building, benchmarks have been used as placeholders for the purposes of this initial concept development phase
The report assessed five different scenarios for the DH&C network in Sydney:
Source: District Heating and Cooling at Sydney Harbour
As noted earlier, council was told in April 2019 that “piping treated wastewater from Battery Point to [a] facility downtown is [the] best option financially” while a “biomass facility” is the best option “environmentally.”
But that’s not the whole story. The authors noted that in all five scenarios:
…building conversion costs are assumed to be paid for by external grant funding [emphasis mine] as the burden of covering these costs greatly reduces the economic benefits of the project.
Yes, we would be expected to pick up the tab for converting the buildings — including the privately owned buildings — to allow them to hook up to the district energy network. Elsewhere in the report, the authors estimate this tab at $4.1 million. But they helpfully suggest possible sources:
Secure grants and/or incentive funding from such sources as the Green Municipal Fund, Green Infrastructure Fund, the Nova Scotia Green Fund, Atlantic Canada Opportunities Agency, or others.
Ramboll uses two measures for the expected return on a capital project: IRR (internal rate of return) and NPV (net present value) both of which are complicated methods of determining whether a project will be profitable. (Apologies to the accountants out there who do not find these things complicated, I should perhaps say, complicated to the layperson). What matters, for our purposes, is that both are methods of calculating profitability:
Source: District Heating and Cooling at Sydney Harbour
The authors of the report rank the scenarios strictly according to return on investment, so Scenario 3a comes first — with caveats:
Economically the scenario which has the highest value is Scenario 3a. This project achieves an unlevered IRR of 9%, which is generally consistent with rate regulated utility returns; however, given the nature and risk profile of a new development project without guaranteed revenue base, significantly greater returns would be required to make this project feasible. A 1km connection from Battery Point to the district energy plant located at the waterfront development is included in the economic analysis.
Think about that for a moment, the point of GMF funding is to help municipalities “make [their] residents’ lives more secure and affordable” and we’ve used it on a report designed to choose a district heating system that will make the most money for a private company — a return “significantly greater” than that achieved by regulated utilities like Nova Scotia Power.
(In passing, I think I know why this report has been quietly deep-sixed: HRDL probably liked the idea of a cheap source of energy for its existing and TBA buildings but realized Enwave is not in the business of providing cheap energy. The two private companies that most stand to benefit from this system are at odds with each other.)
But wait, there’s more. Check out the “second best” option:
…a biomass boiler option is the second best performing independent option for the energy network with an IRR of 7%. In order to achieve the same IRR as Scenario 3a (sewer heat recovery), a biomass cost of $38/ton biomass would be required.
I’m going to talk about biomass in a minute, but first on a note on the “indicative” location of the “energy centre” at the heart of this project.
File under ‘L’
For reasons never actually explained, the publicly owned library was chosen as the site of the “energy centre” for this private project.
You might say, ‘That makes sense, it’s a new construction — easier to incorporate the plant,’ which is true, but would be true of all the buildings in HRDL’s waterfront development scheme — so why choose the public library instead of the privately owned office tower or the residential tower or the hotel/casino or the marine interpretive center?
Could it be because the developer wouldn’t want to ask tenants to share space with a district heating and cooling plant?
Or could it be because, if the plant is in a public building, the CBRM can be said to be “leading” the project, therefore making it qualify for Green Municipal Fund money? Even though the CBRM will neither own nor operate the district energy system and owns only two of the 12 buildings considered “candidates” for connection?
Enquiring minds want to know.
Under Scenario 3a (the best one “economically”), the energy centre would cover 400m2 (1,300 square feet) at the “indicative library location” and include:
• 1400-ton chillers (3 chillers total)
• 10,240MBH [3MWth]heat recovery chiller
• 17,060 MBH fuel oil boilers (3 boilers total)
• Network distribution pumps
• Pressurisation unit
• Water Treatment equipment
• Buffer tank
• Dirt and Air Separator
• Network heat exchangers.
Elsewhere, the authors acknowledge that it will be necessary to inquire as to the “appetite” of the library owners (us) “to incorporate a district energy centre with their building.” The location must be confirmed with “CBRM stakeholders and local developers.”
On the bright side, Scenario 3a is at least better than Scenario 1, which would require the installation of a biomass boiler in the facility — something even the consultants seem to realize might be a non-starter:
A sewer heat recovery project utilising waste heat from the local wastewater treatment plant could be incorporated into the planned developments in Sydney in a more straightforward fashion than a biomass boiler plant where plant location, permissions and acceptance in the downtown location may prove more difficult in this case.
If the biomass option were selected, the energy plant footprint would be 600m2 (1,970 square feet).
To ensure the returns were high enough to make the project worth Enwave’s while, the biomass would have to be sourced at $38/ton.
And now, we really must say something about biomass.
