The Renaissance of District Energy: The Emergence of the Missing Grid
Having spent a forty-year plus career in developing district energy systems in Canada, Bruce Ander, President and CEO at Markham District Energy, has observed the evolution of the district energy policy discussion – evolving from “a heating technology from the past” to “district energy is a current and key strategy to achieving net- zero emissions in our urban centres”. Examples from Markham District Energy and Enwave highlight the innovations necessary to reach net zero emissions.
District Energy in Cities
In recent years our industry association, the International District Energy Association (IDEA), has worked with the United Nations Environmental Program (UNEP) to study the potential for district energy in cities. The resulting UNEP study “District Energy in Cities: Unlocking the Potential of Energy Efficiency and Renewable Energy” reminds us that space conditioning large buildings in urban areas represents more than 50 per cent of our GHG emissions. The study has an important conclusion: “Identifying modern district energy systems as the most effective approach for many cities to transition to sustainable heating and cooling, by improving energy efficiency and enabling a higher share of renewables”.
The Missing Grid
There are thousands of thermal networks operating around the world. However, most Canadians think of electricity and natural gas as the only energy supply grids that serve our homes and businesses. While there are over 200 Canadian district energy systems operational across the country, the “thermal grid” option has a very low market share in terms of serving our growing urban centres. This is not the case in other countries. Denmark has made modern district energy a cornerstone of energy policy in support of their goal of achieving 100 per cent renewable energy for heating and cooling of buildings. In Copenhagen, 99 per cent of all buildings are connected to the world’s most extensive district energy network. While Canada is far behind, we have some encouraging stories emerging from across the county. But first, let’s understand the potential.
“While there are over 200 Canadian district energy systems operational across the country, the “thermal grid” option has a very low market share in terms of serving our growing urban centres”
-Bruce Ander
Connecting the Community With a “Flowing Water Network” as the Energy Transfer Medium
District energy is defined as the connection of multiple buildings to a common energy system distributing hot water and chilled water via an underground system or the “thermal grid”. The distribution of heated or cooled water is simply the energy medium and is technology and fuel agnostic. Consider the similarity of the electricity grid where electrons power our homes and businesses and is the energy medium. Electricity is created by production plants fueled by natural gas, solar, falling water or wind but the grid is only the delivery medium.
Community Scale Low Carbon Opportunities
Herein lies the opportunity and the promise of district energy as observed by UNEP. By connecting a collection of buildings thermally, we unleash the potential for low carbon projects at a community scale, such as the use of waste heat from a central power plant or data centres. Single buildings simply could not, or would not, implement projects of this scale.
A Snapshot of Markham District Energy (MDE)
Owned by the City of Markham and now entering our 25th year of operations, MDE operates two district systems in the City of Markham. Our first system (commissioned in 2000) provides heating and cooling energy to every building since constructed in our emerging downtown area known as Markham Centre. Ten years later we commissioned a second system serving Cornell Centre, a growing urban development anchored by our regional hospital.
For our customers, we are proud of our operating history with production reliability exceeding 99.999% after 24 years. We are equally proud to report that we have had zero lost-time-injuries over our entire company history; a record that has earned MDE several health and safety industry awards.
Getting to Net-Zero by 2050 – a Template for Cities and Systems
Recognizing the Clean50 priority, we confirm that our low carbon goal is to achieve net-zero emissions by the year 2050 which aligns with the City’s objective and Canada’s international commitments and targets. Being Net-Zero Ready is our messaging to customers. As MDE moves along our trajectory towards net-zero emissions, so do our customers. By simply connecting to the district energy system, their heating and cooling carbon intensity follows our path to net zero without the customer having to take any action or having to invest capital.
As MDE pursues low-carbon initiatives over the next 25 years, we will need to lower our carbon footprint by approximately 100,000 tonnes. We are off to great start with four projects completed or under construction that will achieve the first 38,000 tonnes of reductions from this longer-term target.
Here is our first “big move” and a World Class Canadian example: This past July MDE announced the world’s largest wastewater energy transfer (WET) project. Extracting energy from a nearby regional trunk sewer, we are elevating the water temperature using heat pumps to heat and cool our growing district energy system and all connected customers. When operational in Q1 2026, the WET plant will be equivalent to a new 18.5 MWth heating plant and a 3,600-ton cooling plant that when fully operational will reduce MDE’s GHG annual emissions by over 30,000 tonnes.
The community scale of our Markham Centre thermal grid is what makes this project feasible. This regional trunk sewer, and the flowing warm “water” has always been there and certainly pre-dates the district energy system. However, in addition to other “stars” that needed to align such as carbon valuation, the key was that MDE’s Markham Centre system had grown to an interconnected thermal grid totaling 15 million sq. ft. with another 7.5 million sq. ft. connecting in the next five years. This provided the necessary scale (customer load) to justify the WET project investment. Single buildings could not have taken advantage of this low carbon opportunity when compared to MDE’s community scale system.
“The community scale of our Markham Centre thermal grid is what makes this project feasible”
-Bruce Ander
Canadian Government Policy and Funding Support
The Federal government has played an important role in supporting MDE’s path to net-zero emissions. Combined with significant financing packages with the Canada Infrastructure Bank and the Federation of Canadian Municipalities’ Green Municipal Fund, we have secured grant support from the Low Carbon Economy Fund administered by Environment and Climate Change Canada. The last pillar of support was secured in June with the signing of a Contract for Differences with the Canada Growth Fund; Canada’s first carbon hedge contract for our WET project investment.
How About One More Canadian World Class District Energy Project
Most in the energy sector have seen or heard of Enwave’s deep lake water cooling (DLWC) project that recently celebrated its 20th year of successful operations. The DLWC system, the world’s largest system of its kind, serves 180 buildings in the Toronto downtown core totaling over 40 million sq. ft. The intake pipes draw water at a depth of 85 meters at a stable temperature of 4ºC.
Enwave is expanding the system and reports that DLWC will reduce water usage by 832 million litres annually as compared to conventional building cooling plants. Equally important is that DLWC will lower the electricity system peak in Toronto by over 60 megawatts. The key is that once the deep lake water energy is delivered to shore, Enwave’s extensive underground thermal grid provides the necessary economy of scale that now delivers environmental benefits to customers, resiliency benefits to the city, all while providing investors an acceptable financial return; an important district energy “triple threat” outcome.
“Enwave’s extensive underground thermal grid provides the necessary economy of scale that now delivers environmental benefits to customers, resiliency benefits to the city”
-Bruce Ander
Many communities message the desire to reach “net zero emissions” before the year 2050. Given the high percentage of GHG emissions that relate to building heating and cooling in Canada, it is difficult to construct a successful plan that will deliver this objective without a comprehensive thermal grid strategy. This is why we are seeing the renaissance of district energy strategies and investments in many countries around the world.
