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HomeMy WebLinkAboutDSD-20-151 - District Energy Phase 2 StudyREPORT TO:Planning & Strategic Initiatives Committee DATE OF MEETING:September 28, 2020 SUBMITTED BY:Justin Readman,General Manager,Development Services 519-741-2200 ext. 7646 Denise McGoldrick, General Manager,Infrastructure Services 519-741-2200 ext.4657 PREPARED BY:Tim Donegani, Senior Planner 519-741-2200 ext. 7067 WARD(S) INVOLVED:9 & 10 DATE OF REPORT:September 168,2020 REPORT NO.:DSD-20-151 SUBJECT:DowntownDistrict Energy Pre-FeasibilityStudy and Business Case RECOMMENDATION: THAT staff be directed to develop a business case for a Downtown district energy system; and further THAT staff be directed to submit aGreen Municipal Fund Feasibility Study grant applicationto helpfund the Downtown district energy business case development. BACKGROUND: In 2018, the Regionof Waterloo, area municipalities and local energy service providers approved the Community Energy Investment Strategy (CEIS). Its goal isto improve the targeted energy investments. It seeks to integrate economic and environmental thinking, to transform the energy system of the region;and reduce energy use and greenhouse gas emissions (GHGs)by 80% by 2050. The CEIS Governance Committee identified district energy as one of three priority actions for the first three years. Consideringthe impacts of climate change,andnational, regional and City commitments to action,Council declared a Climate emergency in 2019 and directed continued support of corporate and community climate initiatives to reduce greenhouse gas emission by 80% by 2050. Further, in March 2019throughreport DSD-19-047, council resolved: *** This information is available in accessible formats upon request. *** Please call 519-741-2345 or TTY 1-866-969-9994 for assistance. 1 - 1 That the results of the FCM/GMF Feasibility Study: Municipal Tools for Catalyzing Net-Zero Energy Development be used to conduct specific business cases, establish targets and engage with landowners for one or more pilot projects for: -Areas undergoing significant redevelopment, such as the King/Victoria area -The planning of new communities or neighbourhoods District energy (DE) is aprovenandsimple technology. Heat and cold is generated at a centralized plant and then circulated to customers through piped hot and cold water. District Energy systems existinmany large to mid-size municipalities including Windsor, London, Hamilton, Markham andToronto.While there are many economic development, cost and energy security benefits. Itprovidesa flexible thermal energy backbone that enablesgreen solutions that are not available to individual building-level HVAC systems. Ground source heat pumps, also called geothermal energy, use electricity (from the -carbon electrical grid) and steady ground temperatures to efficiently produce heating and cooling for buildings. When paired withaDEsystem, itproduces far fewer GHGs than conventional HVAC systems.Geothermal systems are only successful under certain underground conditions, including those found under downtown Kitchener. REPORT: The CEIS governance committee and its administering organization, Waterloo Region Community Energy,hired a consultant (FVB)to study the feasibility of a district energy pilot projectcentred around the King/Victoria intersection.That Phase 1 Pre-feasibility study is included as AppendixA. Phase 1 Pre-feasibility Study Findings 2 The study found that 450,000 m(4.5millionsquarefeet)of forecasted new floor space is sufficient to support a DE system. Sixenergy centre concepts were evaluatedas shown in Table 1: Table 1 Downtown District Energy Prefeasibility study highlights hƦƷźƚƓ /ğƦźƷğƌ ЋЎΏǤĻğƩ bĻƷ tƩĻƭĻƓƷ DID ǝƭ LƓǝĻƭƷƒĻƓƷ LƓƷĻƩƓğƌ ğƌǒĻ θЍі .ǒƭźƓĻƭƭ ğƭ Λυ ƒźƌƌźƚƓƭΜ wğƷĻ ƚŅ ΛυƒźƌƌźƚƓƭΜ ƭǒğƌ wĻƷǒƩƓ ΛƷƚƓƓĻƭΉǤƩΜ 1 - Conventional Gas Fired Boilers/Electric 37.6 8.9% 20.7 692 Chillers 1A - Option 1 Plus Combined Heat and 39.4 8.9% 21.2 -195 Power 2 - 46.9 5.3% 5.8 5,115 2 1 - 2 2B - Option 2 Plus Combined Heat and 48.7 5.4% 6.4 4,228 Power 3 - 51.8 4.3% 1.5 5,115 3C - Option 3 Plus Combined Heat and 53.6 4.4% 2.0 4,228 Power Staff recommend further study of Option 2-Adistrict energy system paired with an open loop Ground Source Heat Pump (GSHP) that reduces GHGs by 53% (5,000 tonnes annually)andhas an internal rateof return of 5.3%.Construction of option 2 requires a $47mcapital investmentover time-$20m in the first phase.Financial estimates are class D indicative (+/-50%) and need to be refined. Load assumptions in this study are conservative;most forecasted load is on publicly owned landthat is slated for future development.Additional customerscould be connected including private development and retrofits of existing buildings (e.g. City Hall). This would yield additional financial, economic development and environmental returns. The Opportunity Environmental The Study shows that GHGswould be half of business as usualemissions.As the district energy system grows, it enables more renewables, thermal storageand waste heat recovery to advance climate objectives.According to FVB president and CEO, Richard Damecour,you cannot meet your climate targets without district energy. Furthermore, district energy systemscan be used to meltsnow onnearby roads, sidewalksand trails. This can reduce salt application,improvewater qualityandprovide active transportation benefits. Economic Development District energy brings the potential for broad and important economic development benefits including: Local construction and operationaljobs Keeps more energy dollars localThe CEIS found that $1.8B energy dollars leave the region every year. Tailored heating and coolingsolutions such as server cooling for tech firms or heating for biotech sectorscan help attractthese firmsto collocate near DE systems Less upfront HVAC cost and ongoing liability for building ownersand operators Eliminating HVAC equipment can free up building space for other usessuch as parking or rooftop patiosand allow for a flexible floor plate for incubators and accelerators A district energy system can help attract and catalyse green economy firms 3 1 - 3 Recent growth has put significant strain on the electricaldistribution system Downtown.The efficiency and thermal energy storage possibilities of a DE system canhelp delayor avoid therequired hydroelectric transmission investment. Adaptation and Resilience System uptime and avoided interruptions-District energy systems are extremely reliableandcan continue to provide service during electrical orgas system outages. District energy enables fuel switching (e.g. from natural gas to renewables)in response to environmental of financial pressures. Prepareforthe uncertainfutureof natural gas andcoming legislationaimed at lowering the carbon emissions of industry. It is important to move quickly on this opportunity because of the pace of Downtown development. The more time that passes beforeimplementing a DE system can mean that morepotential customers willbe missed and benefits foregone. Phase 2 Business Case Study Staff are seeking direction to pursue a phase 2 business case.This would: Confirm phasing, customers, conceptual system design and cost estimates(+/-10%) Determine how the systems will be financed.The positive rate of return, environmental, resilience and economic development benefits make this project interesting to potential investors including: o Green Municipal Fund loan up to ~$10m (15% forgivable) o Private investors including impact investors o City, Kitchener Utilities, Kitchener-Wilmot Hydro, Waterloo Region and the Province Confirmthe owner/operator model and establish asuitable governancestructure Set strategy,timing, pricing, marketingand contractconcepts. This will help articulate the service offeringnecessaryto attract and secure customers Include a cost/benefit analysis to quantify qualitative benefitswhere possible Include further hydrogeologic assessment to support an open loop ground source heat pump Provide policy recommendations Engage with stakeholders including city,regional,Kitchener-Wilmot Hydro staff and developers Analyse risk including lessons learned from other district energy systems including Ontario examples Outlinethe implications of a Downtown DE system for a city-scale DE strategy Staff areseeking direction to apply for an FCM grant to assist with study costs. Kitchener Utilities and City Role The Cityand/or Kitchener Utilities is emerging as strong potential candidate to lead the Phase 2 study and an eventual business.experience in building and operating a 4 1 - 4 piped infrastructure network, customer management and enterprise business model are allbeneficial.Consistent medium-term leadership is needed to bring aproject to construction. KU is a trusted consistent institution that stakeholdersexpect to continue in the long term. alow carbon economy. ADE system could help KU transitionsuccessfully to a low-carbon energy future.In 2022, KUwill need to address the Federal Clean Fuel Standard which is proposing offset credits for natural gas distributors.DE mayposition KU to purchasefewer carbon creditsand transition to a lower-carbon operation. A DE system is aligned with the climate and economic development objectives. and mission is 20+ years old and needs to be updated. A 10-year business strategy for KU is underwayand should be completed in early 2021. Staff expect a DE system to align with and inform this new strategy. Adding a district energy system to Kitchener Utilitiesportfolio would provide a significant opportunity to diversify the utility toward a more sustainable local energy provider. Nevertheless,project leadership, business structure and appropriate governancewill be consideredthrough the phase 2 study.Planning, Economic Development and Regional staff all need to be involvedas well. Next Steps Oct 2020 Green Municipal Fund Grant Application Jan-June2021 Phase 2 Business Case Development June2021Kitchener Council business decisionto proceed July-Sept 2021Secure customer commitment Q3 2021-Q3 2022Detailed Design Q3 2022-Q1 2024Construction and Implementation ALIGNMENT WITH CITY OF KITCHENER STRATEGIC PLAN: Strategic Plan Goal: Environmental Leadership-Achieve a healthy and livable community by proactively mitigating and adapting to climatechange and by conserving natural resources. Strategic Plan Action: This work supports the Community Climate Action Plan schedule for late 2020. Vibrant Economy -Build a vibrant city by making strategic investments to support job creation, economic prosperity, thriving arts and culture, and great places to live. Strategic Plan Action This work will inform the Bramm Yards Master planand Comprehensive Review of City-ownedproperties. 5 1 - 5 FINANCIAL IMPLICATIONS: The Phase 2 study isanticipated to cost $150,000to $200,000. $50,000 has been earmarked in 2021 toward the Phase 2 study in the DC funded planning studies account. Staff propose to allocate $40,000 from the Kitchener Demand Side Management capital budget. Staff are seeking direction to apply for a 50% matching grant from FCM. Ifthe application is successful, the above noted funding sources are sufficient to cover the study cost. If the grant application is unsuccessful, an additional$60,000-$110,000 will be required to fund the study.That source is currently undetermined. COMMUNITY ENGAGEMENT: INFORM This report has been pagenda in advance of the council/city meeting PREVIOUS CONSIDERATION OF THIS MATTER: None REVIEWED BY:Claire Bennett,CorporateSustainability Officer Greg St. Louis,Director, Gas and Water Utilities Michele Kamphuis, Business Development and Conservation Strategist Ruth-Anne Goetz, Senior Financial Analyst Jonathan Lautenbach, Director of Financial Services Matthew Day, Community Energy Program Manager, Waterloo Region Community Energy ACKNOWLEDGED BY: Justin Readman, General Manager, Development Services Denise McGoldrick, General Manager, Infrastructure Services APPENDICES: AppendixA: Kitchener Innovation District Community Energy System Pre-FeasibilityStudy prepared by FVB 6 1 - 6 KitchenerInnovationDistrict CommunityEnergySystem PreFeasibilityStudy DRAFTΑDecember20,2019 FINALΑJanuary31,2020 Submittedto: CommunityEnergyInvestmentStrategy Submitte dby: 1 - 7 Informationcontainedhereinisconfidentialandmaynotbereleasedtoanythirdparty. 1 - 8 Disclaimer ThisreporthasbeenpreparedbyFVBEnergyInc.TheinformationanddatacontainedhereinrepresentC.͸ƭbestprofessional judgmentinlightoftheknowledgeandinformationavailableatthetimeofpreparation.FVBdeniesanyliabilitywhatsoeverto otherparties,whomayobtainaccesstothisreportforanyinjury,lossordamagesufferedbysuchpartiesarisingfromtheiruse of,orrelianceupon,thisreportoranyofitscontentswithouttheexpresswrittenconsentofFVBEnergyInc. Thecostestimatesandanyestimatesofratesofproductivityprovidedaspartofthestudyaresubjecttochangeandare contingentuponfactorsoverwhichFVBEnergyInc.havenocontrol.FVBEnergyInc.doesnotguaranteetheaccuracyofsuch estimatesandcannotbeheldliableforanydifferencesbetweensuchestimateandultimateresults. 