Following the end of the…

Following the end of the current 2021-2024 energy efficiency framework how could energy efficiency programs be enhanced to help meet electricity system needs and how should this programming be targeted to better address changing system needs as Ontario’s demand forecast and electrification levels grow?

It should be recognized that district energy (DE) (district heating and district cooling or a combination) is the ultimate, permanent and most cost-effective energy efficiency program.

District heating will lower winter peaks while district cooling can lower summer peaks; e.g., by using deep lake water cooling and/or cold thermal storage in the form of chilled water or ice (as in Enwave’s Windsor District Energy System).

It follows that programs should target DE technologies such as those and ground source and water source (e.g., sewage or lake water or rejected heat from cooling) to water heat pumps. Almost all large buildings have essentially hydronic internal heating systems. Geo-exchange should be supported for large buildings and such facilities should be “DE Ready” to facilitate incorporation into DE.

“DE Ready” for new buildings means lower than normal internal heat distribution temperatures, and more than normal heat exchange surface to be compatible with district heating supply at no more than 65°C and return at 30°C. It should also include design drawings (civil, mechanical and electrical) specifying how the eventual connection to district energy will be made, ideally in a basement.

There should be a Clean Heat Production Credit, in the order of about $20/MWh (2 cents /kWh) of useful heat produced from non-emitting sources for the first ten years. This recognizes that, for political reasons, the carbon price does not fully represent the full social cost of emissions. It should be reduced to the extent electricity was used (for example by ground source or water source heat pumps) reflecting marginal emissions from the electricity system. Some sources, such as nuclear, solar thermal, or small reciprocating engines with heat recovery, would thereby suffer no such reduction. (It doesn’t matter, in the short term, that the reciprocating engines burn gas, provided they only operate when gas is on margin anyway, resulting in a slight decrease in emissions, taking into account emissions displaced by the useful heat).

Existing operations should be included. Although they would not provide incremental benefit, it’s only fair to reward early adopters and their publicized gains would draw attention sooner than new projects with their lead times and encourage evolution in the right direction. And it would avoid perverse consequences like operators shutting down existing and starting new. These distributed sources of clean heat could help build up the heat load supplied with hot water through district heating to eventually match planned large-scale CHP. The original heat sources with higher marginal costs would then become standby and peaking.

District heating expansion and new district heating systems should be assisted on the basis of the avoidance of new demand and electricity consumption from air source heat pumps that might otherwise be thought necessary to decarbonize building heating (though they actually would not decrease societal emissions because of the consequent increase in gas plant output).

For example, many suburban neighbourhoods could immediately benefit from district geo-exchange systems involving from a few up to about a hundred houses. The capital for vertical bore-holes, central heat pump (possibly heat recovery chiller), distribution and energy transfer stations could be amortized over 40-50 years added to the property assessments, not individual debt, which would make it easier than home owners trying to go it alone with individual geo-exchange heat pumps. The local electricity distribution companies and/or Enbridge Gas, should be encouraged to lead such projects, which might include wholly or part co-operative ownership. Currently, they are held back by the difficulties in obtaining easements (see later recommendations for policy development under ‘additional feedback’).

As another example, all schools with playing fields should have them temporally dug up to install horizontal (‘slink-toy’) ground heat exchangers for geo-exchange, or just geothermal if cooling wasn’t needed.
All of these individual systems (geo-exchange in large buildings, district geo-exchange in neighbourhoods, horizontal geothermal in schools) could be eventually linked into ‘super’ district heating systems supplied with very low marginal cost energy (e.g., nuclear and/or solar thermal). The original rotating equipment would be partly amortized by then and could be demoted to peaking duty, whereas the underground TES would remain active as part of the larger system.

Do you have any additional feedback on the IESO’s “no-regret” recommendations?
They are mostly good in general terms (except the dead-end of so-called low carbon fuels), but specifically miss what is essential to reach zero emissions affordably, or at all.

