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.
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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
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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
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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
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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
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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:
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Informationcontainedhereinisconfidentialandmaynotbereleasedtoanythirdparty.
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Disclaimer
ThisreporthasbeenpreparedbyFVBEnergyInc.TheinformationanddatacontainedhereinrepresentC.ƭbestprofessional
judgmentinlightoftheknowledgeandinformationavailableatthetimeofpreparation.FVBdeniesanyliabilitywhatsoeverto
otherparties,whomayobtainaccesstothisreportforanyinjury,lossordamagesufferedbysuchpartiesarisingfromtheiruse
of,orrelianceupon,thisreportoranyofitscontentswithouttheexpresswrittenconsentofFVBEnergyInc.
Thecostestimatesandanyestimatesofratesofproductivityprovidedaspartofthestudyaresubjecttochangeandare
contingentuponfactorsoverwhichFVBEnergyInc.havenocontrol.FVBEnergyInc.doesnotguaranteetheaccuracyofsuch
estimatesandcannotbeheldliableforanydifferencesbetweensuchestimateandultimateresults.
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#®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
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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
ŷğƷƭinItforDevelopers?ŷğƷƭinItfortheCity/Region?..................................................50
ResiliencyandReliability.....................................................................................................50
EnvironmentalandEnergyEfficiency.................................................................................50
FlexibleBuildingDesign......................................................................................................50
ReducedCosts.....................................................................................................................50
LocalEconomyBoost..........................................................................................................50
ConsumerandPublicSafety...............................................................................................50
10.Evaluation/Recommendation.......................................................................................................52
11.AppendixA......................................................................................................................................54
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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
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KitchenerInnovationDistrictDESPreFeasibilityStudy219309
1.ExecutiveSummary
TheCEISidentifiedtheKitchenerInnovationDistrict+asapotentialsitetodevelopacommunityordistrict
energysystemtomeettheƩĻŭźƚƓƭenergyplanobjectiveofenhancinglocalenergygenerationand
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.
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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
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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
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KitchenerInnovationDistrictDESPreFeasibilityStudy219309
3.Introduction
ͻƚźƒƦƩƚǝĻğƓķƭǒƭƷğźƓğƷĻƩƌƚƚwĻŭźƚƓƭĻĭƚƓƚƒźĭĭƚƒƦĻƷźƷźǝĻƓĻƭƭğƓķƨǒğƌźƷǤƚŅ
ƌźŅĻƷŷƩƚǒŭŷƷŷĻĭƚƚƩķźƓğƷźƚƓƚŅƷğƩŭĻƷĻķĻƓĻƩŭǤźƓǝĻƭƷƒĻƓƷƭΑĻƓŷğƓĭźƓŭƌƚĭğƌ
ĻƓĻƩŭǤŭĻƓĻƩğƷźƚƓğƓķƭĻĭǒƩźƷǤ͵ͼ
Background
TheCEISidentifiedtheKitchenerInnovationDistrict+asapotentialsitetodevelopacommunityenergy
systemtomeettheƩĻŭźƚƓƭcommunityenergyplanobjectiveofenhancinglocalenergygenerationand
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:
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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
systemandcustomerĬǒźƌķźƓŭƭheatingandcoolingsystems.Havingcommunitysharedheating
andcoolingsourceseliminatestheneedforindividualboilers,chillersandcoolingtowersateach
building.
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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.
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13
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Page
219309
Study
(Downtown)
Centre
Feasibility
Pre
Growth
DES
Urban
District
Kitchener
of
Innovation
City
3
Kitchener Figure
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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
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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.
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KitchenerInnovationDistrictDESPreFeasibilityStudy219309
BuildingA:BrammWorkYards
BuildingE:TheMultiModalHub
BuildingF:StationPark
BuildingL1:HallsLaneParkingLotRedevelopment
BuildingL2:44GaukelStreet
BuildingN:GaukelStreetBusDepot
PeakHeating/CoolingDemandandEnergyProfiles
Ananalysiswascompletedtodeterminewhatfuturethermaldemand(orload)andannualenergythat
wouldbeservedbytheKitchenerInnovationDistrictDES.Thethermaldemandrepresentstheamountof
heatingandcoolingcapacityabuildingrequirestomaintainacomfortablebuildingenvironment.The
demanddeterminesthesizingofthebuźƌķźƓŭƭbusinessasusualstandaloneboilerorchillerplant
capacity,energycentreanddistributionpipingsystem.Theenergyistheusageorconsumptionovera
periodoftime;annualenergyistheamountofenergyusedoveraoneyearperiod.
EachĬǒźƌķźƓŭƭpeakloadandannualenergyrequirementswerederivedusingintensitiesfromactual
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.
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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.