1 - 9 #®­³¤­³² 1.ExecutiveSummary...............................................................................................................................7 2.ReportGlossary.....................................................................................................................................8 3.Introduction........................................................................................................................................10 Background.................................................................................................................................10 CommunityEnergySystems........................................................................................................10 4.Technical:EnergyProfiles...................................................................................................................12 KitchenerInnovationDistrict+....................................................................................................12 PeakHeating/CoolingDemandandEnergyProfiles...........................................................16 5.Technical:DistrictEnergyConcept.....................................................................................................20 EnergyTransferStations.............................................................................................................20 DistributionPipingSystem..........................................................................................................21 EnergyCentres............................................................................................................................22 CentralEnergyCentre:Location&SpaceRequirements...................................................23 PhasingApproach...............................................................................................................23 CentralEnergyCentreConcept:Conventional...................................................................24 CentralEnergyCentreConcept:GroundSourceHeatPump(GSHP).................................25 CombinedHeatandPower.................................................................................................28 OtherConsiderations..................................................................................................................29 EnergyConstraints&Security.............................................................................................29 ThermalStorage..................................................................................................................29 6.Financial..............................................................................................................................................30 CapitalCostEstimate..................................................................................................................30 AnnualOperatingandMaintenanceEstimate............................................................................32 7.BusinessCase......................................................................................................................................32 Glossary.......................................................................................................................................32 KeyFinancialTerms.............................................................................................................32 BusinessAsUsual(BAU)Costs...................................................................................................32 Revenue......................................................................................................................................36 FinancialResults..........................................................................................................................37 SensitivityAnalysis......................................................................................................................38 FinancialModelExcelModelincludingSensitivity....................................................................40 1 - 10 8.EnvironmentalBenefit........................................................................................................................40 GreenhouseGasEmissionSavings..............................................................................................40 OtherEnvironmentalBenefits,Synergies,andConsiderations..................................................41 OwnershipModels......................................................................................................................42 Overview.............................................................................................................................42 100%PublicOwnership......................................................................................................44 100%PrivateOwnership.....................................................................................................44 Hybrid..................................................................................................................................44 9.NextSteps:DESImplementationStrategy..........................................................................................46 Task1DevelopDESBusinessConcept......................................................................................46 Task2ΑDESMarketing...............................................................................................................47 Task3RefinetheTechnicalConceptFurther..........................................................................48 Task4ProjectReview...............................................................................................................48 Task5DevelopProjectTechnicalDefinition.............................................................................48 Task6ObtainCustomerCommitment.....................................................................................49 Task7FinalizeProjectDefinition..............................................................................................49 Task8DistrictEnergyReadyInfrastructure..............................................................................49 ‘ŷğƷ͸ƭinItforDevelopers?‘ŷğƷ͸ƭinItfortheCity/Region?..................................................50 ResiliencyandReliability.....................................................................................................50 EnvironmentalandEnergyEfficiency.................................................................................50 FlexibleBuildingDesign......................................................................................................50 ReducedCosts.....................................................................................................................50 LocalEconomyBoost..........................................................................................................50 ConsumerandPublicSafety...............................................................................................50 10.Evaluation/Recommendation.......................................................................................................52 11.AppendixA......................................................................................................................................54 1 - 11 ListofTables Table1:CEISKitchenerDESPotentialCustomerBuildings........................................................................14 Table2:CEISKitchenerDESDevelopmentLoadandEnergyEstimates.....................................................17 Table3:CEISKitchenerDESEnergyCentrePhasing...................................................................................24 Table4:CEISKitchenerDESCapitalCosts(2019$).....................................................................................31 Table5:CEISKitchenerDESOperationandMaintenanceCosts................................................................32 Table6:TypicalHeatingSelfGenerationCosts..........................................................................................34 Table7:TypicalCoolingSelfGenerationCosts..........................................................................................35 Table8:DistrictEnergyRateSummaryΑHeatingandCoolingEnergy......................................................36 Table9:KitchenerDESFinancialResultSummaryofCapital,ExpensesandRevenue..............................38 Table10:KitchenerDESFitSummarywithCarbonCosts.....................................................38 nancialResul Table11:RapidDevelopmentTimeline......................................................................................................39 Table12:KitchenerDESFinancialResultSummarywithDECapitalIncreasedby10%.............................39 Table13:KitchenerDESFinancialResultSummarywithDECapitalDecreasedby10%............................40 Table14:EvaluationGuideline...................................................................................................................52 ListofFigures th Figure1:DistrictEnergy4Generation......................................................................................................11 Figure2:WhatisDistrictEnergy?...............................................................................................................12 Figure3CityofKitchenerUrbanGrowthCentre(Downtown)................................................................13 Figure4:KitchenerInnovationDistrictEstimatedDESHeatingLoadDurationCurve...............................18 Figure5:KitchenerInnovationDistrictEstimatedDESHeatingLoadDurationCurve...............................18 Figure6:KitchenerInnovastimatedDESHeatingLoadDurationCurve...............................19 tionDistrictE Figure7:TypicalEnergyTransferStationInstallation................................................................................20 Figure8:ExampleofaFourPipeDistributionPipingInstallation..............................................................22 Figure9:SelfGenerationCostsvs.DERateStructure................................................................................36 Figure10:AnnualGreenhouseGasEmissionSavings................................................................................40 Figure11:OwnershipModelsΑSWOTAnalysis.........................................................................................43 Figure12:PublicOwner/OperatorModels................................................................................................44 Figure13:PrivateOwner/OperatorModels...............................................................................................44 Figure14:HybridOwner/OperatorModels...............................................................................................45 Figure16:SummaryofBenefitstoKeyStakeholdersfromaDES..............................................................51 1 - 12 Page|7 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 1.ExecutiveSummary TheCEISidentifiedtheKitchenerInnovationDistrict+asapotentialsitetodevelopacommunityordistrict energysystemtomeettheƩĻŭźƚƓ͸ƭenergyplanobjectiveofenhancinglocalenergygenerationand security. FVBperformedaprefeasibilityondevelopingaDistrictEnergySystem(DES)toservicetheKitchener 2 InnovationDistrict+indowntownKitchener.Theareahasanexistingbuildingstockof~450,000m 222 )withover400,000m(4,000,000ft)ofanticipatednewbuildingdevelopmentexpected (~4,500,000ft overthenext15years. FVBdevelopedaDESconceptcenteredonsix(6)newdevelopmentsforecastedtobeconstructedwithin thenext15years.Thebuildingsareestimatedtohaveatotalheatingandcoolingrequirementsasshown inTableA. TableA:KitchenerInnovationDistrictDESLoads&Energy AnnualAnnual KitchenerInnovationDistrictHeatingCoolingHeatingCoolingEnergy DESLoads&EnergyGFA(ft2)GFA(m2)Load(kW)Load(Tons)Energy(MWh)(MWh) Phase1+21,746,000162,3008,7002,60016,40011,500 Phase1+2+33,485,000323,90015,4004,20032,20021,450 Phase1+2+3+4(TOTAL)4,485,000416,80019,2005,10040,90027,500 DIVERSIFIEDTOTALLOAD(0.85Heating/0.9Cooling)16,3004,600 TheenergycentretoservetheDESisproposedtobelocatedorembeddedwithintheMultiModalHub developmentduetoitssizeandthatitispubliclycontrolledland.Accordingtotheforecastedtimeline thereisaninitialdevelopmentoftheMultiModalHubslatedfor2022whichisenteringthedesignphase in2019andacombined1,000,000sq.ftofdevelopmentanticipatedinfuturephases. Adistributionpipingnetworkwouldbeimplementedtoserveallidentifieddevelopments.The constructionofthedistributionpipingnetworkposesthelargesttechnicalchallengetotheDES developmentduetoexistingLRTinfrastructure,narrowroadways,andcongestedburiedutilities;thishas beenthecaseinmanydowntowncoressuchasWindsor,Toronto,Hamilton,Sudburyetc.buthasnot beeninsurmountable.Noothertechnicalissueswereidentifiedatthistime. Three(3)scenarioswerereviewedinthestudy: 1.ConventionalDESΑwithgasfiredboilersandelectricalcentrifugalchillerstotaling20.5MWand 4,600tons.Plus,anoptionthatincludes550kWeofCHPcapacity. 2.OpenLoopGroundSourceHeatPumps+ConventionalDESΑwith1,000tonheatrecoverychiller coupledwithanopenloopgroundsourceand16.5MWgasfiredboilersand4,100tonselectrical centrifugalchillerscapacity.Plus,anoptionthatincludes550kWeofCHPcapacity. 