Guelph, Ont., July 18, 2016 – Guelph’s existing district energy nodes in the downtown core and Hanlon Creek Business Park will continue to operate with no further expansions at this time, as directed by Council this evening.
The financial and technical performance of the existing nodes was evaluated by Deloitte and FVB Energy Inc. to develop a business case for the future direction of district energy in Guelph. The business case outlined three options: exit the current investments; operate the current nodes as is; and preserve the opportunity for growth.
Council supported Deloitte’s recommendations to operate the nodes as contractually agreed and explore system efficiencies through the development of a district energy business development strategy. These recommendations do not require capital investment and fall under the ‘preserve the opportunity for growth’ option that scored highest on the financial, environmental and business development evaluation criteria.
“Council has now looked at all options for district energy systems in our city, after learning the systems have not achieved any of the environmental and revenue-generation benefits that were promised. Maintaining the systems “as-is” is the best option from a fiscal responsibility perspective at this time. It also means we will not support sinking more capital funds into a system that is not delivering the promised benefits,” said Mayor Cam Guthrie.
Guelph Municipal Holdings Inc. (GMHI) will create the business development strategy to strengthen future risk assessment practices, business planning and implementation, and business case processes. Once in place, the strategy will identify the combination of factors required for sustainable district energy investment opportunities.
“Our staff and partners have provided Council and the community with transparent historical accounting and a third-party review of the possible choices for moving forward with district energy in Guelph,” said City of Guelph Chief Administrative Officer, Derrick Thomson. “We will immediately move to act on Council’s decisions as we continue to consult with the community on the reset of Guelph’s Community Energy Initiative.”
The business case acknowledged both district energy nodes financially underperformed in 2015, which resulted in an $8.7 million impairment; together, financially breakeven; have no immediate operating concerns with the existing infrastructure; and operate at full capacity.
Future district energy considerations, above those approved by Council tonight, will be researched and assessed as part of the Community Energy Initiative Update activities.
Guelph’s District Energy system is a heating and cooling distribution network that offers a local, reliable supply of thermal energy, and fuel costs. The City’s system includes two independent nodes: one at the Sleeman Centre located in the Guelph’s downtown core and a second at the Hanlon Creek Business Park.