District Energy Revisited

I have an update on last week’s district energy study story, with some information gleaned from the Federation of Canadian Municipalities (FCM).

The full cost of the study was $175,400. The CBRM and Enwave Energy applied to the FCM for funding (with the CBRM as “lead applicant”) and received $74,700 from the Green Municipal Fund (GMF), a federal program established in 2000 and administered by the FCM. CBRM’s was one of 15 initiatives to receive funding for feasibility or operational studies, plans or pilot projects in May 2018. The project received an additional $25,300 from the Nova Scotia Department of Energy. That leaves $75,400 which, presumably, was contributed by Enwave.

The timeline for the study, as outlined on the FCM homepage, was 2017 to 2019.

The grant itself was approved in 2018 and announced officially in a 14 May 2018 press release:

In Nova Scotia, the Cape Breton Regional Municipality is partnering with the private sector to study the feasibility of creating a district energy system. The system would provide an affordable, low-carbon supply of thermal energy for buildings along Sydney’s waterfront and downtown core.

In an email, an FCM spokesperson was more explicit, telling me:

As you will see in this news release, Cape Breton Regional Municipality partnered with Enwave Energy Corporation to apply for Green Municipal Fund funding for its feasibility study on the district energy in downtown Sidney [sic].

But the money was received earlier, because CBRM council was told in March 2018 that the study was underway and expected to be complete by “late summer” that year.



I have been trying to ascertain who, in the CBRM, applied for this funding and for some reason, this has proved very difficult. I asked CBRM spokesperson Jillian Moore last week and she promised to look into it for me, but I have yet to hear back.

I don’t think it was CBRM council — mainly because Moore didn’t simply email me back and say, “It was CBRM council” —  but also because I could find only two references to the study in the council minutes and both were updates on its status. And though it was completed in April 2019, it doesn’t seem to have been officially presented to council.

The reason I am curious as to who approved this study and applied for funding is that the study seems designed to support a particular private development — Harbour Royale Development Limited’s (HRDL) plans for the Sydney waterfront. Meaning, the Danish firm (Ramboll) that prepared the report considers the six buildings HRDL intends to build on the waterfront as “candidates” for district heat.

The problem with this is that, as noted, the timeline for the study was 2017 to 2018 — which means CBRM applied for the funding in 2017.

But HRDL’s plan for the waterfront, although submitted to the municipality in November 2017, was not actually approved by council until June 2018.

Mind you, in its funding application to the FCM, the CBRM did mention the waterfront:

The district energy system would complement and accelerate concurrent plans to revitalize Sydney’s downtown core, supporting the 2014 Waterfront Revitalization Plan and the 2017 Downtown Sydney Revitalization Plan. It would also align with recommendations for reducing GHG emissions made in the 2010 Integrated Community Sustainability Plan, and in the 2011 Municipal Climate Change Action Plan.

But that’s quite different from supplying Ramboll with a copy of HRDL’s plans for the waterfront and asking them to evaluate the buildings for inclusion in a district heating system.

Moreover, the focus of the study seems to have changed between the time the CBRM applied for funding and the time the study was completed. Here are a couple of examples.



The CBRM told the FCM that Enwave would:

…conduct a study to explore the feasibility of a low-carbon district energy system for downtown Sydney, Nova Scotia. The system would provide an affordable, low-carbon supply of thermal energy and possibly electricity to buildings along the waterfront and in the downtown core, resulting in reduced GHG emissions and improved energy efficiency.

The completed study contains no reference to the possibility of supplying electricity “to the buildings along the waterfront and in the downtown core.”


Renewable & Residual

The description of the study says it will:

…evaluate renewable and residual energy resources for integration into the district energy system, including ocean water cooling, geo-exchange, sewage heat recovery, waste-to-energy, solar thermal, digester gas from the sewage treatment plant, and heat recovered from process cooling and ice rink refrigeration.

The actual report studied five scenarios for a district heating system, three of which included biomass, which is not mentioned in this description. That said, biomass systems do qualify under FCM guidelines as “renewable and residual” energy sources but it’s interesting that an application that listed pretty much every possible source known to man except biomass resulted in a report that focused to a large extent on biomass.



The description of the project says the benefits will include:

Significantly reduced energy consumption per building, as the efficiency of the energy supply will be much higher. Using heat pumps, renewable energy, and recovered energy, it is expected that the system will be able to improve heating and cooling supply efficiency by more than 40% compared to the business as usual scenario. Specifically, it is expected the Port Building (74 Esplanade), the Civic Centre (320 Esplanade) and the former DFO Building (90 Esplanade) will immediately reduce their energy consumption by more than 40% after connecting to the system.

