A; Strategy Background - - PDF document

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Compass Resource Management Ltd. 200 - 1260 Hamilton St. Vancouver, B.C. V6B 258 Cansda Phone: 604-641-2875 Fax: 604-641-2878 www.compassrm.com

:A;.. Workshop Agenda and Purpose

• Present strategy scope and draft outputs for stakeholder input.
• Strategy expected to be finalized Fall 2012.
• Stakeholders will be provided Strategy document once completed.
• Presentation will be the basis of questions for breakout groups,

Workshop Agenda Start Duration Welcome coffee

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Breakout groups - all (break included) 10:00am Plenary - Report Back 11:45am Closing Remarks 12:15pm

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CREATIVE ENERGY NES NEFC CPCN

EXHIBIT

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District Energy - Overview zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA

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Distribution System Building Hydronic HVAC Energy Transfer Stations zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA

Cit) of 'JanCQU'Jer DE Strategy - Sta~ eholder

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Regional District Energy Activity

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,:.A;. Existing zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA

DE Systems in Vancouver zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA

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Strategy Background zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA

5.10·2012

Low Carbon District Energy (HLCDE"1 Strategy Objective:

To accelerate the establishment and expansion of cost

competitive LCDE systems in Vancouver. Greenest City Action Plan: Avoid 120,000 tonnes CO2 by 2020,

City of VanrClJ'ler DE Str a!egy Star eholde 1':'O:r 5"OP ~2

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Source of Vancouver GHGs

Heavy Trucks

5%

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District Solution vs Building Scale Solution

• SE False Creek NEU: demonstrates

that renewable energy can be cost effective at scale in dense urban settings - and delivers significant GHG reduction

• High upfront capital costs, but low operating costs + long

amortization create opportunities for cost competitiveness

• Economies of scale and other options for low carbon

technologies

• Systems can serve existing buildings
• Avoid 'island of green in sea of brown'

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• Use of local energy sources zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA

= resilience

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CoV Low Carbon District Energy Strategy Components zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA

1, Mapping opportunities 2, Clarifying ownership and operations roles 3, Implementation guidelines to address public concerns 4, Priority supporting policy/actions

• Tools to reduce risks (including load development)
• Tools to support lower rates
• Tools to reduce connectivity costs zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA

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Workshop #1: Feedback from Developers / Landowners

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• Confused about implementation roles and impacts on timelines
• Concerned about cost premiums: hydronic heat and client rates
• Unclear of the benefits of district solutions - more familiar with building scale

solutions

• If there are benefits to DE - question consumer willingness to pay any

premium

• Concerns over LEED standard and credit for district energy

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Workshop #1 : Feedback from Utilities

• Prefer multiple franchise/ service areas vs. single city-wide service provider.

Competition / diversity is healthy,

• Utilities perceived the current BCUC regulatory requirements as a barrier to

entry,

• Unanimously recognise important role of City in DE development.

City ,'Jf '.'an';ou'.'er DE Str3'egy - Stake~olcer ~":or~ st'lcp::.2

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Workshop #1: Feedback from Government / Institutions

• DE a key strategy for lowering GHG, where it can lower capital/lifecycle costs
• Access to capital/lack
• f experience are key barriers for communities
• Not In My Backyard (NIMBY) - public concern over supply impacts
• Some institutions / agencies_do not see DE as a core function
• Transition from existing campus energy systems will need to mitigate impacts
• n existing labour force
• City should consider supportive policies e.q. rezoning and bylaws that improve

DE business case; increased density; tax instruments; allow siting on municipal land; P3s.

• Greater coordination between local governments required (within region)

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Geospatial Vision Can Assist Implementation

• Guide area-based planning zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA

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feasibility (replace city-wide 2 acre DE policy?)

• Target growth to leverage

benefits of DE (part of long- term growth planning initiative)

• Target DE policies I strategies
• Consider large-scale supply

and transmission issues

• Identify logical system I

franchise boundaries

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Geospatial Data Sets

• Existing and projected fioor area
• Current and projected energy consumption (heating and cooling)

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• Existing DE systems
• Major infrastructure (sewer infrastructure, transit stations, parks, etc.)
• Existing planning units (comprehensive development districts, industrial

zones, etc.)

