Government barriers stopping district energy system

AJAX, ONTARIO - Craig Marshall poses a reasonable question.

If the Ontario government is so intent on reducing greenhouse gas emissions by promoting the widespread use of green energy technologies, then why does it keep barriers in place that undermine its own objectives?

Marshall, president of Marshall Homes, has an 88-lot site in Ajax that he wants to begin developing. His vision is to have a district energy system that uses thermal energy stored in the ground to provide hot water and space heating to all homes on the site. It would still require electricity to operate, and maybe some natural gas as backup. But by relying on geothermal energy the community's fuel and power consumption would drop dramatically.

"This is almost the perfect project size to show that it can work and be rolled out in just a couple of years," says Marshall, adding that the Europeans began embracing such district heating models years ago. He wants fellow homebuilders in Canada to learn from and emulate the approach.

Problem is, the company that Marshall wants to partner with – the one most qualified to build and operate such a system – isn't permitted, by regulation, to do anything in the province but distribute and store natural gas. Sure, Enbridge Gas can do the occasional green-energy pilot project, but it's not currently allowed to be a force of change by turning those pilots into commercial ventures.

To understand Marshall's frustration, it's important to know that he is one of the few homebuilders out there trying to introduce green technologies to buyers of new homes. It began back in February 2006, when Marshall took the leap and decided to offer a hybrid geothermal-solar system as an optional upgrade to any homes sold in his Copperfield community in Oshawa. Soon after he offered the upgrade at his nearby Kingsfield project.

It didn't attract huge interest but it was a learning experience that has contributed to Marshall's evolving vision of green energy and how it can be integrated into communities from the ground up.

No doubt, it has influenced his decision to pursue a geothermal-based district heating system at his Ajax site. No longer optional, all homes would be fed by renewable energy from a district plant, which presumably would be less costly to build than installing separate geothermal systems on all 88 homes.

He could partner with Veridian Connections, the local electric utility that has already expressed an interest in his project. But Enbridge would be ideal, Marshall says, because a lion's share of its business involves the delivery of natural gas to provide residential heating. Its engineers are more familiar with what it takes to design and operate a district heating system.

Debbie Boukydis, director of government affairs at Enbridge, says as much as the company may be interested in Marshall's project, its hands are tied. It goes back to the 1990s, when Enbridge Gas operated under the name Consumers Gas. The government at the time limited the company's operations in Ontario. Its so-called undertakings were restricted to the distribution and storage of natural gas.

The recently passed Green Energy Act now permits local electric utilities to pursue small-scale (10 megawatts or under) renewable energy projects, but natural gas utilities were left out of the discussion. Enbridge has been permitted in recent years to go ahead with pilot projects related to fuel cells and combined heat and power. "There are a million things we could do with a change to our undertakings," says Boukydis.

"We've made our case to the government."

It appears government officials are beginning to listen.

What got their attention was Enbridge's recent team-up with Bullfrog Power on a pilot project that aims to have 1,200 solar domestic hot water systems installed in Ontario over the next two years.

There was a sudden realization that a company like Enbridge, with its strong brand, financial heft, and large customer base, could truly be an agent of change by offering its customers green alternatives. "I have no reason to believe it's not going to happen," says Boukydis.

But Marshall can't wait around forever – at least not on the Ajax project.

"We'll have to know in the next couple of months what we're doing or else we'll have to wait for the next opportunity."

But why wait? Why the holdup? As Marshall points out, "removing the restriction on Enbridge doesn't cost the government a cent."