The City of Edmonton (Edmonton) has published a District Energy Strategy. To meet its climate targets, Edmonton aims to reduce emissions from heating and cooling buildings through a "City-wide decarbonized district energy network" to provide emissions-free thermal energy to connected buildings. The District Energy Strategy was developed to support this objective. In support of the District Energy Strategy, an analysis of housing density was performed to identify which Edmonton neighbourhoods are likely to have sufficient thermal demand density to support a district energy system, coupled with regulatory and economic conditions that support successful district energy implementation. The District Energy Strategy then considered potential risks and mitigation measures to district energy development, and identified action items to ensure successful development over both the short and long-term.

District Energy and Benefits

A district energy system distributes thermal energy to multiple buildings in an area. This occurs through three components. 1) the production of thermal energy, 2) a piping system to deliver the energy (the energy transfer medium is typically water or steam); and 3) energy transfer stations at each building to supply space heating, domestic hot water heating and/or cooling. This is more efficient than using individual boilers and chillers in each building.

There are also various indirect benefits of implementing district energy such as, decarbonization of the electricity supply, electrical distribution system support, solid waste diversion, forest fire mitigation, negative emissions for hard-to abate sectors, enabling a circular economy and job creation.

Identifying Areas in Edmonton Best Suited for District Energy

Certain conditions are preferred for optimal use of district energy. In creating its District Energy Strategy, Edmonton considered the following when identifying and evaluating district energy opportunities:

  • High-density, new development (clusters of large buildings).
  • Areas where Edmonton has increased control over the development process through rezoning, development permits and building permits to ensure connection to a District Energy System, or development of city-owned land.
  • Presence of a potential "anchor" load for a new District Energy System (particularly municipally-owned buildings).
  • Presence of a District Energy-scale low-carbon thermal resource.
  • Voluntary or mandatory GHG emissions regulations for buildings (such as C627 Edmonton's Climate Resilience Policy for city-owned buildings).
  • Presence of existing high-density buildings that may connect in the future.
  • Close proximity to an existing (or planned/developing) District Energy System.

Based on the above considerations, Edmonton has identified certain areas that are best suited for district energy. These areas include 25% of the new housing developments in Edmonton, and thus provides an opportunity for 25% of new housing to have zero emissions heating through district energy.

Identifying and Overcoming Barriers to Development

While Edmonton was able to identify numerous areas that met the considerations for potential district energy development, there are still a number of key barriers to district energy development and use in Edmonton. First, without emissions regulations or higher carbon prices, low-cost gas-fired energy provides limited incentives to transition to lower GHG emissions energy like district energy. Second, upfront costs and load risk can be barriers to the development of new district energy systems. Third, development of district energy requires coordination amongst numerous stakeholders, including developers, building owners, utilities and the city.

One strategy for overcoming these barriers is proceeding by way of public (e.g. municipally) owned district energy with a mandatory connection bylaw within a defined service area. This strategy has been successful in British Columbia, but requires the municipality to incur most of the financial risk and responsibility for developing, owning, operating and governing a district energy utility. There are several benefits to such a strategy such as: making it easier to establish mandatory connection requirement; municipally-owned utilities are exempt from economic regulation by the Alberta Utilities Commission (the AUC); municipalities can establish regulation aligned with the size and policy objectives for district energy; municipalities can have a lower cost of capital or longer time horizon; and municipalities can access low-cost financing or grants from governments that may not be available to the private sector. After the district energy system is established, the option exists to divest the system to the private sector.

Another strategy to overcome the barriers is privately owned district energy systems. To utilize this strategy, the risk for private sector investment must be lowered, by incentivizing buildings to connect to district energy and/or introducing other mechanisms to lower initial costs or risks for new district energy systems. Additionally, there must be a framework for identifying and developing district energy opportunities with the private sector.

The District Energy Strategy suggests an evolving framework to address district energy development, to ensure short term opportunities are not missed, while Edmonton develops and implements policies that will encourage more private sector participation in the future. Since Edmonton has no current plans to enforce compulsory GHG emission limits for non-city buildings, a policy of initiating municipally-owned district energy systems with mandatory connection bylaws in priority areas is identified as the primary method for developing district energy in the short-term. The District Energy Strategy outlines that Edmonton can also support district energy development by committing to connect new and existing city-owned buildings as anchor loads on city-owned or privately-owned systems; and Edmonton should consider initiating and de-risking new systems and then divest such systems once established, and re-invest the capital in another new system or expansion. This approach would be transitional as Edmonton works to develop the policy and regulatory groundwork for more private sector investment in the future. The District Energy Strategy goes on to note that over the near and medium term, Edmonton should make proposals to the AUC seeking decisions to ensure appropriate economic regulation of privately-owned district energy systems, and clarity around the AUC's approval criteria/process for franchise agreements.

The District Energy Strategy concludes by identifying several short-term action items to support district energy development in Edmonton.

  • Ensure buildings are ready to connect to district energy.
  • Lead district energy development.
  • Build a district energy database, identifying opportunities and collect energy data.
  • Develop supporting policies and advocate for appropriate regulation.

See our earlier blog titled: No Complaint to Complaint Based Regulation: Alberta Utilities Commission Decision 26717-D01-2022 relating to the Downtown District Energy Centre located in Calgary.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.