• Areas of interest for distributed electricity generation
• Large anchor loads zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA

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Geospatial Approach zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA

DE Low Priority Zone

DE Priority Zones: High growth/energy density, anchor loeds, candidate infrastructure Proactive, area-based DE franchise, ownership, plans and policies DE Opportunity Zones: Moderate growth/energy density, anchor loads, candidate infrastructure Ooportunistic extension via 2-acre study requirement and site rezoning conditions zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA

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DE Low Priority Zones: Low growth/energy density, no anchor loads, poor infrastructure candidate Emphasis on green building / site-oriented strategies

City of Vanccu,,~r DE Strategy - Sla~ eGolder I icrk::;;rcp

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Geospatial Vision - Priority/Opportunity Areas (draft)

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Projected Growth

Existing Floorspace New Floorspace

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thousands m2 DE Priority Areas 17,000 9,000

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DE Opportunity Areas

7,600

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1,700

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Subtotal 24,400 10,900 Existing / Committed DE

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Connecfions

• 4,400
• 1,800

Vancouver- Total Floor Area 45,800 13,000

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DE Areas as % Vancouver Total 53% ,.ll 84% (anticipated)

51012012 City of Vancouver DE Stralegy

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Ownership / Franchising Current Status

• Ownership:
• City developed, owns and operates SEFC, Considering expansion of system,
• SEFC ownership will be reviewed in 2013,
• Rest of systems are privately owned,
• No commitment or formal policy to develop, own or operate any other systems,
• No option toacquire systems
• Franchising:
• No overarching policy/strategy with regards to franchising,

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Ownership I Franchise Scenarios

Scenario Description

1) City-led

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City develops and owns bulk of new DE intrastruclure. (Possible partnership in conversion of existing systems).

2) Formal P3 Partial role for City in DE ownership (individual assets

and/or joint ventures) and proactive service area / franchising strategy. 3) Strategic Partnership No City role in ownership but proactive service area and franchise strategy with joint cooperation

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Example of City Led - SEFC

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• Initially developed, owned and operated by City
• Service area bylaw
• Utility located in municipal engineering department
• Transparent, fully allocated costing
• Emulates private sector financing model (City can

make profit)

• Independent rate review panel (advisory)
• Commitment to ownership review within 3 years
• Other examples: Lonsdale Energy; Revelstoke;

Markham; Copenhagen; bulk of Swedish systems (at start-up)

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Example of P3 Model - Enwave

Jointly by City of Toronto and the Ontario Municipal Employees Retirement System's Borealis Penco infrastructure fund (Borealis). Originally established as a Co-op between City, Hospitals, Queens Park, Terminal Railways

In 1998 Toronto entered into a joint venture with Borealis to fund

expansion, Financial return to City, Governance features:

• The shareholders established a board of directors
• City and Borealis equally represented on board

In December 2011, the Toronto and Borealis announced sale of

Enwave through an auction process, Other examples: Regent Park (Toronto); Windsor; Richmond (under development)

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Example of Strategic Partnership Model - Southhampton, UK

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Central heating and cooling scheme started in 1986 with competitive selection process to secure Cofely (DBFOO). About 40 customers with 70,000 MW,h/year sales today. Energy sources include geothermal (open loop), gas/oil-fired CHP, conventional gas-fired boilers, and chillers.

• 11 km of distribution piping,

Owned and operated by Cofely, subsidiary of GDF Suez. Joint Co-operation Agreement (JCA) between City and Cofely.

• Model under consideration in Seattle

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City's Ownership Model Evaluation Criteria

• Advance City policy objectives
• Financial and risk exposure for City
• Competitive customer service, pricing and transparency
• Consistency, predictability, and affordability for developers
• Enabling environment for utility industry

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Ownership Feedback

• Three ownership models
• Five evaluation criteria
• Opportunity to review and comment on criteria and models
• And to provide feedback on the model the City is considering

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Current City Supporting Policies / Actions zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA

• Large site rezoning policy requires screening of DE for rezoning applications (EcoDensity

Action 2),

• Official Development Plan policies and rezoning conditions:
• Hydronic heating zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA

I connection requirements for Northeast False Creek, Cambie

Corridor, parts of Chinatown, and River District

• Service Area Bylaw in South East False Creek Neighbourhood:
• All buildings must connect to system
• Voluntary connections to SEFC outside neighbourhood boundaries

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City of 'Jancou'.er DE Strategy - 5ta~ ebctder \'/or~shop 1;:2

Supporting Policies / Actions Under Consideration

1, Land use I building policies

• Additional service area bylaws - for immediate connection to low-carbon DE systems
• DE connectivity and connection requirements - for future connection to low-carbon

DE system

• Green building standards (reconcile LCDE Strategy with zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA

LEED requirements) 2, Cost competitiveness policies

• Property taxation of new LCDE utilities
• Processes to reduce DE infrastructure costs through coordination with municipal

infrastructure planning

• Lobbying senior levels of government for supporting policies and funding commitments

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Supporting Policies / Actions Under Consideration zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA

• 3. DE development standards and processes
• Streamlined approval processes for DE infrastructure
• Regional coordination
• Technical standards to ensure heat source flexibility, system scalability, and system

compatibility with building design

4, Engagement

• Co-marketing DE (consumer education, etc.)
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Stakeholder Input

• Stakeholder feedback on Introductory Presentation (15 mins)
• Questions?
• Key issues to address?
• Breakout group (1 hr 45 mins)
• Purpose: provide feedback, cross pollinate ideas, promote shared learning
• Ownership models and criteria
• Key supporting policies / actions and elicit feedback
• Engagement and advocacy priorities

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