District energy, energy prices, and property taxes

April 29, 2014

Guelph is the first city in North America to announce and pursue a long-term plan for a city-wide thermal energy network—a kind of central heating and cooling system for the entire city. It works a lot like the power grid we use for electricity; allowing multiple buildings to connect and share an energy supply from a number of sources.

It’s all part of the Community Energy Initiative; we’re changing how cities think about energy. The District Energy Strategic Plan is an essential step toward creating a reliable and sustainable economic future for Guelph.

A few of Guelph’s District Energy Goals

  • Create a pathway to serve at least 50 per cent of Guelph’s total heating needs
  • Reduce greenhouse gas emissions from heating
  • Attract investment partnerships to build Guelph’s district energy network
  • Earn financial returns, and keep more energy dollars in the community

Financing Guelph’s District Energy Network

Building a local district energy network will increase the security of Guelph’s energy supply and keep more energy dollars here in our community. District energy customers are using a local, efficient system, so they’re protected from ever-increasing energy rates.

It’s good for people, good for business, and good for the environment.

How does Guelph finance district energy projects?

Today, when you pay your electricity bill in Guelph, most of those dollars leave our community to cover the cost of generation, distribution and energy infrastructure all across Ontario.

Some funds do stay here. Guelph’s electric utility company uses them deliver safe, reliable electricity service, and ensure our energy infrastructure can meet the community’s future needs.

Guelph Hydro invests a portion of its revenue in local energy infrastructure projects—including district energy systems—keeping energy dollars here in our community, creating local jobs, and building a secure, reliable and sustainable energy future for our city.

Why is Guelph investing in district energy?

Investing a small portion of our energy dollars locally can help reduce future tax increases. The City of Guelph owns Guelph Hydro; a profitable Guelph Hydro can pay a dividend to the City and help address the municipal tax burden.

Typical district energy systems have an average payback period of eight to 12 years. After that, they continue delivering energy for customers and revenue for investors.

Also, by using district energy at City facilities, like the Sleeman Centre the City reduces its operating costs, and those savings are passed on to Guelph taxpayers.

Is Guelph looking for other ways to finance district energy projects?

Yes. Guelph’s district energy partners are actively negotiating with commercial investors in the open market including energy developers and suppliers of energy products. Guelph will also continue exploring ways to leverage funds from other levels of government.

These financial partnerships are an essential part of how Guelph’s Community Energy Initiative contributes to the goals Guelph’s Economic Development Strategy Prosperity 20/20.

European communities very similar to Guelph have used district energy systems to attract investment, create jobs, and protect themselves against energy inflation – Guelph’s plans are based on proven strategies.

What impact do Guelph’s district energy projects have on energy rates?

Guelph doesn’t set energy rates. To protect energy consumers and benefit communities the Ontario Energy Board regulates electricity prices across the province.

Utility rates have not increased to pay for district energy projects to date, and there are no plans to increase rates to implement the District Energy Strategic Plan.

How much does a district energy system cost?

Here are a few examples of district energy projects costs Guelph:

  • Combined heat and power system at Hanlon Creek Business Park (under construction) is estimated at $18-$20 million
  • Heating and cooling system at Sleeman Centre cost about $3.8 million
  • Combined heat and power system West End Community Centre cost about $2 million

Heating needs for homes, buildings and industry account for about half of Guelph’s total energy use. Finding better ways to generate, deliver and use thermal energy is essential to reaching the goals of Guelph’s Community Energy Initiative. Building a city-wide district energy network is the most efficient and effective way to get us there.

Learn more at guelph.ca/energy