1 - 13 Page|8 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 3.ClosedLoopGroundSourceHeatPumps+ConventionalDESΑwith1,000tonheatrecoverychiller coupledwithaclosedloopgroundsourceand16.5MWgasfiredboilersand4,100tonselectrical centrifugalchillerscapacity.Plus,anoptionthatincludes550kWeofCHPcapacity. Highlightsofthefinancialresultsoftheprefeasibilityaresummarized inTableB. TableB:KitchenerInnovationDistrictDESPrefeasibilityHighlights DESPREFEASIBILITYHIGHLIGHTS($CDN2019)Financial(Unescalated)Financial(Escalated) TotalReducedGHG ExpensesRevenueIRR,25(4%)('000k Investmentvs.BAU ('000k$)('000k$)Years(%)$) ScenarioDescription ('000k$)(tonnes) ConventionalGasFiredBoilers/Electric $37,628$2,456$6,7418.9%20,730$692 1 ChillersDES Scenario1:PlusCHP$39,438$2,120$6,7418.9%21,263$(195) 1A GroundSourceHeatPump(GSHP) 5.3%5,876$5,115 $46,978$2,596$6,372 OpenLoop1,000tons 2 Scenario2:PlusCHP$48,788$2,261$6,3725.4%6,409$4,228 2B GroundSourceHeatPump(GSHP) $51,838$2,606$6,3724.3%1,546$5,115 ClosedLoop1,000tons 3 Scenario3:PlusCHP$53,648$2,271$6,3724.4%2,079$4,228 3C ThedevelopmentoftheKitchenerDESwouldrequireacapitalinvestmentintherangeof$39M+(Class D,indicative+/50%)withanestimated8.9%InternalRateofReturn(IRR)over25yearsforScenario1. Thisiscomparabletoothercitiesandwouldbeconsideredagoodinvestmentwith100%equity. TheresultsalsoshowthatalthoughCHPadditiontotheDESincreasessystemresilience,ithasanegligible impactonthefinancialperformance,andreducestheGHGbenefitwithoutconsiderationtotimeofday usage. Scenarios2and3requiredalargercapitalinvestment,butgreaterGHGreductionbenefit. DistrictEnergySystemsaregloballyrecognizedaspartofthesolutiontoreducinggreenhousegas emissions.DESareknowntoincreaseenergyefficiencyforbuildingheatingandcooling,enabletheuptake ofwasteandalternativeenergysourcesandprovideflexibilitywithrespecttotechnologyandfuel sources.Thoughthebusinesscaseisfairlyneutral,FVBrecommendstheCEISproceedwithapproval towardestablishingaDESunderScenario2tomovetheKitchenerInnovationDistricttowardsitsenergy andsustainabilitygoals.Thebusinesscaseisstrengthenedonthefactthat4of6theforecasted developmentsinthestudyarepubliclycontrolledcoupledwithfinancialfeasibility,GHGemissions reduction,communitybenefitandenergyresilience,aDESfordowntownKitchenerisfeasible. ThenextstepstoestablishingaDESfortheKitchenerInnovationDistrictareprimarilysocial,economic andpoliticalinnature.CEISmustdevelopaDESBusinessPlanincludingdecisionsonownership,financing, operationsandmanagementstrategy,stakeholderengagement,identifyingpolicydriversaswellas solidifyingpotentialenergycentersites,identifyingsynergieswithothermunicipalprojectstoenablethe 1 - 14 Page|9 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 developmentofaDES.Areasonabletimelineforthisworkisestimatedtobe~12monthsarriveatago nogodecision.A12monthtimelinewouldbereservedfordetaildesignwithapprox.1218monthsfor implementation.Temporarystrategiescanbeutilizedifneedtosatisfyinitialcustomersshouldth eDES developlagbehindthefirstcustomerconnection. 2.ReportGlossary Belowaretypicaldistrictenergyacronymswhichmaybereferencedthroughoutthisreport. BusinessasUsual BAU CESCommunityEnergySystemalsoreferredtoasaDistrictEnergySystem CHPCombinedHeat&Poweristhegenerationofbothelectricityandusefulheatfromasingle source.CHPisalsoknownasCogeneration. COPCoefficientofperformanceistheratiooftherateofheatremovaltotherateofenergyinput,in consistentunits,foracompleterefrigeratingsystemorsomespecificportionofthatsystem underdesignatedoperatingconditions. DistrictEnergySystem DES DistributionPipingSystem DPS EnergyCentre EC EnergyTransferStation ETS FVBEnergyInc. FVB GroundSourceHeatPump GSHP Gigajoule,isanenergymeasurementunit. GJ HEXHeatExchanger KilowattElectrical,ameasureofinstantaneouselectricaldemand. kWe KilowattThermal,ameasureofinstantaneousthermaldemand. kW t ALoadDurationCurve(LDC)isacurverepresentingthermalloadofasystemoverthenumber LDC ofhoursperyear. LowerHeatingValue LHV MemorandaofUnderstanding MOU MegawattHourElectrical,isanenergymeasurementunit. MWh e MegawattHourThermal,isanenergymeasurementunit. MWh t MegawattThermal,ameasureofinstantaneousheatingdemand. MW t OperationandMaintenance O&M OutdoorAirTemperature OAT Trenchmeters;ameasureoftrenchdistance(asopposedtopipedistance).Fordistribution TM piping,pipedistanceisdoubletrenchdistance. TonnesofRefrigeration,ameasureofinstantaneouscoolingdemand. TR TemperatureDifferential(deltaT) T VariableFrequencyDrive VFD 1 - 15 Page|10 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 3.Introduction ͻƚźƒƦƩƚǝĻğƓķƭǒƭƷğźƓ‘ğƷĻƩƌƚƚwĻŭźƚƓ͸ƭĻĭƚƓƚƒźĭĭƚƒƦĻƷźƷźǝĻƓĻƭƭğƓķƨǒğƌźƷǤƚŅ ƌźŅĻƷŷƩƚǒŭŷƷŷĻĭƚƚƩķźƓğƷźƚƓƚŅƷğƩŭĻƷĻķĻƓĻƩŭǤźƓǝĻƭƷƒĻƓƷƭΑĻƓŷğƓĭźƓŭƌƚĭğƌ ĻƓĻƩŭǤŭĻƓĻƩğƷźƚƓğƓķƭĻĭǒƩźƷǤ͵ͼ Background TheCEISidentifiedtheKitchenerInnovationDistrict+asapotentialsitetodevelopacommunityenergy systemtomeettheƩĻŭźƚƓ͸ƭcommunityenergyplanobjectiveofenhancinglocalenergygenerationand security.Secondaryprioritiesofthisstudyinclude: 1.ͻ ƦķğƷźƓŭexistingprocessestobetterintegrateenergyconsiderationsintothereviewandapproval processfordevelopmentğƦƦƌźĭğƷźƚƓƭͼͲand Ћ͵ͻ5ĻǝĻƌƚƦanenergyliteracycampaignformunicipal,commercialandinstitutionaldecisionƒğƉĻƩƭ͵ͼ Inaddition,thecommunityenergysystemstudyistofocusontheuseofconventionalboilerandchiller planttechnologiesandthepotentialforintegrationofclosedoropenloopGroundSourceHeatPumps (GSHP)duetothebedrockaquiferslocatedthroughouttheregion.CurrentlyinOntario,lessthan10%of theelectricityisgeneratedbyfossilfuels,sotheuseofGHSPtechnologyinacommunityenergysystem offersCO2reductionpotential. CommunityEnergySystems Theconceptbehindcommunityenergysystems,otherwiseknownasͻķźƭƷƩźĭƷͼenergyissimpleyet powerful.DistrictEnergySystems(DES)connectmultiplethermalenergyusers(buildings)througha pipingdistributionnetworktoacentralizedheatingandcoolingsource. InDistrictEnergysystems,ratherthanhavingaboilerandchillerineachbuilding,acentralenergyfacility providesheatingandcooling,andinsomecasesdomestichotwater,totheconnectedbuildings.Dueto economiesofscaleandonsiteoperatingengineers,centralizedenergysystemscanimplementinnovative lowcarbonalternativesandoperatemoreefficientlyresultinginareductionofGHGandrelianceonfossil fuels.DESisrecognizedbytheUNEnvironmentProgramme(UNEP)asplayinganinstrumentalrolein reducingGHGemissionsanduptakeofrenewableenergysourcesincommunities. Theconceptofdistrictenergyisnotnew;historypointstotheRomansastheearliestusers.Thesepiped heatingsystemswereusedtoheatdwellingsaswellasbaths.InCanada,thefirstdistrictenergysystem wasestablishedin1880inLondon,Ontario,toservetheuniversity,hospitalandgovernmentbuilding.In 1911theUniversityofTorontolauncheditsowndistrictheatinginitiative,followedin1924bythefirst commercialsystemestablishedintheCityofWinnipeg. Traditionally,inNorthAmerica,themostcommonapplicationofdistrictheatingandcoolingisin university,military,governmentandlargeindustrialcampuses;since1990,therehasbeenasignificant growthincommerciallyutilityoperatedsystems,includingToronto,Montreal,Ottawa,Markhamand Vancouver. th Therefore,thesystemismatureandwelldevelopedΑcurrentlyweareinthe4generationofdistrict heatinginCanada: 1 - 16 Page|11 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 st 1Generation:SteamBasedSystems(1880Α1930) nd 2Generation:PressurizedSuperHeatedWaterabove100°C(1930Α1980) rd 3Generation:PressurizedWaterattemperaturetypicallybelow100°C(1980Α2020) th 4Generation:PressurizedWaterattemperaturestypicallybetween50Α70°C(2020+) th Figure1:DistrictEnergy4Generation Districtenergysystemshavethreemaincomponents: 1.EnergyCentre(s)(EC)isthethermalenergysource.Theytypicallyinclude: a.Baseloadcapacity(i.e.cogeneration,heatpumps,biomassboilers,condensingboilers) thatofferkeyadvantagesandutilizeasecure,low(er)costfuelsource.Generallyhighest efficiencyandhighercapitalcostequipment. b.Peakingboilersthattypicallyutilizeamoreconventionalfuelsource. c.Standbyboilersaretypicallyidenticaltothepeakingboilersbutareincludedtoprovidea levelofredundancyandincreasedthermalenergyreliability. 2.DistributionPipingSystem(DPS)istheinsulatedpipingnetworkthattransfersheatingand coolingmediumfromtheenergysourcetothecustomers. 3.EnergyTransferStations(ETS)includeheatexchangerinterfacesbetweenthedistrictenergy systemandcustomerĬǒźƌķźƓŭ͸ƭheatingandcoolingsystems.Havingcommunitysharedheating andcoolingsourceseliminatestheneedforindividualboilers,chillersandcoolingtowersateach building. 1 - 17 Page|12 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 Figure2illustratestheconceptofdistrictenergy;athermalenergygridthatconnectsenergyproducers andusers. Figure2:WhatisDistrictEnergy? 4.Technical:EnergyProfiles KitchenerInnovationDistrict+ TheCityofKitchenerInnovationDistrict+(KID)wasselectedasastudyareaforacommunityenergy system.TheInnovationDistrict+isanareaofrapiddensification,attheheartofthecity,centeredatthe intersectionofKingSt.NandVictoriaSt.S;seeFigure3.Inthenext15years,itisforecasttoseeupwards 22 of~450,000m(4,500,000ft)ofmixeduseresidentialandcommercialdevelopmentwithina600m radius. 1 - 18 13 | Page 219309 Study (Downtown) Centre Feasibility Pre Growth DES Urban District Kitchener of Innovation City 3 Kitchener Figure 1 - 19 Page|14 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 AsmanyoftheKitchenerInnovationDistrictopportunitiesmayhavepassed,duetodevelopmentsbeing inthedesign/constructionprojectphase,thestudyareawasevolvedtoincludetheMidtownareaand publiclyownedlandsintheCityCentreDistrict.Alistofpotentialnewandexistingcustomerbuildings wasdevelopedbytheCEISandFVBteamandaresummarizedinTable1.Thebuildingsincludedseveral developmentscurrentlyintheplanningorconstructionphases,sixforecastednewdowntown developmentsandseveralexistingbuildingsincludingtheGrandRiverHospitalandCityHall.Thepotential 2) customerstoaDESsysteminthedowntowncorerepresent~90,000m2(~9,000,000ftofbuilding developmenteitherplannedorexistingbuildingstock.Locationsofpotentialcustomersareasshownon drawingSK9309100attachedinAppendixA. Table1:CEISKitchenerDESPotentialCustomerBuildings BuildingPublic/PrivateDevelopmentEstimated AddressDescriptionStatus No.DevelopmentYearGFA NewDevelopments(20232034) A55BrammBrammWorksYardsPublicNew2029 E510KingStMultiModalHubPublicNew2029 F607KingSt.StationParkPrivateNew2023 L154WaterStSHallslaneparkinglotPrivateNew2024 L244GaukelSt44GaukelParkingLotPublicNew2029 N15CharlesStWGaukelStBusDepotPublicNew2025 SUBTOTAL1NEWDEVELOPMENTS4,544,656 ExistingPublicBuildings O835KingStWGrandRiverHospitalPublicExisting662,538 P200KingStWCityHallPublicExisting225,000 SUBTOTAL2EXISTINGPUBLICDEVELOPMENTS887,538 FuturePotentialDevelopments(Built/Future) BuiltDevelopments G51Breithaupt"Google"/Breithauptphase1and2Completed2019 H28BreithauptBreithauptBlockphase3UnderConstruction IPedestrianBridgePedestrianBridgeUnderConstruction B1100VictoriaSt.SOneHundredUnderConstruction2019/2021 B2112VictoriaSt.SGarmentSt.CondosUnderConstruction2022 R120VictoriaSt.SGloveBoxUnderConstruction2022 FutureDevelopments Q130VictoriaSt.SMacIntoshDryCleanersRedevelopmentPlanning JMetrolinkPlatformMetroLinksPlatformPlanning CActiveTransportationActiveTransportationPathNew D10VictoriaSt.HealthSciencesCampusFuturePhaseNew K70VictoriaSt.N"CakeBox"New L354WaterStSManulifeParkingLotNew S30WaterStNSanderson(duke+water)New T417KingStWZiggy'sNew UFrancis/WaterParkingLotNew M77WellingtonSt.OSCSeedsCONFIDENTIAL SUBTOTAL3FUTURENEW/EXISTINGDEVELOPMENTS3,626,400 TOTAL1+2+39,058,594 Theexistingbuildingstockwasdeemedincompatiblewithagroundsourcebasedsystemdueto historicallyhigherhotwatertemperaturedesigns;traditionallyhotwaterheatingsystemweredesigned 1 - 20 Page|15 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 tousean82.2°Csupplytemperatureand71.1°Creturntemperature(180°F/160°Fheatingwatersupply andreturntemperature).Heatrecoverychillerorgroundsourceheatpumptechnologyislimitedtoa maximum65°C(149°F)hotwatersupplytemperature.Correspondingdesignreturnwatertemperatures wouldberequiredintherangeof30°C(86°F)whichisnotpossiblewithmostexistingbuildingHVAC systemdesigns.However,existingsystemswouldbecompatiblewithaconventionalsystemorasystem withpeakingboilers.Themarketpenetrationforexistingbuildingswouldbeconsideredlowfor connectiontoaDESbecausetherearefewdriversforthebuildingtomoveawayfromtheirstatusquo. ExistingbuildingswereconsideredasfuturepotentialcustomerstoanestablishedDESsystem,especially buildingswithaginginfrastructureandinneedofrenewal.Existingbuildingsalsotendtobemorecostly andchallengingtoconnect. existingpublicbuildingsidentifiedwithinthestudyarea:theGrandRiverHospitaland Thereweretwo KitchenerCityHall.Theexistinghospitalhasrecentlycompletedseveralmajorrenovationstoitsheating andcoolingsystem,whichincludedtheinstallationofnewcondensingboilers.Forthisreason,the potentialforconnectiontoaDESwasdeemerandnotevaluatedfurtherasapotentialcandidate dlowe intheinitialstudy.Thehospitalshouldbeconsideredasafuturepotentialcustomerorenergysourceto anestablishedDESsystem.TheKitchenerCityHallhasastrongpotentialforconnectiontoadistrictenergy system;ithasahydronicheatingandcoplacementsoon.Aspublic olingsystemandlikelydueforcapitalre buildings,boththeGrandRiverHospitalandtheKitchenerCityHallwouldbeencouragedtoleadby exampleinanefforttogrowenergysharingopportunitiesanddevelopmentofdistrictenergyinthe region,ifnotattheinitialstartoftheDES,theyshouldbeconsideredforconnectioninfuturephases. Buildingdevelopmentsidentifiedwithlittleinformationorlowconfidenceinprogressingandwere excludedfromthestudy. Sixnewdevelopmentsforecastedtobeconstructionbetween2023Α2034wereidentifiedasideal buildingconnectionstosupportanewDESindowntownKitchenerduetoacombinationoffactors: 1.Timing:Thedevelopmentsareinearlydevelopment/planningstagesandcanbedesignedwith connectiontoaDESinmind. 