The actual study declares the “Port Building” (the Joan Harriss Cruise Pavilion) ineligible because of its “[d]istance to the central plant and relatively low connected load” and makes no mention at all of the former DFO building (a building that, by 2017, was owned by the regional solicitor’s sister and her husband and which now rents office space to the Port of Sydney).



The CBRM’s description of the project says it “aims to increase municipal revenue streams while decreasing facility maintenance costs for the municipality.”

But by the time the report is issued, there are only two municipal buildings in the list of 12 “candidates” — and one of those, the proposed new central library, doesn’t yet exist.

And how the CBRM would “increase municipal revenue streams” is unclear, given that the report is concerned solely with Enwave’s potential return on investment from the project (a return the authors say must be “significantly greater” than the returns usually generated by regulated utilities).

That the project would be led by Enwave seems pretty clear from what Ken LeBlanc, the on-site energy manager in the CBRM for Efficiency Nova Scotia, told CBRM council in April 2019:

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.



And finally, while the funding application stresses the reduction in GHG emissions that will be achieved as a result of this project, the actual study is much more concerned with Enwave’s potential return on investment. Again, in fairness, this is a legitimate use of GMF money and it make sense in a case where a municipality is looking at an investment — but why should the public subsidize such a report for a private company?

The claim is that this will be a private-public partnership or a P3 project (sound alarm bells) but the description in the application is vague about the structure of this partnership:

The project also involves the development of a public-private partnership model in which Enwave takes on a leadership role in seeking and building lasting partnerships with Cape Breton Regional Municipality. Enwave will provide patient capital, technical and project management expertise, and the municipal partner will provide planning authority, policy direction, and municipal assets. This model may provide learnings for municipalities that face barriers to developing district energy systems, related to technical expertise and capital costs. The project could also increase awareness of district energy options for small municipalities.

I think Enwave taking on “a leadership role in seeking and building lasting partnerships” with the CBRM is another way of saying “this is a private company doing private business.”

I also think, given that this study was completed in April 2019 and we’re not talking about it, that Enwave’s capital was not sufficiently patient, so we may have dodged a P3 district energy system designed primarily to benefit a private investor. But I feel like we should have been better informed about it — you know, so that if it actually had proved worth Enwave’s while, we would have had time to consider whether we wanted to enter into a P3 agreement for a district heating system before the deal was rushed through council (because you know the deal would have been rushed through council).


Last words

By way of conclusion, I just want to note that the rules for GMF funding state that grants 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.” I don’t think the CBRM can honestly be said to be “leading” this project — particularly since, as noted above, the actual application refers to Enwave “taking a leadership role.”

I would also like to note that of the 15 projects funded by the GMF in May 2018, only two municipalities teamed with private companies in their applications – the CBRM and Winnipeg, which applied for funding for the Park City Commons brownfield redevelopment in conjunction with a private developer called EdgeCorp Developments Ltd (a project that, by strange coincidence, is also supposed to include a new public library).

Also of interest: the CBRM has apparently received GMF funding for five projects since the inception of the fund in 2000. (I am basing this on a search of the FCM’s database of “funded initiatives.”)

Those projects were:

  • CBRM Grand Lake Road Multi Use Path (2014-2018)
  • Sydney-Westmount Passenger Ferry Feasibility Study (2012-2013)
  • Outdoor All-Season Vermicomposting Unit Pilot Project (2005-2011)
  • Wind Energy Feasibility Study for Sydney-CBRM (in partnership with New Dawn Enterprises Ltd, 2005-2011)

So clearly, it’s not easy to land such funding, which probably means we should use it wisely. At the very least, I think it should mean council has some say over what projects are submitted. And at the very, very least, I think council should be asked its opinion on the desirability of entering into P3 agreements for public infrastructure.

Finally, I would like to say that I have been informed that burning biomass for heat is not as environmentally damaging as burning biomass to generate electricity (as is done in Point Tupper). Clearly, I need to educate myself on this and I promise to do so. In the meantime, I apologize for conflating the two (although, in my defense, it was Ramboll that brought up Point Tupper).


Featured image: Detail from the cover of the 2019 Ramboll study, “District Heating and Cooling at Sydney Harbour.”