Heating the city, one neighborhood at a time

Vancouver's Southeast False Creek Neighbourhood Energy Utility uses sewage heat to provide energy and hot water for 22 buildings in a nearby area. (David Dodge, Green Energy Futures/flickr/cc)

VANCOUVER, Canada — When lit soft green or red, the five metal fingers forming something like a giant hand next to a bridge here look like just another wacky piece of public art in Vancouver.

But those “fingers” are actually exhaust pipes. And they’re part of a bold experiment to change the way energy is delivered in this city.

The pipes shoot out from a building under the bridge. Inside occurs a remarkable recycling of energy. Heat is captured from a nearby neighborhood’s wastewater — sewage is actually quite warm from the runoff of hot showers and such. That captured energy is used to heat up clean water, which is sent back through a different set of underground pipes to the area’s 1,100 condos, shops and community center.

Some 22 buildings use this hot water to power two of their biggest energy hogs: room-heating and hot-water systems. It’s like having one giant furnace and hot-water heater for the whole neighborhood.

Setups like this are commonly called “district energy” systems.  Vancouver calls it a “neighborhood energy utility.” This one was launched in 2010 to power the Winter Olympics athletes’ village, an area also known as Southeast False Creek. Compared with arrangements where each building fires its own boiler, it reduces greenhouse gas emissions by 60 percent.

Now, Vancouver’s experiment is about to take a huge step forward. One of the city’s biggest real-estate developers recently announced plans to use a similar model for building out a utility for much of Vancouver’s downtown peninsula. Ian Gillespie says his privately held Creative Energy will dramatically reduce Vancouver’s overall production of greenhouse gases and go a long way to helping the city meet ambitious environmental goals in its “Greenest City 2020 Action Plan.”

A district-energy leader

The efforts by the city and Gillespie are part of a wave of aggressive development of district-energy utilities throughout the Canadian province of British Columbia. It’s a push that energy experts say is turning this region into one of the world’s most prolific developers of these kinds of systems.

But that’s only happening because the province and the city have provided the regulations and the support to foster those experiments, which require a huge amount of upfront capital and long-term patience for the payback.

District energy in Vancouver: Like having one giant furnace and hot-water heater for the whole neighborhood. (Christopher Porter/flickr/cc)

District-energy systems aren’t new. According to the International District Energy Association, their roots go back to ancient Roman schemes for heating baths and greenhouses. Modern city-scale applications, using steam to heat large numbers of buildings, began in the United States in 1877. Some of those city systems in North America still exist. But the bulk of today’s systems are in Northern Europe, China and Russia.

District-energy systems allow power, heating or cooling to be generated by a centralized operation to service a defined local area. They’re useful for dense urban districts, because they eliminate the need for each building to have its own energy-production system to heat and light buildings. They’ve also been seen as absolute necessities by factories far from regular power grids, or institutions that can’t afford a power loss, such as universities, research centers and hospitals.

In the past, many of these systems burned natural gas or coal to create heat. But with growing concern about climate change, experiments are abounding with lower-carbon sources: wood chips or wood waste, sewer heat, heat thrown off from industrial plants or geothermal pipes deep underground. The UN Environment Programme recently launched an initiative on district energy in cities, supporting projects undertaken by national and municipal governments. The district-energy concept has become exceptionally popular in Europe in recent years and has started to make a comeback in the U. S. and Canada.

“What’s remarkable in British Columbia is there’s so much activity in the market. There are more district-energy projects underway there than anywhere else,” says Brad Bradford, the Canadian specialist at the International District Energy Association. Other cities have bigger systems. But the Vancouver-area projects are multiplying at the fastest rate. That’s partly due to B. C. rules that foster experiments in energy. It’s also due to the environmentally aware local culture. “Having a regulated heat market, having a carbon tax, and having progressive, active municipal leadership,” says Bradford, “that is driving district-energy development.”

Complex systems

A 2012 report from B. C.’s Pacific Institute for Climate Solutions looked at how to encourage district-energy systems through regulation. The author, former B. C. Utilities Commission chair Peter Ostergaard, emphasized that district-energy utilities are challenging experiments for cities and private businesses to take on.

“Systems require a high up-front investment and for some systems, energy sales are lower than expected,” he wrote in the report. “This combination can lead to operating losses or deferral accounts that are larger than anticipated.”

The Southeast False Creek plant serves 22 buildings through a network of underground pipes. (GoToVan/flickr/cc)

By the time of that report, district-energy systems had already been built across British Columbia, at Simon Fraser University outside Vancouver and in or near the cities of Victoria, Kamloops and Prince George.  Since then, numerous others have been built or are in development, including ones in the Vancouver suburbs of Richmond and Surrey.

But Vancouver is pushing the hardest to have district-energy systems expand to vast new territories. Since 2007, the city has required that the developer of any large tract of land at least do a feasibility study to examine whether a district-energy system is possible.