2.Newvs.Existing:Newbuildingdevelopmentsprovidegreateropportunityforusingalow temperaturestrategyenablingimplementationofalternativeand/orwasteheatsourcessuchas GSHP,heatrecoverychillers,etc.ExistingbuildingsaregenerallymorecostlytoconnecttoaDES astheyinitiallyrequiresomeretrofitandmodification. 3.Ownership:Fourofthesix(6)developmentsarepubliclyowned:theMultiModalHub,Bramm WorksYards,the44GaukelParkingLot,andtheGaukelStreetBusDepot. 4.HighDensity:Developmentsspreadoverasmallarea(withina600mradius). 2 5.Size:Theplannedbuildingdevelopmentsaregenerallyover300,000ft. 22 Thesixdevelopmentsrepresentover416,000m(4,485,000ft)ofnewbuildinggrossfloorarea comprisedof~65%highdensitymultiunitresidentialspaceand~35%retail,office,andculturalspacein thedowntowncoreofKitchener. 1 - 21 Page|16 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 BuildingA:BrammWorkYards BuildingE:TheMultiModalHub BuildingF:StationPark BuildingL1:HallsLaneParkingLotRedevelopment BuildingL2:44GaukelStreet BuildingN:GaukelStreetBusDepot PeakHeating/CoolingDemandandEnergyProfiles Ananalysiswascompletedtodeterminewhatfuturethermaldemand(orload)andannualenergythat wouldbeservedbytheKitchenerInnovationDistrictDES.Thethermaldemandrepresentstheamountof heatingandcoolingcapacityabuildingrequirestomaintainacomfortablebuildingenvironment.The demanddeterminesthesizingofthebuźƌķźƓŭƭ͸businessasusualstandaloneboilerorchillerplant capacity,energycentreanddistributionpipingsystem.Theenergyistheusageorconsumptionovera periodoftime;annualenergyistheamountofenergyusedoveraoneyearperiod. EachĬǒźƌķźƓŭ͸ƭpeakloadandannualenergyrequirementswerederivedusingintensitiesfromactual metereddataofoperationalDESswithsimilarbuildingarchetypes.Theenergyintensitiesusedassume thattheproposedbuildingswillmeetenergyefficiencytargetsbetterthanthecurrentbuildstandards, i.e.tolatestASHRAE90.1,OntarioBuildingCodeand/orTorontoGreenStandardsenergyefficiency targets. Thenewdevelopmentsrepresentapotentialconnectedundiversifiedpeakloadof19,230kWheating t and5,100tons(17,900kW)cooling.DiversifiedLoadisthemaximumexpectedloadatanygiventime. Sincenotallbuildingswillrequirefulldemandatthesametime,thisenablestheenergycentrecapacity tobelowerthanthesummationofallthebuildingloads,therebyloweringinfrastructurecosts.A diversificationfactorof0.85hasbeenassumedforheatingand0.90forcooling. ThebuildoutoftheDESwasphasedaccordinganticipateddevelopmenttimelines.Table2showsthe estimatedpeakheatingandcoolingdemandandforecastedannualthermalenergyusagebyPhase. 1 - 22 Page|17 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 Table2:CEISKitchenerDESDevelopmentLoadandEnergyEstimates HeatingCoolingAnnual BuildingAnnualCooling PhaseDescriptionGFA(ft2)GFA(m2)DemandDemandHeating No.Energy(MWh) (kW)(tons)Energy(MWh) Phase1:2023 1 FStationsPark640,00059,4802,5005006,7003200 1 L1HallsLaneParkingLot81,7767,600300100800500 SubtotalPhase1721,77667,0802,8006007,5003700 Phase2:2025 kWTons 2 NGaukelSt.BusDepot1,024,35295,2005,9002,0008,9007800 SubtotalPhase21,024,35295,2005,9002,0008,9007800 Phase3:2029 kWTons 3 ABrammWorksYards500,00046,4681,9505504,1003300 3 EMultiModalHub500,00046,4681,8504204,6002750 3 FStationPark330,00030,6691,3002003,4001600 3 L1HallsLaneParkingLot81,7767,600300100800500 3 L244GaukelSt327,10430,4001,3003002,9001800 SubtotalPhase31,738,880161,6066,7001,57015,8009950 Phase4:2034 kWTons 4 ABrammWorksYards500,00046,4681,9505504,1003300 4 EMultiModalHub500,00046,4681,8504204,6002750 SubtotalPhase41,000,00092,9373,8009708,7006050 Phase1+21,746,128162,2808,7002,60016,40011500 Phase1+2+33,485,008323,88615,4004,17032,20021450 Phase1+2+3+4(TOTAL)4,485,008416,82219,2005,14040,90027500 DIVERSIFIEDTOTALLOAD(0.85Heating/0.9Cooling)16,3204,626 AbuildingloadprofilewasdevelopedforeachbuildingandcompiledintoapredictedDESfullbuildout loaddurationcurve.Thepurposeoftheloaddurationcurvesistovisuallyrepresenttheheatingand coolingdemandsandenergydeliveredthroughoutafullyearofoperation.Thesecurvesareutilizedin equipmentsizingandconceptdevelopmentforboilers,chillersandcogenerationunits.Figure4and Figure5illustratetheloaddurationcurvesfortheproposedDESforheatingandcooling. Theseasonalheatingandcoolingloadprofileswerealsooverlaidtoidentifycoincidentheatingand coolingloads;seeFigure5. 1 - 23 Page|18 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 Figure4:KitchenerInnovationDistrictEstimatedDESHeatingLoadDurationCurve Figure5:KitchenerInnovationDistrictEstimatedDESHeatingLoadDurationCurve 1 - 24 Page|19 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 Figure6:KitchenerInnovationDistrictEstimatedDESHeatingLoadDurationCurve 1 - 25 Page|20 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 5.Technical:DistrictEnergyConcept EnergyTransferStations EachbuildingwillbeconnectedtothedistributionsystemindirectlythroughanEnergyTransferStation (ETS).ThepurposeoftheETSistotransfertheenergytransportedfromtheEnergyCentrethroughthe distributionpipingnetworktotheendcustomerviaheatexchangerstosatisfytheĬǒźƌķźƓŭ͸ƭheating needs. Anenergytransferstation(ETS)typicallyconsistsofaspaceheating,domestichotwaterandspacecooling heatexchanger,isolationvalves,strainers,acontrolpackageincludingcontroller,controlvalve(s), temperaturesensors,andenergymeteringpackage. TheETSisphysicallylocatedineachbuildingandreplacestheuseofthermalenergygeneratingequipment inthebuildingsuchasboilers,chillers,andheatpumps.TheETSwillbedesigned,installedandownedby theDES.Itwillutilizebrazedplateheatexchangertechnologyaswellasgasketplateandframeunitsfor DHWandcooling(doublewalledunits).AllcoststoconnectthebuildingwillbebornebytheDES;no capitalcostsareincurredbythebuildingowner.ADESconnectiontoexistingbuildingsmayrequire additionalcapitaltoretrofittheĬǒźƌķźƓŭ͸ƭsystems;thiscouldincludetheconstructionofriserstoconnect totheexistingpenthousemechanicalrooms. Figure7:TypicalEnergyTransferStationInstallation 1 - 26 Page|21 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 DistributionPipingSystem Thedistributionpipingsystemisthephysicallinkbetweenenergysinks(customers)andsources(plants). Theconceptisbasedonabelowgrounddirectburiedhotwaterandchilledwaterdistributionnetwork withsupplyandreturnpipinginaclosedcircuit(4pipesystem).Boththeheatingandcoolingpipingwould generallybeinstalledinthesametrenchinaparallelconfiguration.Stackedconfiguration(e.g.,hotwater pipesonthetopofthecoolingpipes)wouldbeconsideredwherestreetspaceistoocongestedfora parallelconfigurationΑthisoptionisnotpreferredasitiscostandtimeintensiveandaswellasmore challengingtoaccessandmaintain. Apreliminarydistributionpipingconceptwasdeveloped,includingroutingandsizingtoprovidedistrict heatingandcoolingservicestothetargetedbuildingdevelopments.Thelayoutofthedistributionpiping b.TheproposedDPSroute, networkisbasedontheCentralEnergyCentrelocationattheMultiModalHu CEC,andcustomerlocationsareshownonthepipelayoutdrawingSK9309101inAppendixA. TheDPSconstructionisgenerallyimplementedinopentrenchconstructionandadvantageoustobe performedinsynergywithotheranyburiedmunicipalorutilityserviceupgradesorroadway ts.Itispossibletoutilizetrenchlessandorboringtechnologiesforareasthataresensitiveto improvemen opentrenchconstructionsuchashighways,railways,andtransitlinesetc.Trenchlessconstructionisvery expensive,upwardsofdoubletheopentrenchconstructioncosts,andthereforeisgenerallybeenlimited toͻĭƩƚƭƭźƓŭƭͼperpendiculartoroadwaysandnotconsideredforparallelroadconstruction. Theproposedpiperoutinghasbeenselectedtominimizethelengthofdistributionpipingandminimize conflictwiththeLRTrouteonCharlesStreet,KingStreet,andVictoriaStreet.TheMetrolinx/CNRrail corridoralsopassesthroughdowntownKitchenerandpresentschallengesforburiedinfrastructurework. ItisalsonotedthattheroadwaysindowntownKitchenerareparticularlynarrowandcongestedwith existingutilities;thiswillnecessitatecarefulplanningwithrespecttotrafficmanagement,investigation, examination,andcoordinationwithlocalutilities. DESplanningrequiresextensivecooperationwithlocalutilities,municipalworks,androadconstruction. ThegroupsneedtobeawarethatthereisplanningaroundDEinfrastructureinthedowntowncoreinthe next15years.ThismaynecessitateworktobedeferreduntiladecisionismadeonwhethertheDESwill proceed.Forexample,GaukelStreet,betweenbusdepotandCityHall,ispotentiallybeingredeveloped aspedestrianfriendlywalkway.Theconstructionofthepedestrianwalkwaymaytriggertheidealtimeto connecttheKitchenerCityHalltotheDES,installingthedistributionpipingbeneaththewalkwayand possiblyasnowmeltsystem.Asnowmeltsystemwouldincreaseaccessibilityinthewinterbetweenthe busdepotandCityHallandreducesaltingandsnowclearingefforts. ThedistrictheatingpipingsystemassumestheuseofpreinsulatedsteelinstalledinaccordancewithANSI B31.1andCSAB51designedfor1,100kPa(160psig)atmaximum100°C(212°F)designtemperature.The districtcoolingpipingassumesweldedsteelwithepoxycoating. Thepipesizingfortheselectedroutewillbegovernedbythefollowingfourkeyfactors: Supplyandreturntemperaturedifferentials,referredtoasT(deltaT); Maximumallowablefluidvelocity; 1 - 27 Page|22 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 Distributionnetworkpressureatthedesignloadconditions;and Differentialpressurerequirementstoservicethemostremotecustomer. Figure8:ExampleofaFourPipeDistributionPipingInstallation Distributionpipesizesarebasedonadifferentialtemperatureof30Cforheatingand8Cforcooling withamaximumflowvelocityof2.0m/s.Thetemperatureofthedistrictsystemwillbedictatedbythe customerbuildings;thedesignofeachĬǒźƌķźƓŭ͸ƭinternalheatingsystemwillneedtobecoordinatedin ordertoachievethedistrictsidereturntemperatures. Itisassumedthatthedistricthotwatersuppliedtoeachbuildingwouldbe70°Cwiththecapabilityof delivering90°Cmaximuminthewinterandanassociateddistrictreturntemperatureof40°Cand60°C respectively.Adistrictheatingsupplytemperatureresetschedulewouldbeemployed. Itisassumedthatthedistrictsidechilledwatersuppliedtoeachbuildingwouldbe4°Cminimuminthe summer,withanassociateddistrictreturntemperatureof12°C.Adistrictcoolingsupplytemperature resetschedulewouldalsobeemployed. Themainpipesareestimatedtobe300mmforheating,capableofdelivering19.6MWofheating,and 500mmforcooling,capableofdelivery5,500tonsofcooling.Thisallowsforapossibleexpansionofthe DESby20%.Thetrenchwidthis~2500mmwide.Branchsizesrangeaccordingtoassumedbuilding connectionloadfrom100mmto150mmontheheatingpipingand150mmto400mmonthecooling piping. EnergyCentres Three(3)EnergyCentrescenarioswerereviewed: 4.ConventionalDESΑwithgasfiredboilersandelectricalcentrifugalchillerstotaling20.5MWand 4,600tons.Plus,anoptionthatincludes550kWeofCHPcapacity. 1 - 28 Page|23 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 5.OpenLoopGroundSourceHeatPumps+ConventionalDESΑwith1,000tonheatrecoverychiller coupledwithanopenloopgroundsourceand16.5MWgasfiredboilersand4,100tonselectrical centrifugalchillerscapacity.Plus,anoptionthatincludes550kWeofCHPcapacity. 6.ClosedLoopGroundSourceHeatPumps+ConventionalDESΑwith1,000tonheatrecoverychiller coupledwithaclosedloopgroundsourceand16.5MWgasfiredboilersand4,100tonselectrical centrifugalchillerscapacity.Plus,anoptionthatincludes550kWeofCHPcapacity. CentralEnergyCentre:Location&SpaceRequirements TheCentralEnergyCentre(CEC),toservetheKitchenerInnovationDistrictDES,willhousetheheating, coolingandelectricitygenerationequipment.Thethermalenergygeneratedwillbesuppliedtocustomer buildingsconnectedtothesystemforspaceheating,spacecoolinganddomestichotwaterheating. ThisconceptproposeslocatingtheenergycentreintheMultiModalHubdevelopmentareaeitherasa standalonebuildingorembeddedwithinathebasementofthebuilding.Rooftopspacewouldberequired forwetcoolingtowers. Itisestimatedthatatfullbuildoutthefollowingfootprintisrequired: 2 HotwaterboilersΑ~500m 2 ElectricchillersΑ~1000m 2 CoolingtowersΑ~400m(assumedrooftopinstallation) 2 CHPengines~75m BoreholeFieldΑvariesbeneathMultiModalHub PhasingApproach Thephasedapproachedattemptstodefertheoutlayofcapitaluntilthereistheloadandcorresponding revenuestreamtosupportthatcapital.Thechallengewiththephasingapproachistofindtheright balancebetweentheeconomiesofscale,designandconstructioneffort,andtheinitialcapitalrequired toprovidetheplantinfrastructuretosupportthefuturephases. TheDESCECplantinfrastructurerequiredforthefullbuildoutwouldbeinstalledduringthefirstphase withonlytheheatingandcoolingequipmentrequiredforthefirstphasedemandinstalledwithinthe plant.Althoughitrequiresmorecapitaltobeexpendedatthebeginningoftheproject,thisisthemost practicalmethodthatavoidsremovingandupsizingequipmentfromphasetophase.Overall,theplant 1 hasbeenphasedsothereisN+1heatingcapacityandNchillercapacityatfullbuildout.Theproposed phasingoftheDESplantissummarizedinTable3fortheconventionalDESscenario. Thegroundsourceconceptswillbephasedinasimilarfashiontotheconventionalconceptbutwithheat recoverychillersandgeoexchangefieldcapacityinstalledduringthefirstphaseoftheDESdevelopment. 1 N+1Capacityrepresentsthetotalinstalledcapacityminusthelargestboiler.Thisisthemaximumloadthesystem canmeetwithanyoneboilernonoperational. 