City ponders district energy funding options

Port Alberni city council is mulling funding options for its $10 million District Energy Project.

  • Wed Apr 24th, 2013 9:00am
  • News

To partner or not to partner – that will be the question when the City of Port Alberni receives word on several grant funding applications recently made to get the proposed District Energy Project flowing.

The project consists of a centrally located fiber based biomass system that would provide, in the first phase, heat and hot water to up to 12 buildings through approximately three kilometres of underground, insulated pipes.

The system has a 50-year shelf life and is fueled by fiber biomass, which includes wood waste in the form of construction demolition waste, and scotch broom.

In addition to reducing greenhouse gas emissions and diverting wood waste from the landfill (which is then chipped instead of burned), the project would provide about $265,000 per year in non-tax revenue for the city.

To offset the project’s near $10-million cost, the city has applied for $1.5 million from the Gas Tax Innovation Fund, and $800,000 from the Federation of Canadian Municipalities’ Green Municipal Fund (GMF).

During Monday night’s council meeting, consultant Stephen Salter provided an overview and update on the project. A decision on the funding applications is expected by July.

Other proposed funding sources for the energy project are loans; $4 million GMF loan and $1 million Municipal Finance Authority loan and just under $250,000 in city in-kind contributions.

Private investment makes up the remaining $2.4 million in proposed funding, although council could decide to borrow the money instead, pending on the outcome of the grants.

“The biggest drawback for having partners would be that the revenues would not come to the city in the same way, we couldn’t expect to have the same return,” Salter said. “We would also have less control over the use of the system.”

Other disadvantages include losing the ability to claim all of the carbon tax and greenhouse gas reductions.

Salter added that the advantages include private sector expertise and a lower debt load.

So far, the district energy project has received enthusiasm from potential clients, such as the Multiplex, Echo Village, Echo Pool, Pioneer Towers and West Coast General Hospital.

“We’ve had written expressions of interest and support,” Deakin said. “Enough that we felt confident in making the funding application.”

In response to a question from councilor Wendy Kerr on cost comparison, Salter said energy clients could expect to save in two ways.

“The first is that they would see a discount in the total cost of about 20 per cent, but the other thing is that typically district energy is sold over long term contract. Because the system is going to operate for a long time, and we have a pretty good idea of what it’s going to cost, they would be signing a contract to take energy with inflation at the rate of inflation… so they get price certainty.”

Pat Deakin, economic development manager said the department will continue to look into further grant sources as they come available, such as a public private partnership funding opportunity recently announced by the government.

“I’ve glanced at it, and it appears to me to be geared to be bigger projects like bridges, water and sewage treatment plants, but it is possible the district energy system would also qualify,” he said.

Niomi Pearson is a freelance journalist who formerly lived in Alberni.