As a result, the developer building a future community of 10,000 people in the southeast corner of the city is including a district-heat system as part of the project. Managers of what’s called the River District hope the system will be able to tap into waste heat from a nearby garbage-burning incinerator.

The city is also issuing calls for proposals to create two new district-energy systems along Cambie Street, a corridor that includes three major hospitals and where development is exploding. The new developments were required to be built in a way that would be easy to hook up to a future district system.

‘We can do it better’

But Gillespie’s efforts to build a system for huge swathes of downtown Vancouver is the biggest project of all.

Gillespie has completed some of the highest-profile developments in the city already, including two high-end hotels and a new office tower for the the telecommunications giant Telus. His most prominent project in the works is the striking Vancouver House, a luxury condo tower designed by star architect Bjarke Ingels.

But Gillespie has decided that development alone is not enough to shape a city. Earlier this year, he bought the city’s oldest and largest district-energy utility, a private operation called Central Heat. It provides the heat and hot water for 200 downtown buildings, pushing steam through a 14 km network of underground pipes. Its plant burns natural gas, a fossil fuel, making the utility the city’s single-largest target for reducing greenhouse-gas emissions.

Developer Ian Gillespie plans to expand the existing district-energy utility serving downtown Vancouver and use a cleaner energy source. (Josef Hanus/Shutterstock.com)

Gillespie’s plan: Convert the existing system to a fuel that emits less carbon than natural gas. That alone could see a reduction of 70,000 tons of CO2 emissions annually, equivalent to taking about 15,000 cars off the road. Eventually, he’d like to build a much larger new plant, also using a low-carbon power source.  Creative Energy will serve the original 200 buildings, plus build out new underground pipe networks to connect dozens more around downtown.

It’s an ambitious project, and outside the normal expertise of a real-estate developer. But Gillespie likes challenges, and he likes figuring out ways to make whole cities work, not just one building or one project.

“I’ve always had that luxury to be able to take on projects that were more about city building than just me buying a bigger boat,” says Gillespie. “And when you look at the infrastructure of a city, what is it every day that affects us? It’s the transportation system, the social fabric, the buildings, and then the energy system. Any one that can be improved upon, it makes for a better system. We think by using new technology, we can do it better.”

Two regulators

Gillespie already had experience with the alternative possibilities for heating buildings. Some of his early downtown residential projects hooked into Central Heat, using the utility’s steam. And when his team designed the new Telus office tower, they realized they could tap into some of the waste heat thrown off by the company’s data center and use it to warm the offices in the adjacent tower.

But building a new plant and miles of underground pipe, along with adapting an old plant to a new energy source, is taking Gillespie to a much higher plane. To go there, he’s hired Trent Berry, a former electricity planner with BC Hydro, the electric utility that supplies power to almost everyone in British Columbia.

Berry will be responsible not just for figuring out the complicated technical parts of the new district-energy system, but also the regulatory pieces. That’s because Creative will be governed by two bodies.

Creative will have to satisfy the B. C. Utilities Commission that it is providing energy at a similar rate to what other customers are getting, as it does with all utilities that provide power in a monopoly situation. Creative also will have to satisfy city officials, because Vancouver will only require developers to hook their buildings up to Gillespie’s system on the condition that he fulfill his pledge to find a low-carbon energy source.

While that kind of regulation can be cumbersome, it’s necessary to get private businesses to set up their buildings to be able to receive heat from district-energy systems. The rules help the public trust that the price is fair; help other developers trust that they’re not being ripped off for power by one of their competitors; and give Gillespie confidence that an investment of tens of millions of dollars will be guaranteed a certain critical mass of users.

“Developers don’t play well with each other. So that is a challenge, how you build trust,” says Berry. “The city wants to make sure that it makes sense to have a private entity deliver on public outcomes, and it’s a leap to say a developer should provide that. Other developers can say, ‘Are you screwing me?’ But right now, the commission has a strong hand. Ian can’t charge his own projects a different rate.”

The bureaucrat who is overseeing Vancouver’s efforts, deputy city manager Sadhu Johnston, says there is one other key element to encouraging district-energy creation. It’s what he tells the city politicians and engineers who call from Calgary and Houston to ask about how to promote district-energy utilities.

“We always say, ‘Build one yourself first’. We learned lessons from that,” Johnston says, referring to the Southeast False Creek utility with the five finger-like pipes. “Out of the lessons we learned from building ourselves, we developed policy.”

Correction: an earlier version of this story misspelled the name of Trent Berry.

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Frances Bula is a Vancouver-based journalist who has been covering city politics and urban issues in the region for 20 years.  Full bio

LEARNING FROM VANCOUVER

  • The city thinks district-energy systems can reduce greenhouse gas emissions by 120,000 tonnes, equivalent to removing 25,000 cars from the road.
  • Vancouver requires that the developer of any large tract of land do a feasibility study to examine whether a district-energy system is possible.
  • A developer purchased an existing district-energy system downtown and plans to convert it from burning natural gas to a lower-carbon fuel.

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