Pathways states, page 32) that success “would need every known or potential resource available today.” Yet it ignores the potential synergies between the electricity system and heat networks, which could provide economical energy storage enabling phase-out of gas plants without hydrogen, and the great emission reduction potential of using nuclear energy for district heating.

It also ignores the potential flexibility of associated CHP with seasonal thermal energy storage. These omissions should be remedied by ensuring the (what ought to be called) Decarbonization and Energy Transition Panel and the Cost-Effective Energy Pathways Study have appropriate expertise in district energy, which does not appear to the case yet. Consultants have been hired with no indication they have any knowledge of district energy. Their models don’t even allow for it. Therefore, the government can learn little about the potential for district energy from these consultants. These studies should involve experts with specific knowledge about district energy.

Missing this opportunity should be cause for plenty of regrets. It would be a scandalous under-utilization of publicly funded assets. The building heating market in urban areas in Ontario is worth well over $12 billion/year, probably closer to $15 billion/year, and could be largely serviced from local heat sources, severing dependence on imported energy and building a sure, predictable road (unlike hoping for heat pumps in every building and hydrogen) towards cutting emissions from buildings, which is the highest emitting sector in the Greater Toronto and Hamilton Area and second highest in the province. And the load following capability of nuclear CHP could help eliminate emissions from the electricity sector also.
It would provide greater energy security and resilience, having capability, with seasonal thermal energy storage, to weather whatever long and severe spells of extreme cold that paradoxically may come due to global warming. With no such experience, it’s uncertain how a future electricity system might fair if heating for the whole province depended on it. The history of ice-storms in Eastern Ontario and events in Texas and elsewhere don’t inspire confidence in this strategy of having all eggs in the electric basket.

District heating is a simple technology with few moving parts, long-life with minimal maintenance, less embodied materials per kW than the electricity system and well-developed supply chains for its few and simple components. In particular, it is largely independent of inelastic supply chains for critical materials such as copper, aluminium, nickel, cobalt, lithium, manganese, silicon, rare-earth metals and highly engineered equipment, all made somewhere else. It affects less space, no non-urban space, is mostly underground in urban areas, puts less pressure on the construction job market and could create markets for new local industries manufacturing its relatively low-tech components like pipe, heat exchangers, valves and thermal energy meters. Sadly, but realistically, manufacturing of the often more sophisticated and heavy equipment used in electricity systems like autotransformers and turbo-generators is unlikely to come back to Ontario.

If we are about to invest billions in the energy transition, at least let’s maximize local content. Otherwise, the exercise will drain our economy.

