District Heating in North Vancouver

Lonsdale Energy district energy system delivers high-efficiency, cost-effective sustainable energy to North Vancouver customers, while reducing community-wide GHG emissions.

LEC expanded its delivery of environmental, social and economic benefits into Central Lonsdale, where the City's new Library/Civic Centre is under construction. / Lonsdale Energy Corporation.

In the early 1990s, the City of North Vancouver initiated the planning and redevelopment of the waterfront and urban core area, assigning planners to investigate potential land use and energy planning synergies. In 1998, the City funded a feasibility study for district heating in three strategic locations. The pre-feasibility study indicated little potential for a central plant, but recommended a system using interconnected mini-plants. Prompted by an interest in reducing energy costs and GHGs, the City pursued a district heating system in the new redevelopment area.

The mobilization of the project in North Vancouver is the result of a variety of partnerships and synergies. City Council was instrumental in motivating staff to explore potential energy opportunities for new developments in the core and leveraged an opportunity through the Federation of Canadian Municipalities to see first hand European examples of district energy. This energy “mission” led to the hiring of consultants to explore district heating in North Vancouver.

Governance

The consultants’ report recommended interconnected mini-plants for a district heating utility in North Vancouver. This led to the establishment of the Lonsdale Energy Corporation (LEC), a separate utility company, which is owned, governed, and regulated by the City of North Vancouver. In 2003, the FCM provided $4 million in funding through the Green Municipal Fund. Ultimately, the local government retained the services of Corix Utility to handle development maintenancei, monitoring, servicing, and day-to-day operation of the Lonsdale mini-plant.

In order to develop an efficient district heating system, local government staff needed to identify potential areas that would have a high demand for heating. Also, optimum areas would have a strong mix of land uses to allow for a variety of different energy demand cycles. The project required a close working relationship between planning staff and developers to ensure the proper integrationi of the district energy infrastructure into city works operations. Anticipated demand for heating was modelled for residential buildings, which influenced the size of the mini- plants. Currently, the LEC has developed detailed guidelines for developers’ design teams to help implement the infrastructure design and controls needed to efficiently connect to the system.

Local Service Area Bylaws

Under Section 8(2) of the Community Charter, a municipality may provide any service that the council considers necessary or desirable, and may do this directly or through another public authority or another person or organization. In addition, the municipality may, by bylaw, regulate, prohibit, and impose requirements in relation to municipal services, as stated in Section 8(3). These provisions provide authority to establish particular types of energy services (e.g., a hydronic district heating system) and to require buildings to connect to the energy service.

That authority could also be combined with the local service area authority under Section 210 of the Community Charter, to allow the municipality to recover all or part of the costs of the district heating system through taxation within the local area.

The City of North Vancouver established a Hydronic Heat Energy Service Bylaw to create a district heating service area for Lower Lonsdale, with a requirement that all new or retrofitted buildings over a certain size be connected to and use the system. A wholly owned subsidiary, Lonsdale Energy Corporation (LEC), was incorporated in 2003 to operate the system. The council acts as the tariff setter, regulating the rates charged by LEC. In February 2007, the City established a service area bylaw to introduce a second system, to be served by LEC, in the expanding Central Lonsdale neighbourhood.

Hot water heat is created three times more efficiently than electrical heat. / Lonsdale Energy Corporation.

Implementation

Strong partnerships transformed the City of North Vancouver into a district heating leader in the province. For example, City of North Vancouver council provided leadership to motivate the engineering, financial, and planning professionals to mobilize the project internally. Another key partnership was the relationship with FCM, which provided low interest loans and grants for start-up funds.

As the plans progressed, the City selected the interconnected mini-plants system, requiring cooperation from the building community. All new buildings would need underground parking and selected sites would provide space in these underground lots for mini-plants of 4 to 6 high efficiencyi boilers. In moving from the planning of the system to the commissioningi and operating of the system, the City of North Vancouver needed an experienced operator to provide design services as well as system and customer operations services (CORIX). With this expertise and leadership Lonsdale Energy Corporation commenced operations in 2004.

Barriers and Breakthroughs

The most important breakthrough was the passing of the Hydronic Heat Energy Service Bylaw. This bylaw required developers in the district to provide infrastructure to connect to the system, avoiding the construction of baseboard heating in the district. This commitment by Council ensured the district would be flexible to a variety of energy sources and would reduce GHGs. Note, however, that this bylaw is precedent-setting and has not yet been tested by the courts. Formal legal advice would be necessary before proceeding with a similar bylaw.

Outside of local government, there was a key barrier related to the Provincial Social Service Tax Act. Currently, major energy providers like Terasen and BC Hydro do not pay PST or charge it to residential customers. However, because the LEC is still a net user of natural gasi they were charged PST and were also required to charge its customers PST, putting the LEC at a competitive disadvantage with other competitors. The City of North Vancouver and LEC were successful in convincing the province to amend the Social Service Tax Act. But the LEC is still required to pay PST on large natural gas purchases, a barrier LEC continues to lobby for amendment. Another key barrier relates to potentially competing regulations aimed at reducing greenhouse gas emissions and reducing particulate matter, given that some fuel sources (e.g., bioenergy) may represent a reduction in greenhouse gas emissions but an increase in particulate matter.

Cleaner air. Nitrous oxide emissions are reduced by 64%; carbon dioxide emissions by 21%

The choice of developing a central heating system or an interconnected mini-plant system was a key turning point. The City decided an interconnected mini-plant system was better suited to the Lonsdale area, rather than a large central system that would reduce development potential in the area. Also, the efficiency of the boilers was underestimated in the original design, resulting in the over-sizing of the mini-plant boilers. The design originally estimated that five mini-plants be constructed to serve 3 million ft² , underestimating the efficiency of the mini-plants and boilers in the system and incorrectly forecasting the heating demands of the system.

Results

From a performance standpoint, the district heating is much more reliable than conventional heating sources. If one plant fails the other plants continue to provide hot water. Mini-plants are well suited for urban environments, easily fitting into small areas in residential and commercial parking lots. The boilers are extremely efficient, providing a 95% rate of capture on heat energy and providing a production capacity of 6 Mega Watts (MWs) serving 600,000 ft² thus far. The boilers are vary flexible, allowing for the use of a variety of different fuels and the easy integrationi of alternative energies like solar power. Although the system is performing well, the high grid temperature of 82 degrees Celsius constrains the number of fuel sources that can be used. The experience from the project has shown that running the grid at a lower temperature, provides greater access to a higher quantity of lower heat sources.

Environmentally speaking, the project improves air quality through the reduction in nitrous oxide emissions by 64% and carbon dioxide emissions by 21% relative to conventional heating practice. The project has reduced GHGi emissions by 4,070 tonnes a year, saving roughly 49,098 GJ in energy a year. The water based delivery system is ideal for integrating alternative fuel source such as solar energy. Economically, the rates for energy within the system are very competitive. The rates include a capacity meter and a commodity charge which allows for the energy demand for each customer to be tracked. The LEC operates on a 20-year financial cycle, providing roughly 4.5% rate of return on investment.

The total system capital cost was $8 million (in 2003 dollars), below is the contribution breakdown

$2 million loan from the City of North Van
$2 milllion from CORIX utility
$2 million loan from the Federation of Canadian Municipalities
$2 million grant from the Federation of CanadiaLonsdale Energy Corporationn MunicipalitiesLonsdale Energy Corporation.