District Heating System

A district heating system for Oujé-Bougoumou was conceived of not by engineers or energy technicians nor for that matter by people who had a vast background in the area of energy production or alternative energy, but rather it was conceived of by the people whose professional activity was community development. From the point of view of what is beneficial to an aboriginal community, such a system was found to be an enormously positive tool in contributing to the development of the community's future financial base.

District Heating: What is it?

A district heating system is a way of providing energy for the purpose of heating residences, institutions (school, clinic, administration buildings, etc.) and commercial establishments utilizing a single source of energy to produce heat which is distributed via a hot water medium by underground pipes to all the buildings. One source of producing energy replaces having each building individually heated by conventional means such as oil furnaces or baseboard electric heaters. The district heating system also provides the source for domestic hot water.

District heating is not new. The Romans were the earliest user of the concept and applied it to heat dwellings and also to heat their renowned baths. The first modern district heating company was established in Lockport, New York in 1878 by the Holly Steam Combination Company. The company started with fourteen customers and by 1880 the system included several factories. The distribution network consisted of nearly three miles of steam piping. The early distribution lines were iron pipe, wrapped with asbestos, felt and paper buried approximately three feet in the ground in a wooden box filled with sawdust.

By 1880 district heating became well established. The establishment of many small electric utility companies in the United States to serve the growing demand for electric power with the expansion of the industrial revolution gave birth to district heating in the northeastern United States. It was also found that the exhaust steam produced in the process of generating electricity and normally vented to the atmosphere could be sold to district heating consumers. These systems were the earliest successful combined heat and power schemes. Within a decade district heating had spread to a number of cities across the United States with steam being the preferred energy transfer medium.

The development of the hot water district heating system was primarily a European concept designed to overcome the limitations of steam systems. Today, the concept of district heating - and cooling - is widely employed in many countries. In Europe, especially the Scandinavian countries, large district heating systems are common. and cooling systems have been primarily limited to university, military, governmental and large industrial complexes.

In Canada, the first district heating system was established in 1924 to serve a small section of the City of Winnipeg's commercial core. Other Canadian cities served today by steam district heating systems include Toronto, Montreal, Ottawa and Vancouver. The only two district heating systems in Canada that use the European concept of hot water are at Lebreton Flats in Ottawa, installed in 1981, and at Charlottetown, PEI, installed in 1987. Ouj&eacute-Bougoumou represents the first village-wide application of a district heating system in North America and also the continent's first village-wide application of the system utilizing biomass as the fuel source and hot water as the energy transfer medium.

Community Decision-making

The community first began to talk, in very conceptual terms, about the possibility of a district heating system fuelled by biomass in 1986. The concept developed as a consequence of the conjuncture of two separate lines of thought.

First: On the main highway connecting Chibougamau to Chapais, the two non-aboriginal towns in the region, and other towns further west and south (including Waswanipi, Lebelsur-Quevillon, Miquelon, Seneterre and Val d'Or), sits a large sawmill which specializes in producing eight-feet long two-by-four lumber for the American market. As with most mills of this size in Canada the mill site contains a large beehive burner which burns wood waste (bark, cul, etc.) twenty-four hours a day. This particular mill utilized the practice of piling most of its waste sawdust in huge mounds at the mill site, using only a very small portion for such things as fuelling a lumber kiln.

The visual presence of this waste represented two things for the Ouje-Bougoumou Crees. It was, first of all, a constant reminder to them of the rapacious logging that was stripping them of their land and making it more difficult to carry out their traditional land-based activities. In addition, it was a sad reflection on the manner in which natural resources were typically exploited by industrial enterprises operating in the region. For them, this meant taking only what is wanted for commercial reasons and leaving the rest to rot - such a stark contrast to the traditional aboriginal approach of harvesting only what is required for use and finding a use for all parts of any items harvested from the environment while wasting very little.

Second: It was around 1986 that the federal government announced the closing of a number of Canadian Forces Bases in conjunction with the establishment of a successor system to the Distant Early Warning System built in the late 1950's. This meant that the Canadian Forces Base located in Chibougamau, operating since the early 1960's, was scheduled for closure. At that time, feeling optimistic that a settlement of the Ouje-Bougoumou issue was just around the corner, some of the community members visited the base for the purpose of identifying equipment or facilities which perhaps could be obtained at a reasonable price and be utilized in the new community. In addition to the recreational facilities, fire engines, tables and chairs, and other useful items, what also caught the eye of those who visited the installation - virtually a small town unto itself - was the presence of a district heating system.

The heating for the base's residential housing was provided by a district heating system utilizing a diesel generator. It seemed at first glance that such a system must be more economical than having each housing unit with its own furnace. They immediately wondered if such a system could work for a village of the kind being contemplated by the Ouje-Bougoumou people. Further, instead of purchasing and transporting at great distances the fuel required for such a system would it not be possible to utilize, as an alternative source of fuel, something locally and inexpensively available - like waste sawdust, and doing something with that mountain of sawdust produced annually? A little research confirmed not only that district heating systems were feasible and quite common in the Scandinavian countries with similar climates, but also that it could readily be adapted to be fuelled by biomass.