1 - 29 Page|24 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 Table3:CEISKitchenerDESEnergyCentrePhasing ConventionalDESPlant SystemSummaryPhaseIPhaseIIPhaseIIIPhaseIVFullBuildOut YearofConnection20232025202920342034 SystemConfiguration Plant Boilers22217 Chillers12115 DistributionSystem HotWaterTrenchMetres6203303101260 ChilledWaterTrenchMetres6203303101260 Heating&CoolingPeakLoads Heating(kW)Cumulative2,8008,70015,40019,20085% DiversifiedLoad(0.85)7,40013,10016,300 16,320 Cooling(tons)Cumulative5402,5004,1005,10090% DiversifiedLoad(0.90)2,3003,7004,600 4,590 PlantCapacity Boiler(kW)(N+1)3,00010,00017,00020,50020,500 Chiller(tons)(N)6002,6003,6004,6004,600 yphase) AnnualEnergy(b Heating(MWh)7,40016,30032,10040,80040,800 Cooling(tonh)1,028,4003,246,2006,070,5007,790,7007,790,700 CentralEnergyCentreConcept:Conventional Thehotwaterboilerplantinstallationiscomprisedoftwo(2)1,500kWtandfive(5)3,500kWtboilers. 2 redundancyinthe ThisallowsforthebaseloadtobemetbysmallerboilersandfortheretobeN+1 overallboilercapacityatfullbuildout. Naturalgasfiredhotwaterboilershavebeenassumedforthisconcept.Thelarger3,500kWtboilerswill becommercialgrade,packagedwatertubeboilerswithlowNOxburners,upgradedburnercontroland condensingeconomizers,whereapplicable.Thesmaller1,500kWtboilerswillbehighefficiency,low emissionsgascondensingboilerwithstainlesssteelheatexchanger.Theseasonalboilerefficiencyis assumedat85%fortheseboilers. 2 N+1describesalevelofredundancy,wherethereisduplicationofacomponentintheeventofafailure.Nwould representthebasenumberofcomponentsorequipmentrequiredtosatisfythesystemandthe+#wouldindicate thelevelofbackupintheeventofafailureintheNcomponent.Forexample,inaheatingsystemwhere3boilers, eachat500kW,arerequiredtosatisfytheheatload,anN+1redundancydesignwouldhave4x500kWboilerssuch thatintheeventofafailure,thelevelͻbͼcanstillbemaintained.Typically,theͻњϔͼwillrefertothelossofthe largestsizeunit. 1 - 30 Page|25 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 TheCECalsoincludescentralizedcoolingequipmentthatproduceschilledwater.One(1)600tonandfour (4)1,000tonelectric,watercooledcentrifugalchillersareassumedforthisconcept.Thisallowsfor turndowninlowloadscenarios.ACOPof5.0kWt/kWeisassumedforthecoolingplantsystem.These chillersalsoproducealargeamountoflowgradewasteheatthatisrejectedthroughwetcoolingtowers. Thesetowersrequirealargefootprintandaccesstolargevolumeofairinthecoolingprocessandare generallylocatedontherooftopoftheenergycentre. AschematicillustratingtheconventionalconceptcanbefoundinAppendixAinSK9309001. CentralEnergyCentreConcept:GroundSourceHeatPump(GSHP) 5.3.4.1.General Agroundsourceorgeoexchangesystemisanelectricallypoweredheatingandcoolingsystemthatutilizes theearth(orseaorlake)forbothaheatsourceandaheatsink.Agroundsourceheatpumpsystemalso knownasͻŭĻƚĻǣĭŷğƓŭĻͼsystemusestherelativelyconstanttemperatureoftheearthasaheatsource inwinterandaheatsinkinsummer.Componentsofthissystemincludeheatpumps,hydronicpumps,a groundheatexchanger(ubendedpipesinboreholes),andadistributionsubsystem.Mostgeoexchange systemsutilizepolyethylenepipingintheearthfortheheatexchanger.Thegeoexchangeheatpump rejectsheatintotheearthduringthecoolingmodeandtakesheatoutoftheearthwhileintheheating mode. GSHPsystemsarecategorizedintotwotypes:openloopandclosedloop.Openloopsystemspump groundwaterfromthegroundtothesurface.Thegroundwaterispassedthroughaheattransfersystem, beforebeingreturnedbyinjectionbackintotheground,atadifferenttemperaturethanbefore;warmer whenthesystemisusedforcooling,orcolderwhenthesystemisusedforheating. Closedloopsystemsdonotutilizegroundwater,butinsteadcirculateafluidthroughaloopofborehole heatexchangepipesburiedintheground.Acirculatingfluid,typicallyglycol,passesthroughaheat transfersystematthesurfacebeforebeingrecirculatedbackthroughtheburiedgroundlooptoexchange heatwiththesurroundingsoilorrock.Thelengthofthegroundloopisdeterminedbythecapacity requiredforheatingorcooling.Theborefieldcanbehorizontalorverticalinconfigurationdependingon theavailablearea;verticalholesrequiremuchlesslandareabutrequiretheexpenseofdrillingboreholes. Boreholespacingiscriticaltotheefficientoperationandcosteffectiveconstructionofthegeoexchange system.Asboreholesareplacedclosertogethertherewillbeanincreaseinthermalinterference, decreasingtheenergyloadcapacityofthegeoexchangesystem,andrequiringmoregeoexchangetobe installedtoovercomethepenalty.Minimumrecommendedboreholespacingforaclosedloop applicationis6.0m(20ft).Belowthisspacingthermalinterferencemaysignificantlyadverselyaffectthe geoexchange. Closedloopboreholesaretypicallydrilledtodepthsof120260m(400Α850ft). Heatpu mpperformanceCOP'sareusuallyprovidedassumingaconstantenteringwatertemperature (EWT)of10°C.Ageoexchangesystemdesignedtoreturnwatertotheheatpumpsatthemeanground 1 - 31 Page|26 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 temperaturewouldbemoreefficientbutwouldneedtobeextremelylongandisthereforenotpractical. Inreality,theEWTwillvarythroughouttheyeardependingupontheweatherconditions,andtheextent anddurationofthegeoexchangesystemusage,amongstothervariables.Whendesigningageoexchange system,thedesignerwillsetminimumandmaximumEWTs.Theloopwillthenbesizedtomeetthese limits.TheseEWTsarecommonlysettobe4°C(40°F)minimumforwinterheatingand32°C(90°F) maximumforsummercooling.Insomecases,thesevaluescanbealteredtomeetannualefficiency targets,howevermostcommonlyitisassumedthattheactualruntimesattheseEWTvaluesareminimal. Geoexchangesystemsprovidenumerousadvantagescomparedtoconventionalheatingandcooling systems,including: Allcomponentsarelocatedbelowground(asopposedtocoolingtowersandboilers) Reducedequipmentspacerequired(e.g.Αforcoolingtowers) Reducedcoolingtowerenergyuse Reducedlongtermmaintenancecosts Reducedgreenhousegasemissions Eliminationofwaterconsumptionforcooling 5.3.4.2.OpenLoopWellSystem 5.3.4.2.1.GeologicalSetting TheoverburdenwithintheKitchenerInnovationDistrictconsistsofacomplexmixofglacialtillsand outwashsandandgravel.Thetotaloverburdenthicknessintheareaisapproximately55m.Thesandand graveldepositsrangefrom5to10minthicknessandareusuallyfoundnearthebottomoftheoverburden sequence. ThebedrockbeneaththeKitchenerInnovationDistrictconsistsofmultipleformationsofsedimentary rock.Nobedrockwellsareknowntoexistwithinthedistrict,howeveropenloopgeothermalwellsare locatedabout200mtothewest(seeBeattyFigure1inAppendixA).Thewellsaredrilledabout55minto thebedrockandarestillinuseattheAirBossplant(formerlyUniroyalRubberplant). BasedontheķƩźƌƌĻƩƭ͸logofthetwoAirBosswells,thesedimentaryformationsatthesiteinclude: o SalinaFormationshale, o GuelphFormationfractureddolostone, o Vinemountshale,and o GasportandGoatIslandFormationsdolostone Aschematiccrosssectionthroughthetwowells(plusanoldRMOWobservationwell)isshownonBeatty Figure2inAppendixA. 5.3.4.2.2.GroundwaterAquifers Thesandandgraveldepositinthelowerpartoftheoverburdenispartofamajoraquiferwhichisfound westoftheInnovationDistrict.TheRMOWoperatesfivehighcapacitywellsinthisaquifer,whicharepart oftheStrangeStreetWellfield. 1 - 32 Page|27 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 TwoofthebedrocksedimentaryformationsbeneaththeInnovationDistrictarealsoconsideredtobe majoraquifersthroughoutKitchener,WaterlooandCambridge.TheyaretheGuelphandGasportaquifer systems,asshownon.ĻğƷƷǤ͸ƭFigure2.TheRMOWhasneverpumpedwaterfromthebedrockinthe vicinityofcentralKitchener,duetothebetterqualityoftheStrangeStreetsandandgravelaquifer. ThetwoAirBosswellsweretestedat53to56L/s(840to900USgpm)whentheyweredrilledin1968 and1974.Thewellshavebeeninusefor46to51years.BasedonthecapacityoftheAirBosswells,and .ĻğƷƷǤ͸ƭexperienceattheevolv1andHUBbuildings,itshouldbefeasibletoobtainupto30L/s(500US gpm)frommultipleopenloopsupplywellsthroughouttheKitchenerInnovationDistrict. Modernopenloopsystemssustaintheaquiferproductioncapacitybyreinjectingallthesupplyflowback intotheaquifer.Asaresult,theavailableaquifersupplycanbesustainedforlongtermgeothermal heatingandcoolingofbuildingsinthedistrict. 5.3.4.2.3.ConceptualOpenLoopSystemDesign Ourconceptualopenloopsystemdesignconsistsofacluster3supplywellsand3injectionwells.Both thesupplyandinjectionwellswithineachclusterarespaced60m(200ft)apart.Theclusterofsupply wellsislocated150m(500ft)fromtheclusterofinjectionwells.Eachsupplywellisassumedtohavea maximumcapacityof30L/s(500USgpm). Basedontheconceptualtotalflowfromthe3supplywells,thesystemwoulddeliverapeakheatingand coolingloadof3,500kW.Asummaryoftheconceptualsystemdesignandassumptionsareshownin .ĻğƷƷǤ͸ƭTable1inAppendixA.Thistablealsoprovidesahighlevelconstructionbudgettoconstructthe system. 5.3.4.3.ConceptualClosedLoopSystemDesign BasedonthegeologicsettingdescribedinSection5.3.4.2.1,itisexpectedthatclosedloopborehole drillingwouldbefeasible,providingtheboreholescanbedrilledeconomicallyinthefracturedbedrockat thesite. Ourconceptualclosedloopsystemdesignconsistsof250geothermalboreholes,eachdrilledtoadepth of200m(650ft).Theboreholeswouldbelaidoutina6mby6mgrid,andwouldbeconnectedbya networkofsupplyandreturnheaderpiping. Basedonthegeologicsettingandthe250boreholegeothermalfield,thesystemwoulddeliverapeak heatingandpeakcoolingcapacityof3,500kW.Asummaryoftheconceptualsystemdesignand assumptionsareshowninTable2inAppendixA.Thistablealsoprovidesahighlevelconstructionbudget toconstructthesystem. 5.3.4.4.GSHPSystemCapacityandTemperatures Forboththeopenandclosedloopdesigns,thedistricthotwatersuppliedtoeachbuildingwouldbe65°C maximuminthewinter,withanassociateddistrictreturntemperatureof35°C.Thedistrictchilledwater 1 - 33 Page|28 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 suppliedtoeachbuildingwouldbe4°Cmaximuminthesummer,withanassociateddistrictreturn temperatureof12°C. Thesizeoftheopenloopsystemislimitedbythespacerequiredbetweentheextractionandinjection wells.Itisrecommendedthattheextractionandinjectionwellsbespacedapproximately120210m apart.Additionally,theextractionandinjectionwellsshouldbeclusterednocloserthanapproximately 60mtoeachother.SincetheDESistobeinstalledinadenseurbansetting,itiscostprohibitivetoinstall morethanthreepairsofwells,astheywillneedtobepipedtogetherandroutedtotheEnergyCentre. Threepairsofwellswillprovideapproximately1,000tonsofcoolingcapacity.Theremainingloadwillbe managedbyelectricchillerswithheatrejectiontocoolingtowers. Tocomparethetwogeoexchangeoptions,theclosedloopwillbedesignedwiththesameborefield capacityastheopenloop.Foraclosedloopdesign,aborefieldcontaining250boreholeswillrequire 2 approximately7,500mofareafootprint.Athermalenergybalanceiscriticalintheborefield;therefore, theheatrecoverychillerswillbeoperatedtomaintainthisbalance.Theadditionalcoolingloadwillbe managedbyelectricchillerswithheatrejectiontocoolingtowers. Similartotheopenloopconcept,therequiredareafortheclosedloopconceptisalsoveryclosetothe areaavailableattheMultiModalHubsite.Ifadditionalclosedloopborefieldcapacityweretobeadded tothesystem,itwouldneedtobelocatedatanothersiteandpipedtoandfromtheEnergyCentre.This optionwasnotevaluatedinthisstudy. Inbothcases,naturalgasfiredboilerswillberequiredtomeetthepeakheatingdemand. ConceptualschematicsfortheopenandclosedloopscanfoundinAppendixAasSK9309002andSK 9309003,respectively. SizeofGSHPinfrastructureandcostscanbereducedoroptimizedbybalancingsimultaneous,coincident heatingandcoolingdemand.Thisrequiresfurtherinvestigationduringthetechnicaldevelopment includinghourlymodellingofheatingandcoolingdemandandreviewingopportunitiestoutilize mechanicalcoolinginlieuofambientcooling. CombinedHeatandPower CombinedHeatandPower(CHP),otherwiseknownasͻĭƚŭĻƓĻƩğƷźƚƓͼͲisthesimultaneousproductionof electricityandthermalenergyfromonesource.Someexamplesofacogenerationsourcearea reciprocatingengine,gasturbineorsteamturbine.Thecombinedheatandpower(CHP)efficiencyfora properlysizedcogenerationsystemusinggasfiredreciprocatingenginescanachieve90%. ThekeytoachievingthislevelofefficiencyistheaggregationofbuildingspaceheatingandDomesticHot Water(DHW)loadstoalevelwheremostoftheheatgeneratedfromcogenerationcanbeutilized.This goalmustbebalancedwiththeeconomicbenefitofinstallingthelargestgeneratorsorCHPunitsas possibletoachieveeconomiesofscale. 1 - 34 Page|29 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 ADESisagoodcandidateforacombinedheatandpower(CHP)plantbecauseofasteadybasethermal heatingload.ACHPplantcouldbeinstalledwithintheEnergyCentretosupplyelectricalloadtotheplant withtheaddedbenefitofheatrecoveryfromtheCHPtobeinje ctedintothedistrictheatingsystem. ACHPplantfortheKitchenerDESwouldbegasfiredgeneratorsthatproducehotwater.Foreveryunit ofgasconsumedapproximately0.4unitsofelectricityand0.4unitsofthermalenergyareproduced.Even thoughthereissomeoffsettingofnaturalgasconsumptionbythethermalenergyproducedintheCHP, similartotheCESboilers,therewouldbeanetincreaseofnaturalgasflowtothearea,butitwillbeallto oneaddress,attheCEC.However,therewillalsobeanetreductioninelectricityconsumptiontothe areaandthecapabilityofsupplyinghotwaterorchilledwaterintheeventofapoweroutage.Thisisa significantadvantagetothebuildingsservedbytheDES. FeedbackfromKitchenerUtilitieswasobtainedandnaturalgasisavailable.However,thecapacity needstobedeterminedbasedontheselectedscenarioandtheprojectedsizeofthesystem. Asingle275kWeenginewillbeinstalledatPhase2andanadditional275kWeenginewillbeinstalled atPhase3.Theywillbeoperatedprimarilytooffsetthebaseelectricalloadwithintheplant.Any additionalheatrecoveryabovewhichisrecoveredbytheCHPengineswillbeprovidedbytheheat recoverychillers. OtherConsiderations EnergyConstraints&Security ThekeyenergysourcesthatareimpactedbytheDESarenaturalgasandelectricity.Thesesameenergy sourcesareneededforthedevelopmentofnewbuildingsinthearea.Thenaturalgasconsumedbythe CESboilerswillbeoffsetbyareductioninnaturalgasconsumptioninthebuildingsservedbytheCES. Thesameistruewithelectricityloadgeneratedbythecoolingplantsinthedistrictenergycentres.The electricityconsumedbytheelectricchillersisoffsetbythereductioninelectricalloadinthebuildings servedbytheCES.Therewillbeanetreductioninelectricitybecausethechillersinthedistrictenergy plantaremoreefficientthanthebuildingcoolingequipment. Electricallosses,andfailurerates,inthedistributionsystemarereducedduetolesspeakpowerflowto mostofthebuildings(exceptonecontainingthechillerplant)duringthehottestsummerdays.Thisis trueevenaftersubtractingtheadditionalpowerrequiredtopumpchilledwatertothevariousbuildings. Insummary,therewillbeanetreductioningasandelectricityconsumptionduetotheCESboilerand chillerplantswhichwillimprovetheenergyreliabilityandsecurityforthearea. ThermalStorage Athermalenergystorage(TES)systemcouldbeinstalledforeitherthehotwaterorchilledwatersystems. ATESisintendedtobeusedtoprovidepeakingcapacityforthedistrictheatingandcoolingsystems.The conceptisthatthestoragesystemwouldbefilledduringtimeperiodswheretheenergyrequiredto 1 - 35 Page|30 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 providethehotorchilledwaterisatalowcostandwhenthesystemdemandislow.TheTESsystem wouldbedesignedforspecificdischargeperiod. Thebenefitsfromhotwaterthermalstoragecouldbethefollowing: MaximizethegenerationofhotwaterfromtheCHPunits. Provideadditionalcapacitytosupplypeakheating Improvehotwaterheatingsystemreliabilitybyhavingahotwaterreserveavailableincaseof emergencies. Theadvantagesofthechilledwaterthermalstoragearethefollowing: ReduceonpeakelectricalloadsbygeneratingchilledwaterduringoffpeaktochargeTE Sand dischargeduringonpeakperiods. Provideadditionalcapacitytosupplypeakcoolingloads. Improvechilledwatersystemreliabilityhavingachilledwaterreserveavailableincaseof emergencies. 