Squamish Neighbourhood Energy Utility:Final Feasibility Presentation

Prepared for:District of Squamish and Project Sponsors

Prepared by: Compass Resource Management Ltd.

June 15, 2010

Squamish NEU Study – Final Presentation, June 2010, Page 2

Study Overview Demand forecast (five target areas) Analysis of business as usual (BAU) Screening of many supply options Detailed analysis of short-listed scenarios

Area A + expansion scenarios (Waterfront and Oceanfront) Biomass, ocean heat, and natural gas co-generation Staging and sensitivity analysis

Squamish NEU Study – Final Presentation, June 2010, Page 3

Demand Forecast – Focus Areas and Phasing

Squamish NEU Study – Final Presentation, June 2010, Page 4

Demand Forecast – Phasing

Squamish NEU Study – Final Presentation, June 2010, Page 5

Supply Screening – Shortlist Biomass

Abundant local resource One of lowest cost options in screening and greatest GHG emission reductions

Ocean Heat Potentially slightly higher cost than GX but more available resource Best heat pump option for this location Some further optimization may be possible with cooling service to commercial loads

Natural gas cogeneration BC Hydro is interested in systems which also produce electricity Best commercial electricity production option at this scale. Natural gas cogeneration is a stepping stone to biogas cogeneration GHG emissions depend on whether we use provincial perspective or regional trade

perspective.

Squamish NEU Study – Final Presentation, June 2010, Page 6

Summary Results – Base Case

No Grants, Private Financing, Property Taxes Included

Squamish NEU Study – Final Presentation, June 2010, Page 7

Total Capital Costs by Demand and Supply Scenario

($,000)

Squamish NEU Study – Final Presentation, June 2010, Page 8

Sample Phasing of Capital (All Three Service Areas)

-

2,000

4,000

6,000

8,000

10,000

12,000

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

2031

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2037

2038

2039

Annu

al C

apita

l Req

uire

men

t(2

010$

thou

sand

s)

Capital Expenditures

Squamish NEU Study – Final Presentation, June 2010, Page 9

Sample Cashflows - Municipal Financing

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

2031

2032

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2034

2035

2036

2037

2038

2039

Reve

nue

& R

even

ue R

equi

rem

ent

(201

0$ th

ousa

nds)

Financing and Depreciation

Operations

Revenue

Squamish NEU Study – Final Presentation, June 2010, Page 10

Summary Results - GHG Reductions

Demand Scenario

Biomass Ocean Heat

Cogen (BC

Perspective)

Cogen (Regional

Perspective)tonnes / year change at build out

Area A Only (1,300) (1,100) 1,100 (900)Area A + Waterfront (3,000) (2,200) 3,700 (1,800)Area A + Oceanfront (5,000) (4,100) 3,700 (3,500)Area A + Waterfront + Oceanfront

(6,600) (5,200) 6,100 (4,300)

% change at build outArea A Only (74%) (62%) 62% (51%)Area A + Waterfront (79%) (58%) 97% (47%)Area A + Oceanfront (81%) (67%) 60% (57%)Area A + Waterfront + Oceanfront

(80%) (63%) 74% (52%)

Squamish NEU Study – Final Presentation, June 2010, Page 11

Summary Results – Gas and Electricity System Impacts

Demand Scenario

Biomass Scenario

Ocean Heat Scenario

NG Cogen Scenario

Area A + Waterfront + Oceanfront

Incremental gas increase (reduction) (35,300) (28,500) 38,400

Incremental electricity increase (reduction) (9,200) (1,000) (9,200)

Additional electricity production - - 26,900

Squamish NEU Study – Final Presentation, June 2010, Page 12

Summary Results - Grant Requirements

Biomass Ocean Heat Cogeneration

Private Financing Scenario 8,600 13,800 18,500 % of total capital 30% 41% 50%

Municipal Financing Scenario 1,900 8,300 13,400 % of total capital 7% 24% 36%

Grant required to achieve competitive rates and target return on investment. Municipal financing scenario assumes 100% debt financing and no property taxes.

Squamish NEU Study – Final Presentation, June 2010, Page 13

Summary Results – Conclusions All options require some level of grants to achieve competitiveness and break-even

requirements. Biomass is least cost option in all demand scenarios and has the highest total GHG emission

reductions and greatest reliance on local resources. All options exhibit economies of scale. Competitiveness increases as total system size

increases. Securing a large service area is critical to success. Under a municipal financing model and excluding property taxes, the larger biomass system

starts to approach BAU costs, even before taking into account grants.

Squamish NEU Study – Final Presentation, June 2010, Page 14

Possible Optimizations (Design Phase) Solar DHW Alternate siting of energy centre Multiple energy centres Distribution layout Actual sizing and staging of capital items Specific technology / vendor selection

Squamish NEU Study – Final Presentation, June 2010, Page 15

Key Implementation Risks for District Energy

Securing loads Marketing Relationship building Policy / bylaw support

Minimizing installed capital costs Technology selection Coordination with other infrastructure Competitive tendering Performance contracting

Phasing of equipment relative to loads Just in time capital where possible Build in flexibility Optimize staging and siting

Ensuring optimal building performance Developer design document Design and commissioning support Retrofit support

Squamish NEU Study – Final Presentation, June 2010, Page 16

Paths Forward

Squamish NEU Study – Final Presentation, June 2010, Page 17

District Policy Role Establishing target core service area boundaries Cultivating community support Developing measures to promote/require interconnection Establishing commitment to interconnect municipal buildings Creating mechanisms to support efficient planning/installation of linear infrastructure Establishing policies and programs to encourage/facilitate access to energy resources Facilitating the selection of site(s) for energy center(s) Establishing policies for property taxes and franchise fees