The community then submitted a request to a federal program operating at the time which was carrying out demonstration projects in the area of energy efficiency in remote areas. The request was for funds to carry out an initial study of the economic feasibility of installing such a system in the new village. However, because the new Ouje-Bougoumou village was to be situated near an existing hydroelectric grid, it was deemed to be ineligible for the program's funding. Such an analysis was nonetheless considered to be a critical first step in permitting the community members to make a decision on whether or not to proceed with the project.

It was not until after an agreement was reached with Quebec in the fall of 1989 which laid the basis for the commencement of village construction activities that some limited funds became available to Ouje-Bougoumou to carry out various small research studies.The first priority for the community at that time was to start building as soon as possible in order to get those community members living in the substandard conditions into decent housing. The first undertaking was the installation of a water and sewer infrastructure system.

Upon completion of the planning, and during the completion of the installation of the infrastructure system, the community members approached a management and engineering firm with whom they had some association to carry out a pre-feasibility analysis of a biomass fuelled district heating system to determine whether or not it was worthwhile for the community to undertake a more indepth analysis. The firm was a conventional management firm with little direct experience in district heating. The results of this pre-feasibility study suggested that the cost of installing such a system would be so enormously high as to be prohibitive.

The community leaders, having already begun speculating on the potential benefits of such a system - benefits in terms of employment and financial benefits from having energy dollars captured locally - decided to obtain a second opinion.

It was at this time that initial contact was made with the Energy Research Laboratory of the federal Department of Energy, Mines and Resources (now Natural Resources Canada). The staff at the Laboratory, under the direction of Michael Wiggin, had begun to develop some considerable expertise in the area of district heating and district cooling having been involved in a number of such projects in Canada. They were involved in the development of the biomass fuelled district heating system in downtown Charlottetown, Prince Edward Island, as well as in the initial stages of potential projects in Kingston, Toronto and Edmonton. They were also familiar with the latest technological developments in the field and were acquainted with the companies and individuals who possessed the most current expertise.

The staff of the Laboratory were eager to assist Ouje-Bougoumou and offered to carry out another pre-feasibility assessment. A staff researcher was immediately dispatched to Ouje-Bougoumou from Ottawa where he saw the site of the new village, the development plans and the quantity of available biomass. In a very short time the pre-feasibility study concluded that the cost of installing such a system was substantially less than initially estimated and that it was well worth the community's while to give serious consideration to having a complete feasibility assessment carried out.

In the course of their various projects, the staff of the Energy Research Laboratory had become acquainted with the firm of Eltec/FVB of Edmonton, Alberta. Eltec/FVB was established as a joint venture between the consulting arm of Edmonton Power and a well-regarded Swedish engineering firm with considerable experience in district heating and cooling. The objective of the joint venture was to seek out and to provide engineering assistance to potential district heating and cooling projects in Canada. Owing to their vast experience and expertise in the field, Michael Wiggin recommended that this firm be selected to conduct the comprehensive feasibility study.

After a fruitless attempt to secure financial assistance for the feasibility study from the Aboriginal Economic Program of the federal Department of Industry, Science, and Technology, in the end, the cost of conducting the feasibility study was shared between Ouje-Bougoumou and the Department of Energy, Mines and Resources Canada.

The feasibility study was completed in fairly short order. In a few short weeks, the community began its deliberations over the feasibility study. What it demonstrated was what the community had already suspected. First, that in the short term, when compared against hydroelectric heating or heating by oil, district heating is much more expensive. Obviously the capital costs associated with the installation of a biomass boiler plant and a network of distribution piping is much more costly than installing baseboard heaters or oil-burning furnaces. But secondly, and more importantly, in a relatively few short years, the cost of heating and providing hot water to the community through a district heating system caught up with the costs of conventional systems and began showing substantial economic returns.

Comprehensive Cost-Benefit Analysis

For the community members, the cost-benefit perspective through which they had begun to view this project was based on much more than the simple short-term economic return. Instead, they had begun to assess the feasibility of this system in terms of very long-term and comprehensive benefits potentially available to the entire community. In addition to looking at the short-term economic return they were looking also at such things as environmental impacts, community development, employment generation, impacts on their local housing program and long-term generation of income for the community. It was a grasp of these potential benefits to the community which was the driving force behind the community's exploration of the feasibility of the system.

Community representatives were in constant discussions with the engineers who prepared the feasibility study, modifying assumptions, altering forecasts and assessing the economic impacts of various energy scenarios. The community leaders knew that they were approaching decision time and they needed to make up their minds very soon whether or not to proceed.

As part of the decision-making process the community appointed a four-person delegation to go to Charlottetown, P.E.I, to observe the operations of the biomass fuelled district heating system in the downtown core. For the delegation who were on the trip this represented the first tangible and direct experience with a district heating system. Up to this point all the discussions had been more or less theoretical. This visit permitted the delegation to gain an understanding of the way in which such a system works so that they could explain it in very graphic detail to their fellow community members in Ouje-Bougoumou. The delegation returned to Ouje-Bougoumou very enthusiastic about district heating. Their enthusiasm and the information which they returned home with was a springboard which raised the intensity of community discussions.