6.Financial Thekeyinputstothefinancialmodelare: 1.Projectphasing,loadandcapitalestimates,whichvaryfromprojecttoprojectandfordifferent phaseswithinprojects,i.e.contractedcapacity(inkWtortons)andcapital(in$millions). 2.CapacitychargesthathavebeendeterminedthroughaBAUcostanalysistobecompetitivefor thesubjectscenario(i.e.$percontracttonpermonthor$percontractkWtpermonth). 3.Operatingassumptionsusingtypicaldefaultvaluesandratiosforoperatingcostsperunitof energyorunitofinstalledcapacity,whicharelargelythesamebetweenallprojects,being adjustedfromtimetotimeasenergypriceschangeorexperienceleadstotherecommendation ofdifferentratios. CapitalCostEstimate Thepreliminarycapitalcostestimatesforeachphaseoftheproposeddistrictenergysystemdevelopment hasbeenestimatedbasedonC.͸ƭcostingtemplatesandestablishedunitcosts,vendorandcontractor estimates.ClassestimatesareconsideredClassD,indicative+/30%.hǞƓĻƩ͸ƭcontingency,softcosts,and legalandeasementfeesarenotincluded. AsummaryofthecapitalcostsforeachproposedDEScanbefoundinTable4below. 1 - 36 31 | Page 219309 Study (2019$) Feasibility Pre Costs DES Capital DES District Kitchener Innovation CEIS 4: Kitchener Table 1 - 37 Page|32 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 AnnualOperatingandMaintenanceEstimate Theannualcosttooperatethedistrictenergysystemsandmaintaintheequipmentplaysasignificantrole intheviabilityofadistrictenergyproject.Thefollowingtablesummarizestheestimatedannualcostsfor eachproposedDESatfullbuildout. Table5:CEISKitchenerDESOperationandMaintenanceCosts 7.BusinessCase Glossary KeyFinancialTerms NPV(NetPresentValue)isthedifferencebetweenthepresentvalueofthebenefitsofa projectanditscosts. IRR(InternalRateofReturn)isdefinedastheinterestratethatsetstheNPVofthecashflows ofaprojecttozero. WACC(WeightedAverageCostofCapital)istheaveragecostofcapitalanentitymustpayto allitsinvestors,bothdebtandequityholders. TVM(TimeValueofMoney)istheconceptthatthevalueofcashtodaywillbeworthmore . thaninthefutureduetotheearningpotentialofpresentdaycash BusinessAsUsual(BAU)Costs CustomerĬǒźƌķźƓŭƭ͸BAUcosts,otherwisereferredtoasstandaloneorselfgenerationcosts,includethe totalcostsofowning,operatingandmaintainingheatingand/orcoolinginbuildingsystemsifitwerenot connectedtotheDES. TheBAUcostcanbeconceptualizedasbeingcomprisedoftwocomponents: 1 - 38 Page|33 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 1.AnnualOperatingandMaintenance(O&M)Costs.Thisincludesfuel,electricity,other consumables,onsitestafftimeandmaintenance. 2.CapitalCosts Fornewbuildingstherearetwocomponents: Theupfrontcapitalcostavoidedinhavingtobuildthespaceandinitialcosttoinstallthe heatingandcoolingequipment;and Theavoidedfuturereplacement/sinkingfundforequipmentreplacement. nd Forexistingbuildingsthereisonlythe2portionoftheavoidedcapital(future replacement/sinkingfundforequipmentreplacement). TheBAUcostswereestimatedforthepotentialcustomerbuildings.Basedonthestandalonecosts, otherwisereferredtoasselfgenerationcosts,marketbaseddistrictenergyratesaredevelopedtobe costcompetitivewithabusinessasusualscenario. 1 - 39 34 | Page 219309 Study Feasibility Costs Pre DES Generation Self District Heating Innovation Typical 6: Kitchener Table 1 - 40 35 | Page 219309 Study Feasibility Costs Pre DES Generation Self District Cooling Innovation Typical 7: Kitchener Table 1 - 41 Page|36 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 Revenue DistrictenergyratesarethechargesthecustomerĬǒźƌķźƓŭ͸ƭpayfortheDESservice.Theyaredeveloped basedonavirtualplantmodelasifthebuildingwerenotconnectedtothedistrictenergysystem.It analysesthecapitalcostsandoperationandmaintenancecostforastandalonebuildingsystemto generatethebuildinŭ͸ƭspaceheating,spacecoolingand/ordomestichotwater(DHW)needs. Thedistrictenergyratesarecomprisedoftwocomponents: 1.theEnergyChargeTheannualenergychargesarebasedontheannualenergyconsumption,current utilityratesandtheequipmentefficiencyexpectedtobeachievedintheselfgenerationscenario. 2.theCapacityChargeTheCapacityChargesarebasedonthestandardratesapplicableto theloadforheatingandcooling. ThefollowingfigureshowstherelationshipbetweentheSelfGenerationanddistrictenergyrate structures.DistrictEnergyRateStructure1involvesanenergychargeandcapacitycharge.District EnergyRateStructure2involvesaonetimeconnectionfeetocovercapitalcosts,reducingongoing rates. Figure9:SelfGenerationCostsvs.DERateStructure Theratestructureisassumedtoutilizeafixedcapacitychargeandavariableenergychargestructure (RateStructure1showninFigure9above).Theratesassumedinthecalculationoftherevenueinthe financialmodelarebasedontheweightedaverageoftheproposedratesdeterminedfromtheBAU costs.TheyaresummarizedinTable8. Table8:DistrictEnergyRateSummaryΑHeatingandCoolingEnergy DESRates HeatingCooling CAD/MWh Energy31.72$$0.12CAD/tonh t CAD/kW Capacity53.15$$620.29CAD/ton t 1 - 42 Page|37 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 Thecapacitychargeratesaresettobecompetitiveagainsttheannualizedfixedcostofconventional heatingand/orcooling.Acapacitychargeof$53.15kW/yearforheatingand$620.29perton/yearfor t coolingisassumedandshouldbeadjustedtobecompetitiveforKitchenerDESandbusinessessuchthat buildingownerscanexpecttheirannualizedfixedcoststobeequalorlowerwhenconnectingtoaDES comparedtoconventionalselfgeneration. FinancialResults InC.͸ƭexperiencewiththedistrictenergybusinesscasedevelopmentinCanada,a65%/35%debtto equityratioisaconservativefinancialleverageforamunicipallyowneddistrictenergysystem.The InfrastructureOntariolendingrateforͻaǒƓźĭźƦğƌCorporationsΑDistrictEnergyhƦĻƩğƷƚƩƭͼis~4.0%for 25years.ByexaminingtheWeightedAverageCostofCapital(WACC)assumingaborrowingrateof4% andequityvalueof10%,theWACC=0.65x4%+0.35x10%=6.1%.Therefore,anInternalRateofReturn (IRR),basedon100%equityassumedinthefinancialanalysis,aboveWACCwouldbeconsidereda financiallyviableproject.Forexample,theROIforScenario2is7.9%andisabovetheWACCandtherefore agoodproject. ThefinancialresultsincludingprojectIRRandNPVforeachscenarioaresummarizedinTable9. ghestIRRof Scenario1a,theconventionalgasfiredboilers/electricchillersscenariowithCHPhasthehi 8.9%andNPVof$21.4million.However,theGHGemissionsreductionfromtheBAUcaseistheworst.In fact,theemissionsincreasecomparedtotheBAU.EvenforScenario1,withoutCHP,theGHGreduction isonly7%. Scenario2,thegroundsourceheatpump(GSHP)ΑOpenLoophasanIRRof5.3%andNPVof$5.9million. TheGHGemissionsreductionis53%comparedtotheBAUcase.Scenario2a,withCHP,hasaslightly betterfinancialcase(i.e.IRRandNPV)buttheGHGreductionreducesto44%fromtheBAU. Scenario3,theGSHPΑClosedLoophasthehighestestimatedfullbuildoutcapitalof$51.8million,the lowestIRRof4.3%aswellastheanegativeNPVof$1.6million.TheGHGemissionsreductionfiguresare similartotheOpenLoopscenario. MostoftheriskassociatedwiththedevelopmentofDESiswiththebuildoutandconnectionoffuture development.Thewaytomitigateriskthatfuturebuildingsgetbuiltlaterthanplannedistoaggressively phasethecapitaloftheprojectandspendcapitalasbuildingsareconfirmed.ForScenarios2&3,they faceaveryhighupfrontcapitalcost,buttheircorrespondingrevenuedoesnotcomeonlinefullyuntil 2034underthecurrentplan.Thishasadramaticnegativeimpactontheirfinancialviability. InC.͸ƭopinion,Scenario1ahasapositivebusinesscaseandrepresentsthebestopportunitytodevelop abasedistrictenergysystemforKitchener.However,thisispurelyonafinancialbasis.WhenGHG emissionsandotherfactorssuchasenergysecurityareconsidered,thenScenario2representsasolid businesscasewithsignificantreductionofGHGemissions. 1 - 43 Page|38 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 Scenario2/2aand3/3awouldbenefitgreatlyfromamorerapidbuildoutandconnectionofplanned customers,andtheimplementationofacarboncost,whetheritbesolelyforthepurposesofmodeling orimplemented. Table9:KitchenerDESFinancialResultSummaryofCapital,ExpensesandRevenue SensitivityAnalysis Theresultsofthisanalysisareimpactedinanotablemannerbyamultitudeofsensitivitiesthatare accessibleintheprovidedfinancialmodel.Foremostamongthesesensitivitiesisthepresenceofacost ofcarbon,developmenttimingandcapitalcosts. TheFederalGovernmenthaslaidaframeworkthatdelineatesa$20/tonnecostofcarbonstartingin 2019andrisingto$50/tonnein2022.Ifthecostofcarbonisincludedinthefinancialmodeling,andthe savingsinreducedcarboncostsareincorporatedasreducedexpensestothedistrictenergyscenarios, thisincreasesthefinancialvalueofdistrictenergy.Thisanalysisanditsresultsca nbeseeninTable10. Table10:KitchenerDESFinancialResultSummarywithCarbonCosts BusinessCaseFinancial(Escalated) ProjectedIRR,2525YearNPV(4%)('000k Years(%)$) ScenarioDescription Conventional Gas Fired Boilers/Electric Chillers 9.2%21,763$ 1 DES Scenario 1: Plus CHP9.1%22,038$ 1a Ground-Source Heat Pump (GSHP) - Open 6.1%9,507$ 2Loop - 1,000 tons Scenario 2: Plus CHP6.1%9,782$ 2a Ground-Source Heat Pump (GSHP) - Closed 5.1%5,177$ 3 Loop - 1,000 tons Scenario 3: Plus CHP5.1%5,452$ 3a 1 - 44 Page|39 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 TheextensivetimelineofthebuildoutoftheDESindicatesthatagreatdealofcapitalwillneedtobespent upfront,withcustomersandtheirassociatedrevenuecomingonlinelater.Fortheoreticalpurposes, Table11belowdemonstratestheeffectofimmediateconstructionandacquisitionofcustomers (constructionrevenuecommencingin2 019). Table11:RapidDevelopmentTimeline BusinessCaseFinancial(Escalated) ProjectedIRR,2525YearNPV(4%)('000k Years(%)$) ScenarioDescription Conventional Gas Fired Boilers/Electric Chillers 14.5%51,946$ 1DES Scenario 1: Plus CHP14.7%54,689$ 1a Ground-Source Heat Pump (GSHP) - Open 9.5%31,876$ 2Loop - 1,000 tons Scenario 2: Plus CHP9.8%$ 34,618 2a Ground-Source Heat Pump (GSHP) - Closed 8.3%$ 26,854 3Loop - 1,000 tons Scenario 3: Plus CHP8.6%$ 29,597 3a Capitalcostsalsohaveasubstantialinfluenceonthefinancialresults,andifcapitalcostsforthedistrict energyscenariosincreaseordecreaseby10%alikelihoodwhichisfarfromimprobableΑthefollowing resultsareshowninTables12andTable13. Table12:KitchenerDESFinancialResultSummarywithDECapitalIncreasedby10% BusinessCaseFinancialFinancial(Unescalated)(Escalated) TotalInvestment ExpensesRevenueProjectedIRR,25YearNPV ('000k$in2019 ('000k$)('000k$)25Years(%)(4%)('000k$) ScenarioDescription Dollars) Conventional Gas Fired Boilers/Electric $ 2,45641,391$ 6,741$ 7.9%17,238$ 1Chillers DES Scenario 1: Plus CHP43,382$ 2,120$ 6,741$ 7.8%17,608$ 1a Ground-Source Heat Pump (GSHP) - Open $ 2,59651,676$ 6,372$ 4.3%1,544$ 2Loop - 1,000 tons Scenario 2: Plus CHP53,667$ 2,261$ 6,372$ 4.4%1,915$ 2a Ground-Source Heat Pump (GSHP) - $ 2,60657,022$ 6,372$ 3.4%$ (3,219) 3Closed Loop - 1,000 tons Scenario 3: Plus CHP59,013$ 2,271$ 6,372$ 3.4%$ (2,848) 3a 1 - 45 Page|40 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 Table13:KitchenerDESFinancialResultSummarywithDECapitalDecreasedby10% BusinessCaseFinancialFinancial(Unescalated)(Escalated) TotalInvestment ExpensesRevenueProjectedIRR,25YearNPV ('000k$in2019 ('000k$)('000k$)25Years(%)(4%)('000k$) ScenarioDescription Dollars) Conventional Gas Fired Boilers/Electric $ 2,45633,865$ 6,741$ 10.1%24,222$ 1Chillers DES Scenario 1: Plus CHP35,494$ 2,120$ 6,741$ 10.1%24,917$ 1a Ground-Source Heat Pump (GSHP) - Open $ 2,59642,280$ 6,372$ 6.4%10,208$ 2Loop - 1,000 tons Scenario 2: Plus CHP43,909$ 2,261$ 6,372$ 6.5%10,903$ 2a Ground-Source Heat Pump (GSHP) - $ 2,60646,654$ 6,372$ 5.4%6,311$ 3Closed Loop - 1,000 tons Scenario 3: Plus CHP48,283$ 2,271$ 6,372$ 5.6%7,006$ 3a FinancialModelExcelModelincludingSensitivity Providedasaseparateattachment. 