A long cause of corporate consternation at Guelph City Hall was official resolved on Monday when the shareholder of Guelph Municipal Holdings Inc., aka city council, passed a motion to sell the downtown node of District Energy to Toronto-based Cascara Energy. The move is being considered a victory for corporate oversight and stewardship, while also being held up as an example of the City’s commitment to get to net-zero emissions.
“Following the Alectra merger in 2019, staff have been working very, very hard to get to this point, finding a partner who can expand and invest in the existing District Energy system and is aligned with the city council endorsed 100 per cent renewable energy and net-zero carbon energy targets for the City of Guelph and the Guelph community,” Mayor Cam Guthrie said at the GHMI shareholder meeting.
“In my view, the sale of this district energy system to a company in this sector is a very tangible way that Guelph is moving forward on its environmental and climate goals, and reviewing assets such as this has brought about a very positive outcome for our community, both environmentally and financially,” the mayor added.
“We haven’t gotten out [of District Energy] because we wanted to save money and find a cheaper alternative, we wanted to find an alternative that’s good for the environment, and that’s good for our pocketbook,” said CAO Scott Stewart in an interview with Guelph Politico after the GMHI shareholder meeting. “Our environmental staff will be happy, our treasurer will be happy, and if you saw the reaction tonight, our shareholders were happy.”
They were happy because the under-performing nature of District Energy has been a consistent bee in the bonnet of staff and council alike over the last two council terms.
Launched in 2013, District Energy foresaw a network of piping and small thermal energy plants supplying at least 50 per cent of the heating needs for Guelph in order to reduce the community’s carbon footprint. Two nodes were initially created, one in the Hanlon Creek Business Park and one downtown, but shortly after those plants went live it was clear that the only thing District Energy was efficiently generating was red ink.
The Hanlon node was dismantled, but the downtown node, which was being used to heat and cool Sleeman Centre and the River Mill Condominiums, was allowed to remain.
“It’s difficult for me to go back to 2014 and beyond, but the lesson learned by us is to find the right partners for whom that’s their sole business and find somebody that’s good at it, and we’ve done that,” Stewart said.
The right partner apparently is Cascara who says their vision is to develop an alternative, economically competitive energy network that can replace existing fossil fuel-based energy systems. In particular, they’re looking to develop 5GDHCs, or fifth generation district heating and cooling systems, which incorporates energy generation from renewable sources into a district energy network.
“Transitioning from operator to owner was our vision, and we are thrilled to see this vision become a reality,” said Cascara’s chief executive officer Robert Croghan in a statement provided by the City of Guelph. “We look forward to continuing to provide excellent service and grow our customer base in an effort to support the City with its decarbonization objectives.”
Stewart added that Cascara will be looking at new opportunities to expand District Energy while taking care of its present customers, and the City will play some role in supporting Cascara if they need help in that expansion. But essentially, Guelph is now out of the business of supplying clean energy options.
“It’s not a partnership in the true sense that you and I have are both still in the game,” Stewart explained. “We may have a role in terms of their expanded use, like maybe if they want to put some pipes down in the underground, we would play a role in that, but otherwise this is a business transaction, and they’re now running the business. We’re out of that business.”
Cascara has effectively been running District Energy for the last year, and Stewart said that if they were to hit a snag in the deal, they would have hit one by now, which is why he and council as shareholder were confident that this was the right call. The alternative, Stewart said, was to dismantle the downtown node, which would have come with additional expenses to the City.
“Council sitting as a shareholder said, ‘Find a partner that does this,’ and then we’ve got some creative staff here that went and found some potential partners, and that due diligence has been done over the last little while, including having Cascara run with it for a year,” Stewart added.
“At the end of the day, we have found somebody that is going to be looking at this through an environment and fiscal lens for the good of our consumers,” Guthrie said to Politico after the meeting. “I think that implementation is the keyword, there was just not the right implementation at that time, and it’s taken eight years to get to this point, but we had a goal of not just backing out and leaving the customers hanging.”
“District energy is not a bad thing, it’s actually a great thing when implemented properly,” Guthrie added. “We’re turning around another asset that’s been reviewed, and I think it shows that reviewing these assets is very worthwhile because the outcomes can be very good and new opportunities can arise, and that’s the result that we’re seeing here today.”