Marc Lee, Oakley Brooks & Elise Furlan
Vancouver shows how urban neighborhoods can tap local energy and make it pencil out.
In the early 2000s, architect and designer William McDonough was the toast of sustainability towns. His book with chemist Michael Braungart, Cradle to Cradle: Remaking the Way We Make Things, was a must-read, and Nike and Ford had him on the payroll. From that position of influence, he had a provocative idea he often slipped into talks: What if we turned our thinking 180 degrees and thought of all waste as a resource to be constantly tapped? Then sewage could be seen in an entirely new light. With control over this suddenly valuable resource, “wastewater treatment operator becomes a coveted job,” McDonough would say.
In Vancouver, British Columbia’s Southeast False Creek neighborhood, McDonough’s predictions are proving out: sewage is now indeed a treasured product. Thanks to a purpose-built neighborhood utility started in 2010, a giant heat pumping station in the area extracts thermal energy from a city sewer main and sends it up to new condominiums mushrooming to life around the former Olympic athletes’ village. Today, the residents of False Creek are meeting more than 70% of their daily heating needs on an average day with common sewage.
Sewer heat recovery, which is also in use in a few cities in Japan and Norway, builds on an older 20th century idea of shared district heating that still exists in many American cities, universities, and hospitals. In those first-generation district heating systems, a central boiler or heat source delivers steam throughout a system of vents and pipes. The systems take advantage of efficiencies offered by larger, more powerful equipment feeding a steady demand of many users.
In the False Creek system, piping circulates water as the heat delivery medium. As it passes through the energy center, heat pumps pull the heat from the room-temperature sewage and distribute it as warmed water for heating the 3.8 million square feet of space and the tap water in 24 buildings. Call it District Energy 2.0.
The heat pump system is three times more efficient than a comparable boiler, and many times more efficient than a traditional network of hot water heaters and furnaces. More importantly, an analysis by Future Economy researcher Marc Lee has found that the city of Vancouver, which runs the utility for this sewer heat recovery system, has built a viable business model for the operation. That’s no small feat given this was the first such system built in North America and one of only a handful in the world.
Vancouver’s experience in False Creek has changed its outlook on how it will heat the city—and in the process it offers the world a glimpse at the future of urban energy. Heating space and water accounts for up to three-fourths of residential energy use. Driving up efficiency in urban space and water heating offers huge promise in an urbanizing, emission-conscious world. And a path to financing that future has now become clear.
“Vancouver gives you a model on the technology and policy sides that others could look to emulate,” says Lee.
OVERCOMING GROWING PAINS
The system does depend on natural gas boilers to provide supplementary heat during cold spells in the winter, when the heat pump is malfunctioning or undergoing maintenance, and in interim periods before buildings are hooked into the sewer heat recovery system. This backup system was chosen in haste as the Olympic deadline loomed in 2010, and residents around False Creek expressed initial concerns about future air quality from a biomass burner that might harness British Columbia’s ample forest reserves.
In reality, Lee notes that a latest-generation biomass boiler wouldn’t negatively affect air quality and would produce significant greenhouse gas savings for the whole False Creek energy system. As it stands, natural gas usage makes the system a net greenhouse gas producer, although at half the rate of traditional heating systems that rely on natural gas and grid electricity. Reliance on natural gas also makes the system vulnerable to price shocks driven by global demand spikes, as happened in 2013.
Still, a closed loop system like False Creek, which will rely primarily on a local resource in sewer heat, insulates against grid failures. Lee notes that an ice storm in Quebec last year took down the electric grid, but legacy buildings connected to urban steam districts still had heat through the storm. As cities explore cooperative models of district energy ownership, which Vancouver has not yet, Lee notes that communities could also benefit from steady financial returns from their own neighborhood utilities—it is already happening in rural German communities where citizens cooperatively own steam boiler utilities.
A closed loop system like False Creek, relying primarily on a local resource in sewer heat, insulates against grid failures.
While the False Creek system did have $10 million in Canadian federal funding to help it begin operating in time to anchor the 2010 Olympic village, Lee says that the project could have been built without subsidies if the city had delayed the construction of the sewer heat recovery system. The city could have simply relied on the natural gas boiler until utility payments from homeowners came online to pay for the expensive new technology. (As it happened, Vancouver wanted the sewer heat recovery system operating right away, as a showpiece for the Olympics.)
And as the cost of sewer heat recovery comes down, the price tag will certainly beat the $47 million for Vancouver’s custom built system; neighborhood utilities could reach profitability even more quickly than in False Creek, where the utility is slated to go into the black in 2027. Regardless, the False Creek utility has built some certainty into revenue projections because new buildings (and new rate payers) arriving in the neighborhood are mandated by local zoning rules to hook into the system.
“The mandatory hook-up takes risk out of the project and you can make a business case for it, without any upfront government subsidies to get it off the ground,” Lee says.
The success at False Creek means government planners in metro Vancouver are bullish on developing further sewer heat exchange systems; a recent report found that up to 700 buildings in the region could be heated without substantially reconfiguring their existing sewer system. And regional officials like the idea of district energy systems in general: Vancouver is actively working to establish three new district heating utilities in high density areas. The neighboring city of Surrey is establishing its own utility around a natural gas and biomass-powered district—to be hooked up to the first building this spring.
Vancouver’s False Creek engineers have also been leading international efforts to grow district energy across the continent and around the world. Chris Baber, the engineer who runs the False Creek utility, has been sharing experiences and information on district energy projects with other sustainability leaders around the world as part of the C40 urban climate change program. He says that New York, Barcelona, Boston, London, Melbourne, Oslo, Paris, San Francisco, Seattle, Sydney,Toronto, and Washington, D.C. are all considering or actively implementing new local energy districts.
“We see this as part of a new growing urban trend of relying on shared infrastructure,” Baber says. “It’s like car sharing or bike sharing. People are giving up the need of owning something”—in this case it’s a hot water heater or a furnace—“in favor of service.”
And the efficiency savings have the potential to make a real dent in climate change. The UN is estimating that 58% of the greenhouse gas emission cuts needed to stabilize temperature rise at 2 degrees Celsius could come from energy efficiency measures like district energy.
The market is responding, especially in Vancouver. After overcoming early concerns that district energy would drive up real estate costs in the city, developers now have become proponents. One of the city’s most prominent developers, Ian Gillepsie, recently bought out the city’s legacy steam system. He is bent on converting it to a system that runs on underused resources like wood waste and waste heat from sewers or even data centers and refrigeration units in the city.
Waste has indeed become a hot commodity in the city. As the private sector joins governments in adopting new business models to take advantage of waste, it could reshape how cities are heated. Whoever harnesses the waste, heats the city.