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KitchenerInnovationDistrictDESPreFeasibilityStudy219309
Figure4:KitchenerInnovationDistrictEstimatedDESHeatingLoadDurationCurve
Figure5:KitchenerInnovationDistrictEstimatedDESHeatingLoadDurationCurve
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KitchenerInnovationDistrictDESPreFeasibilityStudy219309
Figure6:KitchenerInnovationDistrictEstimatedDESHeatingLoadDurationCurve
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KitchenerInnovationDistrictDESPreFeasibilityStudy219309
5.Technical:DistrictEnergyConcept
EnergyTransferStations
EachbuildingwillbeconnectedtothedistributionsystemindirectlythroughanEnergyTransferStation
(ETS).ThepurposeoftheETSistotransfertheenergytransportedfromtheEnergyCentrethroughthe
distributionpipingnetworktotheendcustomerviaheatexchangerstosatisfytheĬǒźƌķźƓŭƭheating
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
additionalcapitaltoretrofittheĬǒźƌķźƓŭƭsystems;thiscouldincludetheconstructionofriserstoconnect
totheexistingpenthousemechanicalrooms.
Figure7:TypicalEnergyTransferStationInstallation
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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;
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KitchenerInnovationDistrictDESPreFeasibilityStudy219309
Distributionnetworkpressureatthedesignloadconditions;and
Differentialpressurerequirementstoservicethemostremotecustomer.
Figure8:ExampleofaFourPipeDistributionPipingInstallation
Distributionpipesizesarebasedonadifferentialtemperatureof30Cforheatingand8Cforcooling
withamaximumflowvelocityof2.0m/s.Thetemperatureofthedistrictsystemwillbedictatedbythe
customerbuildings;thedesignofeachĬǒźƌķźƓŭƭinternalheatingsystemwillneedtobecoordinatedin
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.
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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.
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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.
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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
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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).
BasedontheķƩźƌƌĻƩƭlogofthetwoAirBosswells,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.
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KitchenerInnovationDistrictDESPreFeasibilityStudy219309
TwoofthebedrocksedimentaryformationsbeneaththeInnovationDistrictarealsoconsideredtobe
majoraquifersthroughoutKitchener,WaterlooandCambridge.TheyaretheGuelphandGasportaquifer
systems,asshownon.ĻğƷƷǤƭFigure2.TheRMOWhasneverpumpedwaterfromthebedrockinthe
vicinityofcentralKitchener,duetothebetterqualityoftheStrangeStreetsandandgravelaquifer.
ThetwoAirBosswellsweretestedat53to56L/s(840to900USgpm)whentheyweredrilledin1968
and1974.Thewellshavebeeninusefor46to51years.BasedonthecapacityoftheAirBosswells,and
.ĻğƷƷǤƭexperienceattheevolv1andHUBbuildings,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
.ĻğƷƷǤƭTable1inAppendixA.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
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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.
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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
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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%.hǞƓĻƩƭcontingency,softcosts,and
legalandeasementfeesarenotincluded.
AsummaryofthecapitalcostsforeachproposedDEScanbefoundinTable4below.
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219309
Study
(2019$)
Feasibility
Pre
Costs
DES
Capital
DES
District
Kitchener
Innovation
CEIS
4:
Kitchener Table
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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
CustomerĬǒźƌķźƓŭƭBAUcosts,otherwisereferredtoasstandaloneorselfgenerationcosts,includethe
totalcostsofowning,operatingandmaintainingheatingand/orcoolinginbuildingsystemsifitwerenot
connectedtotheDES.
TheBAUcostcanbeconceptualizedasbeingcomprisedoftwocomponents:
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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.
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219309
Study
Feasibility
Costs
Pre
DES
Generation
Self
District
Heating
Innovation
Typical
6:
Kitchener Table
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35
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219309
Study
Feasibility
Costs
Pre
DES
Generation
Self
District
Cooling
Innovation
Typical
7:
Kitchener Table
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KitchenerInnovationDistrictDESPreFeasibilityStudy219309
Revenue
DistrictenergyratesarethechargesthecustomerĬǒźƌķźƓŭƭpayfortheDESservice.Theyaredeveloped
basedonavirtualplantmodelasifthebuildingwerenotconnectedtothedistrictenergysystem.It
analysesthecapitalcostsandoperationandmaintenancecostforastandalonebuildingsystemto
generatethebuildinŭƭspaceheating,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
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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.
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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
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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
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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
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KitchenerInnovationDistrictDESPreFeasibilityStudy219309
GreenhouseGasReductionFullBuildout
BuildingasUsual
TotalBAUEquivalentElectricityConsumption ЏААЋaŷ
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
hƓƷğƩźƚƭEmissionsJune2019
OtherEnvironmentalBenefits,Synergies,andConsiderations
1.Opportunitiesandheatavailableforsnowmeltoperations:sidewalks,parkinglots,busdepotand
transportationhubscanbenefitfromreductioninsaltingandsnowclearingefforts,improved
accessibilityandpublicsafety.