8.EnvironmentalBenefit GreenhouseGasEmissionSavings Akeyconsiderationtothissystemisthegreenhousegasemissionsascomparedtobuildingasusual,as summarizedinthefollowingtable: Figure10:AnnualGreenhouseGasEmissionSavings 1 - 46 Page|41 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 GreenhouseGasReductionFullBuildout BuildingasUsual TotalBAUEquivalentElectricityConsumption ЏААЋa‘ŷ Ļ TotalBAUNaturalGasConsumption 183,800GJ AnnualBuildingasUsualGHGEmissions9,662tonnes DistrictEnergySystem Scenario1ΑAnnualDistrictEnergySystemGHGEmissions8,971tonnes Scenario1aΑAnnualDistrictEnergySystemGHGEmissions9,858tonnes Scenario2&3ΑAnnualDistrictEnergySystemGHGEmissions4,547tonnes Scenario2a&3aΑAnnualDistrictEnergySystemGHGEmissions5,434tonnes NetAnnualGHGReduction,%ReductionoverBuildingasUsual Scenario1692tonnes,7% Scenario1a(195)tonnes,2% Scenario2&35,115tonnes,53% Scenario2a&3a4,228tonnes,44% Thedistrictenergysystemisexpectedtohavealowerelectricityconsumptionandnaturalgas consumptionovertheBuildingasUsualscenariowhenCHPisnotconsidered.Notably,duetolowcarbon emissionsoftheelectricitysuppliedtoKitchener,theconstructionofCHPcapacityandtheresulting increaseinnaturalgascoisestheGHGemissionsofScenario1.Duetotheincorporationof nsumptionra GSHPsinScenarios2&3,theGHGemissionsofthesescenariosremainlowerevenwiththeadditionof CHPcapacity. Thisassumesthefollowingemissionfactors: OntarioblendedElectricityGeneratingemissionintensity:31.0kgCO/MWhfromGuidelinefor 2ee Quantification,Reporting&VerificationofGreenhouseGasEmissionsApril2019(Note:thisfigure representsanaveragevalueandwouldbedifferentiftimeofdayfiguresareused,whichwould beconductedduringamoredetailedstudy.) Naturalgasemissionintensity(combustiononly):49.3kgCO/GJfromAClearerViewon 2e hƓƷğƩźƚ͸ƭEmissionsJune2019 OtherEnvironmentalBenefits,Synergies,andConsiderations 1.Opportunitiesandheatavailableforsnowmeltoperations:sidewalks,parkinglots,busdepotand transportationhubscanbenefitfromreductioninsaltingandsnowclearingefforts,improved accessibilityandpublicsafety. 1 - 47 Page|42 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 2.Roofspaceformostbuildingswouldbemorecongenialwithoutstacksandcoolingtowers.The roofmighttherebybeusedascommonareasfortheenjoymentofbuildingoccupants,greenroof, implementation,solarPV/solarthermal,rainwaterharvesting. 3.Provideopportunitiestoutilizewasteheatproducers. 4.Increaseenergyliteracystartingwithdemandsidereductionsandimprovingsupplyside efficiency. 5.Supportssmalllocalpowergeneration/cogenerationandmicrogridstrategiesforbackuppower. OwnershipModels Overview Variantsofthreeownershipmodelshavebeenusedby59{͸ƭworldwideandinNorthAmerica: 1.PublicΑtheCitymaintainsownership 2.PrivateΑconcessionsoroutrightownershipbyprivateentity 3.HybridΑincludingjointventure(JV)orsplitownership,acombinationoftheabovemodels InCanada,approximatebreakdownofDESbyownershipmodelisroughly: 30%Institutions 20%PubliclyOwned 20%PrivatelyOwned 30%OtherΑCrown/FirstNations/Cooperative/Hybrid Determinationofthepreferred,viableOwner/Operatormodelandgovernanceisaprerequisiteto developingaDES.Theremustbeanentitywithaclearlydefinedstructurethatwillberesponsibleforthe project,raisefinancingandenterserviceagreementswithcustomers,whetheritistheCity/Regionitself, anagencyorcorporationoftheCity/Region,aJointVenture(JV)oratotallyprivatecompany. AnidentifiedandcredibleDESOwnerisessentialforeffectivemarketing.Prospectivecustomerswillwant toknowtheDEShǞƓĻƩ͸ƭpreciseplanforownershipandoperatingstructure,oratleastthemostlikely option,ifitisnotfirmlyestablishedatthetimemarketingactivitycommences.Thisisbecausecustomers areexpectedtosignlongtermserviceagreementsnaturallyneedtounderstandexactlywhotheir counterpartywouldbeandwhotheycanrelyontodeliverthisessentialservice. Thesuitabilityofeachofthethreeownershipmodelsdependsonthefollowingfactors: ManagementcapacityandDEexperienceistheCitywillingtoallocateinternalmanagement staffandisitinterestedinenteringtheDEutilitybusiness? Risk/Reward(degreeofcomfortwithriskorriskaversion) AccesstocapitalorCostofcapitalistherewillingnesstoraisealloranypartofthenecessary capital?Involvementofprivatecapitaltendstobemorecostly.Publicownershipmayhave accesstogovernmentgrantsandincentivesthathelptoimprovethebusinesscaseandreturn oninvestment 1 - 48 Page|43 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 StrengthsandweaknessesoftheotheroptionsarehighlightedbyaSWOTanalysisinFigure10. Figure11:OwnershipModelsΑSWOTAnalysis 100%PublicHybrid100%Private ΘAccesstolowcostfinancing.ΘCombinesprivateDEexperienceΘPrivatesectorassumesallrisk,is Strengths ΘLongtermagreement,stable&capitalwithCityadvantages,mostmotivated,minimizes partner.suchasaccesstoseniorgovernmentinterference ΘAccesstoGovernmentGrants.governmentgrants ΘAlignmentwithotherCity Departmentsandlevelsof government ΘAvailablecapitalforlargeΘJVcomplexitywithresultantΘCESprojectsmaynotmeetprivate Weaknesses infrastructureproject.demandsonmanagementtime.return/riskcurvewithout Managementcapacity(internalΘSplitownershipfoundtoinhibitgovernmentassistance resources)andgrowthinWindsorexample ΘNoDESexperience ΘMeetsothergoalsandΘMonetizeCityadvantages;selloutΘCreateenvironmentfortheCESto Opportunities objectivesinadditiontowhenCESestablished,usingcashsucceed businesscasesuchastoseedanotherCESproject,ΘRealizesocioeconomicand sustainability,economicmaximizingsocioeconomicandenvironmentalvalueswithoutusing development,resilience.environmentalvalues/źƷǤ͸ƭownlimitedfinancial ΘLeadershipΘLeverageindustryexperienceresources Synergywithothermunicipal projectsandobjectives ΘRisks:costoverruns,ΘDisputesduetodifferentgoalsΘConcessionsinhibitmotivationto Threats performanceissuesassociatedΘRelationshipandRFPprocessexpandorspendmaintenance withconstruction,scrutinizedforfairnessdollars commissioningandO&Mcosts. ΘMarketpenetration ΘNuisancecomplaints 1 - 49 Page|44 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 100%PublicOwnership ManysuccessfulDESsystemstartupshavebegunwith100%PublicOwnership. Figure12:PublicOwner/OperatorModels ModelDescriptionExamples Θ100%municipalownershipandoperationdirectlyΘSoutheastFalseCreek(SEFC)NEU; 1 (throughtheengineeringservicesdepartment)ΘStrathconaCounty ΘCityofSurrey ΘPrinceGeorge ΘCityofNorthVancouver Θ100%municipalownershipandoperation,throughΘMarkhamDistrictEnergy; 2 asubsidiarycorporationorexistingpublicutilityΘHamiltonCommunityEnergy; ΘCity/ğƌŭğƩǤ͸ƭEnmax; ΘCityofRichmondAlexandraDEU; ΘLonsdaleEnergyCorp. ΘLuluIslandEnergyCompany Θ100%municipalownershipwithprivatesectorΘRevelstokeCommunityEnergy 3 operationΘRegentParkEnergyInc. 100%PrivateOwnership 3 PrivateDEsystemshavebeenproventoworkinCanadawiththelargestdistrictenergyutilitiesbeing entirelyprivatelyowned.Someofthe59{͸ƭmayhavebegunaspubliclyownedorjointventureowned systemsandtransitionedtoprivateownership. Figure13:PrivateOwner/OperatorModels ModelDescriptionExamples Θ100%privateownershipandoperationΑΘEnwave(Toronto,London,Charlottetown,Windsor, 4 commercialutilitymodelChicago,LosAngeles,Houston,NewOrleans,Seattle,Las Vegas,Portland) ΘCreativeEnergy(FormerlyCentralHeat) ΘCorix(University,Dockside) ΘSudburyDistrictEnergy(Toromont) ΘCornwallDistrictEnergy ΘEnergirUrbanHeatingandCooling(VeoliaNorthAmerica ΑMontreal) ΘRiverDistrictEnergy Θ100%privateownershipΑcampussystemsbyrealΘMirvishVillage,TorontoΑWestBank+CreativeEnergyin 5 estatedevelopersToronto ΘDrakeLandingSolarCommunity,Okotoks ΘLaCiteVerte,QuebecCityΑSSQ+ Hybrid Thereareseveralexamplesofhybridmodelsthathaveworkedbecausetheysuitedspecificlocal requirementsatthetime.Thisisapatternthatmightfitthe/źƷǤ͸ƭsituationwheretheCitymaybe interestedinapartownershippositioninordertoinitiatetheprojectandthenholdthatinterestforas 3 ThequalifierͻǒƷźƌźƷǤͻistodistinguishthisbusinessmodelfromcampussystemsownedbyuniversities,industries, themilitaryorothergovernmentorganizations. 1 - 50 Page|45 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 longasitprovesusefultoensureexpansiontomeetCitygoalsforlocaleconomicdevelopmentandGHG reduction.ManyoftheW͸ƭhavemoved,oraremoving,toasingleownerposition;thesplitownership modelistheleastfavorableoption. Figure14:HybridOwner/OperatorModels ModelDescriptionExamples JVbetweenamunicipalityandaprivatesectorΘTorontoCommunityHousing/Corix(now100%public) 6 company(theprivatesectorcompanymayprovideΘCityofSubury/Toromont(now100%private) operatingexpertise)ΘOvalVillageRichmondΑLIEC/Corix Splitownershipandoperation,themunicipalityΘWindsorDistrictEnergy/Enwave 7 owningandoperatingthedistributionsystemswith privatesectorowningandoperatingEnergyCentre 1 - 51 Page|46 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 9.NextSteps:DESImplementationStrategy Task1DevelopDESBusinessConcept ThefirsttaskistoconfirmtheOwner/Operatormodelandestablishsuitablegovernanceforacommercial DESsystemorutility(e.g.relationshipwithshareholdersandfunders).Keyquestionstoconsiderinclude: Whowillowntheplantanddistributionsystem? Whowilloperatethesystemmosteffectivelytobenefitthecommunity? Whohasaccesstopotentialsourcesofprivatefinancingorgovernmentgrants? Cancapitalcostsandfinancingresponsibilitiestobeshared? FromC.͸ƭexperience,itisunderstoodthatbuildingowners/developerswantaclearunderstandingof: ΘWhattheDESservicebeingprovidedis. ΘWhotheyaredealingwith? ΘThattheserviceisfairandtheprocesstransparent. ΘThattheDESservicewillmeettheirprojecttimeline. ΘThattheserviceiscostcompetitive. ΘWhatarethebenefitsandwheredogoalalign? IdentifyDESengagementstrategy: City/RegionalRole EffectiveDESimplementationrequiresaproactiverolebytheCity/Region.Staffwill needtoarticulatetherationaleandroleoftheCity/Regionandrequirementsoftheserolestoall departments,theCityChiefAdministrativeOfficer(CAO)andultimatelyCity/RegionalCouncil.The City/Regionalstaffateverylevelmustunderstandthattheyareinstrumentaltotheultimatesuccessof theDESimplementation. AseniorstaffpersonshouldbeassignedtoplaytheleadroleintheestablishmentoftheDESbusiness structure,aswellasnegotiatingthetermsofahybridmodelifthatistheƚǞƓ͸ƭpreferredoption.This individualwouldalsoberequiredtomakethecasetointernalapprovalauthoritiesforanyspecific monetaryorinkindcontribution. AuthoritytoexecutetheCity/RegionalrolesshouldbesoughtfromCouncil.Havingestablisheda responsibleentitytotakecarriageoftheproject,theassignedrepresentativeswouldbedulyauthorized toexecutethebalanceoftheimplementationplanasoutlinedbelow. Priortothecommencementofmarketing,aninitialbusinessplanshouldbedevelopedwithaproject schedule,costs/revenueprojection,anddraftsampleMemorandaofUnderstandingΛah ͸ƭΜand ThermalEnergyServiceAgreementsˁ9{!͸ƭΜforcustomers. KeyStakeholders ΑIdentifyandinvolvekeystakeholderswhomaybenefitfromtheestablishmentofa DESinKitchener.Toursofsuccessfuldistrictenergysystems,workshops,andsharedexperienceswith 1 - 52 Page|47 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 otherbuildingownersandoperatorsareaneffectivewaytoinvolvecommunitystakeholdersand familiarizethemwithdistrictenergy. ΘCityCouncilorsRegional/ProvincialGovernmentOfficials ΘDevelopers/Landowners ΘLocalResidentsandResidentialOrganizations ΘBusinessGroups ΘEnergyManagers,OrganizationsandEnvironmentalGroups ΘGeneralPublic DESDevelopers InternalCity/RegionalGroupssuchasWater,MunicipalInfrastructure,Roads,Building Operators,Planning/Policy AcademiaΑUniversityofWaterloo,ConestogaCollege,WilfridLaurierUniversity Others:Enbridge,IESO,KitchenerWilmotHydro,GrandRiverHospital,Metrolinx KeyCommunityMembers BenefitstotheCommunity Itisimportanttocommunicateaconciseclearmessagebasedon: 1.AddingValuetotheCity/Region 2.Strengtheningthelocaleconomy 3.Improvingenergyefficiencyandenergysecurity 4.Offeringacleanermeansofmeeting(thermal)energydemands 5.Providingenergyflexibilityandresilience. UnderstandBarrierstoDESImplementation: ΘLowenergyprices. ΘLackofcapital:communityenergysystemsarecapitalintensive. ΘEconomics:requirementforshorttermpaybacksonenergyinvestments. ΘLackoftechnicalandDESbusinessknowledgebycompanies,policymakers. ΘNeedforeffectivepolicyincentivestostimulateinvestmentinenergy. ΘLackofbuyinfromͻğƌƌͼstakeholdersincludingmultiplelevelsofgovernment,developers,local utilities,buildingowners. ΘUnderstandingofthetruecostofenergyproductionΑcapital&operatingandmaintenance. ΘLittlebenchmarkingandmeasurementintheHVACindustrytounderstandefficienciesand performance. Task2ΑDESMarketing DESMarketingistheprocessofteachingconsumerswhytheyshouldchooseaconnectiontoadistrict energyproviderovercontinuingwithastandaloneheating/coolingsystemfortheirbuilding.Marketingis aformofpersuasivecommunicationwhichincludescreatingtheproductorserviceconcept,identifying whowillbeDEScustomerbuildings,promotingit,andmovingitthroughtoaconnectionagreement.The DESmarketingphaseinvolvesincreasingawarenessanddemonstratingviability. 