To ensure affordability of both electricity and heating for Ontario business and low to middle income consumers, the Government of Ontario should establish policy certainty on firm and permanent support for DE starting with requirements to maximize efficiency in thermal generating stations by making economic use of otherwise discarded heat.
1) Mandate all new thermal generating stations (whether bioenergy or nuclear) to be situated and designed so as to make otherwise discarded heat available as useful heat, be constructed to be at least “DH Ready” and have standing offers to sell heat on a commercial basis. DH Ready for power plants means at least tie-ins for steam and condensate cut out and blanked and civil, mechanical and electrical design drawings approved with bills of materials.
2) Establish appropriate wholesale price regulation for CHP electrical production - for example, covering all fixed costs with capacity payments, thereby allowing CHP to sell heat for wholesale prices that would be a bargain for heat consumers yet higher than their marginal operating cost to provide return on investment for the necessary incremental works within the fence. Another benefit to the nuclear projects would be the consequent greenhouse gas emission reductions from buildings, and the avoided societal investment in electricity infrastructure and in-building heat pumps and building retrofits, which could improve its ESG standing and thereby lower the cost of financing. Cost of financing is the most sensitive parameter affecting the economic viability of nuclear plants.
3) Include district heating and cooling in Conservation and Demand Management programs.
4) Assist and enable municipalities to attract experienced, deep pocket DE developers (study what the City of Bristol has done in the United Kingdom).
5) Publicize (in collaboration with the Canada Infrastructure Bank) availability of long-term, low-cost financing for feasible district energy projects.
6) Apply the full carbon price to all electricity generation and continue increasing beyond 2030.
7) Offer a Clean Heat Production Credit. The federal government might be persuaded to co-sponsor.
8) Consider legislation, such as developed by the Department of Energy Security and Net Zero in the United Kingdom concerning Heat Network Zones, where designated categories and sizes of buildings would be obligated to connect to district heating, as would significant potential sources of waste heat (e.g., data centres). At the very least, require all municipalities, and provide them with funding, to develop Heat Plans (similar to the IESO’s electricity planning, but more appropriately conducted by municipalities). This was required in Denmark about 50 years ago and Demark now has about 70% of buildings connected to district heating, and is increasing connections all the time, including single family homes.
9) Consider legislation similar to that developed by the Department of Energy Security and Net Zero in the United Kingdom concerning district heating consumers rights. This would create more confidence leading to higher demand.
10) Recognizing that district energy development will be driven by demand from major real estate investment firms, ensure that such companies clearly understand that zero emissions, one way or another, will soon be mandated while there will be policies in place to ensure economic viability of district energy.
11) Also recognize that, while district energy in Canada is generally given faint praise by all levels of government without sufficient action, it deserves, a big, near-term “win” would un-freeze calcified attitudes. One such “win” could be to emulate what the federal government has done with its steam district heating systems in Ottawa, to strongly encourage and facilitate conversion of several steam district heating systems to hot water, thereby paving the way for their decarbonization; e.g., Enwave, the U of T and York University in Toronto, Enwave in London, Index Energy in Ajax and others. These systems already have connected customers, which is the key requirement. They might logically move towards conversion to hot water and decarbonization independently. However, as with the Ottawa steam to hot water conversion, the strong, helping hand of a senior level of government would be pivotal.
12) The IESO should be directed by the Minister of Energy to provide another Pathway to Decarbonization assuming only about a quarter of the province’s building heat load would be electrified and that only by ground source heat pumps in low density areas with individual thermal energy storage. These are more suitable where there is space available and would not pose as great a challenge to electricity distribution systems as in the highly built-up major load centres. And it should explore the notional benefit of CHP.
13) The Government of Ontario should develop a long-term strategy to transition from natural gas fuel to a truly clean source of heat between now and 2050. This will not be easy. It will be difficult to find dependable heat sources to replace natural gas. One clean dependable heat source potentially available on a sufficient scale is nuclear energy, which can be made available as heat not just electricity and probably without needing much, if any, additional installed capacity beyond that projected by Pathways in the decarbonization scenario. Another is solar thermal, which would likely develop after the basic infrastructure was put in place, as it has in Europe. Another is heat from sewage and/or water treatment plant effluent, which should be encouraged to build up heat loads prior to in-service of nuclear units. Another potential upside is closed loop deep geothermal, likely more useful for the lower temperatures needed in district heating than for power generation (this is no more ‘way out’ than hydrogen, in fact, more down-to-earth, safer and broadly replicable).
14) A provincial level strategy communicated to the municipalities should encourage local planning to allow electricity and heat production to be placed in reasonable proximity to the loads and ease legal barriers for easements for the underground services crossing property lines and city streets.
15) Encourage nuclear regulators, and cities and towns to accept SMRs and MMRs inside urban areas.
16) Incorporate municipal and community heat plans into provincial energy planning. Get a true bottom-up view of what the demand is for what and where.

Without such a bold, proactive strategy, new district heating would be limited to planned new communities where the density is high enough and the land is essentially clear so the infrastructure can be built efficiently as part of the subdivision plan, such as the Lakeview development in Port Credit. That’s all very well, but won’t go far in decarbonizing all building heating (particularly existing) or the electricity system as required by the proposed federal Clean Electricity Regulation. Policies advocated in this submission would do that.

Installation of heat pumps in every building is not going to happen because there is no payback for the owners, insufficient contractor capacity able and willing to take on the work (gentrification is more lucrative) and the process of upgrading electrical service is inevitably slow (each connection must be reviewed by the LDC individually). There is no fast road to Net Zero that doesn’t go through district heating.