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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
toknowtheDEShǞƓĻƩƭpreciseplanforownershipandoperatingstructure,oratleastthemostlikely
option,ifitisnotfirmlyestablishedatthetimemarketingactivitycommences.Thisisbecausecustomers
areexpectedtosignlongtermserviceagreementsnaturallyneedtounderstandexactlywhotheir
counterpartywouldbeandwhotheycanrelyontodeliverthisessentialservice.
Thesuitabilityofeachofthethreeownershipmodelsdependsonthefollowingfactors:
ManagementcapacityandDEexperienceistheCitywillingtoallocateinternalmanagement
staffandisitinterestedinenteringtheDEutilitybusiness?
Risk/Reward(degreeofcomfortwithriskorriskaversion)
AccesstocapitalorCostofcapitalistherewillingnesstoraisealloranypartofthenecessary
capital?Involvementofprivatecapitaltendstobemorecostly.Publicownershipmayhave
accesstogovernmentgrantsandincentivesthathelptoimprovethebusinesscaseandreturn
oninvestment
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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/źƷǤƭownlimitedfinancial
ΘLeadershipΘLeverageindustryexperienceresources
Synergywithothermunicipal
projectsandobjectives
ΘRisks:costoverruns,ΘDisputesduetodifferentgoalsΘConcessionsinhibitmotivationto
Threats
performanceissuesassociatedΘRelationshipandRFPprocessexpandorspendmaintenance
withconstruction,scrutinizedforfairnessdollars
commissioningandO&Mcosts.
ΘMarketpenetration
ΘNuisancecomplaints
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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/ğƌŭğƩǤƭEnmax;
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/źƷǤƭsituationwheretheCitymaybe
interestedinapartownershippositioninordertoinitiatetheprojectandthenholdthatinterestforas
3
ThequalifierͻǒƷźƌźƷǤͻistodistinguishthisbusinessmodelfromcampussystemsownedbyuniversities,industries,
themilitaryorothergovernmentorganizations.
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KitchenerInnovationDistrictDESPreFeasibilityStudy219309
longasitprovesusefultoensureexpansiontomeetCitygoalsforlocaleconomicdevelopmentandGHG
reduction.ManyoftheWƭhavemoved,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
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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,aswellasnegotiatingthetermsofahybridmodelifthatistheƚǞƓƭpreferredoption.This
individualwouldalsoberequiredtomakethecasetointernalapprovalauthoritiesforanyspecific
monetaryorinkindcontribution.
AuthoritytoexecutetheCity/RegionalrolesshouldbesoughtfromCouncil.Havingestablisheda
responsibleentitytotakecarriageoftheproject,theassignedrepresentativeswouldbedulyauthorized
toexecutethebalanceoftheimplementationplanasoutlinedbelow.
Priortothecommencementofmarketing,aninitialbusinessplanshouldbedevelopedwithaproject
schedule,costs/revenueprojection,anddraftsampleMemorandaofUnderstandingΛah
ƭΜand
ThermalEnergyServiceAgreementsΛ9{!ƭΜforcustomers.
KeyStakeholders ΑIdentifyandinvolvekeystakeholderswhomaybenefitfromtheestablishmentofa
DESinKitchener.Toursofsuccessfuldistrictenergysystems,workshops,andsharedexperienceswith
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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.
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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,
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KitchenerInnovationDistrictDESPreFeasibilityStudy219309
schematicsandlayouts,includingpiperouteandsamplepipedetails.Morerefinedcapitalcostestimates
wouldbedevelopedfromthePTD.
BasedontheprojectedĭǒƭƷƚƒĻƩƭavoidablecostsanddiscussionswiththelandowners/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
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KitchenerInnovationDistrictDESPreFeasibilityStudy219309
requirelarge,newbuildingstobeconstructedinawaythatareatleastͻ59ƩĻğķǤͼ͵Newdevelopments
andsubdivisionplanscanincludespacereservedinrightofwaysforDEinfrastructureoritcanbe
installedaspartofthemunicipalservicing.Theseinitiativescanbedevelopedthroughplanningandpolicy.
ŷğƷƭinItforDevelopers?ŷğƷƭinItfortheCity/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
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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
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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
meetthewĻŭźƚƓƭinterestsininnovation,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.
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KitchenerInnovationDistrictDESPreFeasibilityStudy219309
Table14:EvaluationGuideline
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KitchenerInnovationDistrictDESPreFeasibilityStudy219309
11.AppendixA
1)SK9309100ΑKitchenerDESOverviewMap
2)SK9309101ΑKitchenerDESDPS
3)SK9309200ΑDPSTypicalTrenchDetail
4)SK9309001ΑConventionalPlantConceptualSchematic
5)SK9309002ΑOpenLoopGeoExchangeConceptualSchematic
6)SK9309003ClosedLoopGeoExchangeConceptualSchematic
7)BeattyFigure1ΑWaterWellandCrossSectionLocations
8)BeattyFigure2ΑCrossSectionAA
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L
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WaterWellMECPWellRecordNo.CrossSectionLocation
2870
7980
870
948
6502
6504
175
6504
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CALE
S
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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