1 - 53 Page|48 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 Themostimportantbuildingowners/developerstoapproachwouldbetheCity,Region,andProvince. Staffanddecisionmakersresponsibleforheatingandcoolingofallpubliclyownedbuildingsidentifiedas potentialconnectionsshouldbeengagedinpreliminarydiscussionsaimedatintroducingthepossibility connectiontoDES. ThepotentialvaluetotheCity/Regionshouldbestressedandtheplannedprocessforestablishingthe DESbusinessexplained,includingtheexpectedschedule.Animportantoutcomeofthisactivitywouldbe togainthecooperationandparticipationofeachbuildingowner/operatorintheestablishmentofthe DESalongwithcommitmentstocoordinatetheirplanningactivitieswiththeDESactivity. DESmarketing,learning,andincreasingknowhowwillcontinuetobeanongoingeffort. Task3RefinetheTechnicalConceptFurther TheDEStechnicalconceptshouldbedetailedfurtherbasedontheresultsofdiscussionswiththebuilding owners/developers.Includedinthiseffortwouldmoreindepthinvestigation: Commitmentofthesiteidentifiedfortheenergycentre,coordinatewitharchitecturaland developmentteamifenergycentrewillbeembeddedinabuilding. Technicalplanningandcoordinationwilloccurwiththeoverallsiteplanning. Identifycoordinationrequiredandpotentialsynergieswithotherongoinginfrastructure developmentworkinthetargeteddevelopmentareas. Analysisoftestboreholesandconfirmsuitabilityofgroundsource,ifapplicable. Reviewbuildingenergymodelsandidentifysimultaneousheatingandcoolingopportunitiesto increaseeffectivenessofGSHP. Investigateutilityservicingrequiredforenergycentreincludingnaturalgasservice,electrical connection,water,etc. PreliminaryreviewofEnvironmentalComplianceApprovalrequirementsrelatedtoairemissions, noiseassessment,useofgroundwater,effectongroundtemperature,anduseofcoolingtowers. Refinetechnicalconceptdesignandimprovecostestimateclass. Task4ProjectReview StockwouldbetakenoftheprospectsandsuggestedcharacteroftheDESasinformedbyongoingand previousefforts.Anespeciallyimportantstepwouldbetosolicitcommentsonthecurrenteffortfrom buildingsowners/developers,asthesewillformthebasisofah ͸ƭthattheywillbeaskedtosign.The listofprospectivecustomerpeakloadsandenergyuse,andconsequentlythecost/revenuemaybe revisedasaresultofthiswork. Task5DevelopProjectTechnicalDefinition Basedonaprimaryreviewoflikelycustomers,theProjectTechnicalDefinition(PTD)shouldbedeveloped. (ThisissometimescontainedinaDesignBasisDocument).ThePTDwillincludeinitialsizingofequipment, 1 - 54 Page|49 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 schematicsandlayouts,includingpiperouteandsamplepipedetails.Morerefinedcapitalcostestimates wouldbedevelopedfromthePTD. BasedontheprojectedĭǒƭƷƚƒĻƩƭ͸avoidablecostsanddiscussionswiththelandowners/developers,a pricingstructurewillbedeveloped.Thepricingstructureandcapitalcostestimateswillbeusedtodevelop theprojectbusinesscaseandreviewofrisks. Task6ObtainCustomerCommitment Withasolidbusinessplan(includingpricing)inhand,presentationswillbemadeto landowners/developersaimedatsecuringsignoffofah ͸ƭ͵Explanationswillbegivendescribingwhat itmeansforabuildingtobeconnectedtodistrictenergyfrombothatechnicalandbusinessperspective. Thekeypricingmessagewillbetheconceptthatdistrictenergywillcostnomorethanthebusinessas usualalternativebutwillprovidebettervalueformoneythroughriskmitigationandservicereliability.In astandalonesituation,thebuildingowner/operatorassumesallriskoffaultyequipmentandoperator error.ByconnectingtoaDES,buildingownerstransferthisrisktotheCESowner. Thelandowners/developerswillbeaskedtosignoffonah ͸ƭͲinacknowledgementofdraft9{!͸ƭthat willalsobepresentedtothem. Experiencehasbeenthatexecutionof9{!͸ƭcanbeatimeconsumingprocess.ah ͸ƭprovidetheDES developerwithsomeassuranceofcustomercommitmenttosupportapplicationforcapitalapprovalsand constructionfinancing,evenwhilefinalcustomerreviewandexecutionof9{!͸ƭareinprocess. Task7FinalizeProjectDefinition TheProjectTechnicalDefinitionandbusinessplanwillbereconfiguredasnecessaryinaccordancewith theah ͸ƭ͵Thismayincludesomerefinementtothepricingandconsequentlyrevenueprojections. Thefinalbusinessplanshouldincludeconfirmationofbusinessandfinancingstructure,governance, pricing,cost/revenueprojection,projectschedule,riskmanagementplan,environmentalandsocial performanceandsamplesofMOUandESA. AtthisstageagoornogodecisionfordevelopmentofaDESmaybemade,andifpositivewouldmove intoadetaileddesignandimplementationphase. Task8DistrictEnergyReadyInfrastructure OneofthemostcommonconcernsofprospectiveDEinvestorsistheextenttowhichenoughcustomers arecommittedtosubscribetotheservice.Therefore,thebestthingtheCitycoulddotofacilitate realizationofthebenefitsofDESistoencouragebuildingstoconnecttotheDES. TheCityiswellpositionedtobeeffectiveinthisrolethroughitsrelationshipwithrealestatedevelopers. RepresentativesoftheCitycanengagedevelopersindiscussionaboutthemutualbenefitsofDES.In areaswhereDEserviceis,ormay,becomeavailable,thedevelopmentapprovalprocessmightbeusedto 1 - 55 Page|50 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 requirelarge,newbuildingstobeconstructedinawaythatareatleastͻ59ƩĻğķǤͼ͵Newdevelopments andsubdivisionplanscanincludespacereservedinrightofwaysforDEinfrastructureoritcanbe installedaspartofthemunicipalservicing.Theseinitiativescanbedevelopedthroughplanningandpolicy. ‘ŷğƷ͸ƭinItforDevelopers?‘ŷğƷ͸ƭinItfortheCity/Region? ResiliencyandReliability Centralenergysystemsareveryreliable,andtheburiedinfrastructurereducessusceptibilitytoextreme weathereventssuchastornadoesandicestorms.Theuseoflocalandwasteenergysourcesaswellas CHPopportunityincreasesenergysecurityandresilience. EnvironmentalandEnergyEfficiency TheeconomiesofscaleandcentralizednatureofDESenablesahighlyflexibleandadaptablefueland technologymixtobeused;increasesopportunitytouselocalwasteenergystreams,implementlow carbonenergysourcesandcombinedheatandpower.Inaddition,purposebuiltandoperatedcentral energyfacilitiestogetherwithcombinedthermalloadsallowsprimaryfuelsourcestobeusedmore efficiencytherebyreducingGHGemissions.Buildingsconnectingtodistrictenergysystemsdemonstrates environmentalandenergyleadershipandacommitmenttocombattingclimatechange. FlexibleBuildingDesign Reducesmechanicalandelectricalserviceandrooftopspacethatwouldhavehousedboilerandchillers, coolingtowerandboilerstacks/chimneys.Spacecanbeusedforamenityandcommunityspace,green roofs,rainwaterharvesting,solarPV/thermalinitiatives.Reductioninnoise,vibration,andonsitebuilding emissions. ReducedCosts Buildingownerscandefercapitaldollars;upfront/replacementscostsforpurchasingboilersandchillers. Alsolowersriskduetocapitalandoperatingcostsfromboilers,chillers,heatpumps,radiatorsandcooling towers.Eliminatesonsitefuelandreducesbuildingelectricalload. LocalEconomyBoost DESareinfrastructureprojectsthatcancreateandenhancealocalenergymarketandindustry;creating jobsduringconstructionandrequiringoperatorsandservices. ConsumerandPublicSafety DistrictEnergySystemssignificantlyreducetheriskofLegionellabacteriabyeliminatingtheneedfor coolingtowers.Italsoeliminatestheriskofcarbonmonoxidepoisoningfromboilers.Furthermore, connectingtoDESallowsforpublicspacessuchascommunitycentres,schools,andlibrariestohavethe 1 - 56 Page|51 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 capabilityofbeingutilizedasemergencycentresinthecaseofenvironmentaldisastersandother incidentsoflocalcrisis. Figure15:SummaryofBenefitstoKeyStakeholdersfromaDES ToRealEstateDevelopers,BuildingOwnersTotheCity/Region andResidents ROI,localeconomicdevelopment BusinessSense Costsavings,deferredcapitalcosts Jobcreation,riskmitigation &Economic Energysavings,stabilizedenergycosts Infrastructureasset Development Alternativeincomestream,wastefuel Increaseurbandensificationandplanning sources Increasespotentialforuptakeofwaste Energy Energyreliabilityandflexibility heatandrenewableenergysources Security Increasedefficiencyandconservation Increasedenergysecurityandresilience Reduceimpactfromlossofheatingand withlocalenergyproductionandfuture coolingthatcanaffectproductivity proofing Fuelflexibility Potentialtodeveloplocalfuelsources Lowerdemandonexistinggas/electricity infrastructure Reducedelectricalpeakdemand Environmentalbenefitfromefficiency, Environmental Greenimage/marketing,environmental CO2eGHGreduction andOther stewardship/leadership HelpstomeetGHGreductiontargetsand Architecturalopportunities:rooffreefor fuelconservationmethods amenityspace,greenroof, Canreducewaterusageincoolingsystems Renewableopportunities:rooffreefor Promoteenergyawareness solarthermal/PV Synergywithpotentialstormwater Increasecomfortfromhydronicheating reductionstrategy andpossiblyradiantfloorheating Improvedairquality+healthbenefits Potentialtoprovidegreenroofspace 1 - 57 Page|52 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 10.Evaluation/Recommendation BasedontheproposeddevelopmenttimelinesanddensitiesprojectedfordowntownKitchener,itis concludedthatthereispotentialtoestablishaDESwithapositivebusinesscase.TheDESconcept proposedfordowntownKitchenerwouldserveapproximately416,000m2(4,485,000ft2)ofnew developmentinfourphasesbetween2023Α2029. Scenario1,aDESusingconventionaltechnologies,hasthelowestbuildoutcostof$37.6Mandhighest IRRat8.9%.ItalsohasthelowestGHGbenefitcomparedtoBAUat~700tonnesCO2reduction. Scenario2,aDESusingbaseloadedopensourcegroundsourceheatpumps/heatrecoverychillerswith conventionaltechnologiesusedforpeakingandbackup,hasthenexthighestbuildoutcostof$47Mand IRRof5.3%over25years.TheGHGreductionisestimatedat~5,100tonnesofCO2reduction. ItisrecommendedthattheCEISproceedwithdevelopingaDESfortheCityofKitchenerbasedon Scenario2Op enLoopGSHP.TheDESisestimatedtotalbuildoutcostis$47M(classDindicativeestimate +/50%)withanestimated$20MrequiredtoestablishPhase1.ThebusinesscaseforScenario2hasa lowerIRR,5.3%,thanScenario1usingconventionaltechnologies,IRR=8.9%,buthasagreaterGHG reductionpotentialof~5,000tonnesvs.~700tonnesandisthereforeamoreattractiveopportunityto meetthewĻŭźƚƓ͸ƭinterestsininnovation,effectiveness,security,andresilienceinenergy.Thecreation oftheDESinKitchenerwouldestablishathermalenergygridthatincreasesenergysharingopportunities andflexibilitytoadoptalternateandwasteenergysourcesand/ortechnologies. ThenextstepstoestablishingaDESfortheKitchenerInnovationDistrictareprimarilysocial,economic andpoliticalinnature.CEISmustdevelopaDESBusinessPlanincludingdecisionsonownership,financing, operationsandmanagementstrategy,stakeholderengagement,identifyingpolicydriversaswellas solidifyingpotentialenergycentersites,identifyingsynergieswithothermunicipalprojectstoenablethe developmentofaDES.Areasonabletimelineforthisworkisestimatedtobe~12monthsarriveatago nogodecision.A12monthtimelinewouldbereservedfordetaildesignwithapprox.1218monthsfor implementation.TemporarystrategiescanbeutilizedifneedtosatisfyinitialcustomersshouldtheDES developlagbehindthefirstcustomerconnection. 1 - 58 Page|53 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 Table14:EvaluationGuideline 1 - 59 Page|54 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 11.AppendixA 1)SK9309100ΑKitchenerDESOverviewMap 2)SK9309101ΑKitchenerDESDPS 3)SK9309200ΑDPSTypicalTrenchDetail 4)SK9309001ΑConventionalPlantConceptualSchematic 5)SK9309002ΑOpenLoopGeoExchangeConceptualSchematic 6)SK9309003ClosedLoopGeoExchangeConceptualSchematic 7)BeattyFigure1ΑWaterWellandCrossSectionLocations 8)BeattyFigure2ΑCrossSectionAA 1 - 60 L A U T P E C N O C 1 - 61 L A U T P E C N O C 1 - 62 1 - 63 L A U T P E C N O C 1 - 64 L A U T P E C N O C 1 - 65 L A U T P E C N O C 1 - 66 WaterWellMECPWellRecordNo.CrossSectionLocation 2870 7980 870 948 6502 6504 175 6504 1 - 67 CALE S 1 - 68 Beatty Geothermal Consulting A Division of Beatty Geothermal Inc. ___________________________________________________________________ Table 1 - Kitchener Project Open Loop Well System Assumptions Summary (3,500 kW option) ParameterAssumption/Estimate No. of Wells Required6 (3 supply and 3 injection) Well Flow Available, L/s (gpm)95 (1,500) Cooling capacity kW (tons)3,500 (1,000) Heating Capacity kW (tons)3,500 (1,000) oo 6 (43) Min, Heat Pump EWT - Peak Heating,C (F) oo 15.5 (60) Max. Heat Pump EWT - Peak Cooling,C (F) Maximum/Minimum Groundwater Injection 20/4 (68/40) oo Temperature,C (F) Budget Estimate ($)1,000,000 NOTES: - all estimates are high-level, based on rules of thumb and previous experience. - assumes supply well separation of 60 m (200 ft), and supply/injection well separation of 150 m (500 ft) oo - assumes ambient groundwater temperature is 10C (50F) - well flow assumes three supply wells, each with a capacity of ~31.5 L/s (500 gpm) - EWT = heat pump Entering Water Temperature oo - cooling capacity based on a heat pump EWT of 15.5C (60F) and EER of 22 oo - heating capacity based on a heat pump EWT of 6C (43F) and COP of 3.5 oo - assumed 1.1C (2F) heat exchanger approach temperature - budget estimate includes: 3 supply wells, 3 injection wells, stainless steel casing, drop pipe, 3 submersible pumps. etc. (does not include distribution piping) - all values are approximate Beatty Geothermal Consulting -A Division of Beatty Geothermal Inc. British Columbia - 1965 West 4th Avenue, Suite 202 | Vancouver, BC | V6J 1M8 Ontario - 2175 King Road | King City, Ontario | L7B 1G3 1 - 69 Beatty Geothermal Consulting A Division of Beatty Geothermal Inc. ___________________________________________________________________ Table 2 - Kitchener Project Closed Loop System Assumptions Summary (3,500 kW option) ParameterAssumption/Estimate Number of Boreholes250 Depth of Boreholes, m (ft)200 (650) Cooling capacity kW (tons)3,500 (1,000) Heating Capacity kW (tons)3,500 (1,000) oo 4.5 (40) Heat Pump EWT - Peak Heating,C (F) oo 32 (90) Heat Pump EWT - Peak Cooling,C (F) Budget Estimate, $3,750,000 NOTES: -all estimates are high-level, based on rules of thumb and previous experience. -total annual heat rejection/extraction to/from the boreholes has not been considered in the above estimates -budget estimate includes: boreholes, u-loop, grout, horizontal header piping and trenching, antifreeze, etc. (does not inlcud main distribution piping). -all values are approximate Beatty Geothermal Consulting -A Division of Beatty Geothermal Inc. British Columbia - 1965 West 4th Avenue, Suite 202 | Vancouver, BC | V6J 1M8 Ontario - 2175 King Road | King City, Ontario | L7B 1G3 1 - 70