Important Concerns

Important concerns began to be raised. What kind of environmental emissions would be given off by the plant? What kind of back-up would there be to the biomass boiler? What would happen if there was a total breakdown of the system? Was the system sufficiently simple that it could be operated and maintained by the local people themselves? What would happen if there was no longer any sawdust available?

The systems engineers provided satisfactory answers to all the community's concerns. The community also initiated discussions with the local sawmills to secure a guaranteed long-term supply of wood waste. It was also brought to the community's attention that in Sweden a specie of fast-growing poplar had been developed which matures in three to five years. It was felt that in the long-term the community would be much less vulnerable if it could provide its own supply of biomass for its plant.

At the same time, the engineers raised another important consideration with the community which had to be entered into the decision-making process, and it concerned the nature of the community's housing. In the interest of energy conservation and long-term economic benefit the community had decided to build highly energy efficient housing. The Canadian standard for energy efficient housing is R-2000 (insulation value). The housing being built by Ouje-Bougoumou was rated higher than this. In fact, the district heating engineers calculated that the insulation value of the residential houses being built were close to R-3000. This fact could have a very significant impact on the economic feasibility of the district heating system. It meant that because of their low rate of energy use the houses were contributing less revenues to pay off the cost of the district heating system. The critical question for the community was whether this additional burden was sufficiently onerous so as to negate the potential benefits associated with district heating.

Potential Benefits

In making its final decision the community members made a list of all the potential long-term benefits associated with district heating. Their list included the following:

• Capturing capital for internal circulation which otherwise would leave the community. Energy dollars would be retained within the village rather than being exported out. Future community development projects could thus be financed internally.
   
• Ability to exercise control over a substantial portion of energy costs which could not be done if heating were provided conventionally. It was obvious that both hydroelectricity and oil were increasing in cost and there was nothing which could be done about it. A local district heating system would permit control over heating energy and domestic hot water costs.
   
• Creation of some local employment. Someone would need to be hired to operate the plant, obtain the biomass fuel and read the meters. There was no employment associated with conventional heating.
   
• Long term relative reduction of heating energy costs.
   
• Beneficial impact on innovative local housing program. The district heating system would result in a reduction of operating costs of residential housing as the cost of heating energy decreases. Under the community's housing program individual residents are required to pay a fixed percentage of their income toward their housing costs. This revenue will be used to cover operating costs (energy, insurance, maintenance, etc.) and also to add to the community's housing fund so that it will be able to build additional future housing. By reducing the operating costs of the houses a greater portion of the amounts paid by the residents will be available for the purpose of future housing construction. To this extent an important contribution is made to the community goal of self-sufficiency in the area of housing.

The ability to control substantial operating costs of the houses could make the difference between community self-sufficiency in housing and perpetual housing shortages as experienced in most other Native communities. The capacity to sustain the Housing Program for the long-term also has enormous implications for future community-based employment and income.

Although such factors as the highly energy efficient housing had a negative economic impact on the system's economic feasibility it nonetheless remained within a range whereby costs were recoverable within an acceptable timeframe. The system would still remain a viable undertaking which would generate revenues above and beyond what would be required to repay the initial capital costs. In the end it was decided that the potential long-term community benefits were worth the initial capital investment. The key to understanding the community's decision is that they viewed the district heating system as an integral part of the future socio-economic development of the community, and thereby, having an impact on local employment, on future community projects and on their innovative housing program. They were not looking strictly at short-term economic return.

They had instead adopted a profoundly comprehensive view of community economics and were convinced that the community as a whole would reap substantial benefits from the installation of a district heating system.

Once having made the decision to proceed with the project the question to address was the nature of the financing required to construct it. It was felt that some of the negative impacts on the economic feasibility of the system could be offset by contributions in the form of grants. The community decided that they had an obligation to contribute to their own future development by dedicating a substantial amount of resources from its own funds. The community was also able to secure important contributions from the Department of Natural Resources Canada and from Hydro-Quebec.

Summary of Community Benefits

From a community planning perspective working in the context of small community offers certain built-in advantages. Because of the relative absence of the kind of complexity that is present in large urban areas with their multiple interests and extensive stakeholders on any issue it is possible to perceive the interrelationships of various social and economic factors much more clearly. It is, therefore, easier to assess and weigh the costs and the benefits of any potential change on the community as a whole. A smaller community provides, in a sense, a simplified microcosm of the socio-economic impacts of any change. In this context, it was relatively easy for the Ouje-Bougoumou community to determine the viability of proceeding with the district heating project.

For the Ouje-Bougoumou members the district heating system offers an opportunity to realize long-term benefits for the community which offset the shorter-term economic costs. In addition to generating surplus revenues after the initial capital costs are paid, the ability to control the cost of heating energy indefinitely will provide enormous socio-economic benefits.