Economies of Scale in District Systems

In Part 2 of the Holiday Rewind, Trevor revisits five standout episodes from thinkenergy in 2025. The conversations focus on renewable energy, from Distributed Energy Resources (DERs) and building decarbonization to energy storage, district energy, and the policy forces shaping it all. This episode reflects on how renewables are becoming personal, scalable, and central to Canada's smart energy future. Listen in for a thoughtful look at the momentum we've built and the progress we made.

Related links

• Episode 163 (How Distributed Energy Resources (DERs) are reshaping the grid): https://thinkenergypodcast.com/episodes/thinkenergy-shorts-how-distributed-energy-resources-ders-are-reshaping-the-grid/

• Episode 150 (Decarbonizing Canada's buildings with the Building Decarbonization Alliance): https://thinkenergypodcast.com/episodes/decarbonizing-canadas-buildings-with-the-building-decarbonization-alliance/

• Episode 152 (Capturing lightning in a bottle with Energy Storage Canada): https://thinkenergypodcast.com/episodes/capturing-lightning-in-a-bottle-with-energy-storage-canada/

• Episode 154 (Reimagining heating and cooling with district energy systems): https://thinkenergypodcast.com/episodes/reimagining-heating-and-cooling-with-district-energy-systems/

• Episode 149 (Looking ahead at 2025 clean energy trends): https://thinkenergypodcast.com/episodes/looking-ahead-at-2025-clean-energy-trends/

• Trevor Freeman on LinkedIn: https://www.linkedin.com/in/trevor-freeman-p-eng-cem-leed-ap-8b612114/

• Hydro Ottawa: https://hydroottawa.com/en

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Transcript:

Trevor Freeman 00:00

Welcome to thinkenergy, a podcast that dives into the fast, changing world of energy through conversations with industry leaders, innovators and people on the front lines of the energy transition. Join me, Trevor Freeman, as I explore the traditional, unconventional and up and coming facets of the energy industry. If you have any thoughts, feedback or ideas for topics we should cover, please reach out to us at think energy at hydro ottawa.com, hi everyone and welcome back. Welcome to the second of our special year end holiday rewind episodes that we do here on the think energy podcast, I'm your host, Trevor Freeman, in our last episode, we looked at five conversations or snippets of conversations that we thought, you know, helped shape the way we think about the grid, everything from politics to grid modernization to large scale investments, what Hydro Ottawa in particular is proposing to invest in our grid, but Today is all about the fuel that powers our clean energy future. And I don't mean all the candy and gingerbread and all the sugar that we're going to eat over the next little while, although those help too. I'm talking about renewable energy, solar, District Energy Systems, how we're using distributed technologies to really transform the way we generate and manage and use power here in Canada. Think of this episode as a bit of a, you know, warm fireside reflection on the progress that we've made, the momentum we're carrying into the year ahead. But also keep in mind how far we have to go. We've got more work to do, and 2026 needs to be another year of focusing on that. But today we're going to revisit portions of, you know, five conversations from 2025 that really show how renewable energy isn't just a trend, it's an accelerating shift that's reshaping our homes and our businesses, our communities and even the grid itself. So let's jump right in with our first clip. So today we're going to start with a clip that's close to my heart, because I talk about distributed energy resources all the time, and you guys hear me talk about that all the time with guests and in some of the solo episodes that I do, it's one of the clearest signs that renewable energy is moving from kind of the fringes of the grid, the very large centralized systems to really write on our own rooftops and backyards and on our businesses, DERs represent really that bottom up renewable revolution. So rooftop solar, home batteries, smart EV chargers and more, these are becoming technologies that our friends and neighbors and us, even the listeners of this podcast, have and are using to add real clean energy to the grid and using it in smarter ways. So here's a moment from my distributed energy resources episode that looks at how DERs are becoming those practical tools for resilience, for decarbonization and just for everyday energy use. So let's dive into what some of the reasons are why someone would want a der there's a couple of different reasons. The first is for backup during an outage. So using solar panels, especially if paired with a battery, can give you some backup if there's an outage from the grid, whether that's a storm or an accident or something like that, that backup power can be focused on your key devices or systems or appliances, or if your storage is big enough, or your system is big enough, it may be used to power your whole home for a period of time. Of course, if you're using one of those non renewable sources that I mentioned, like a fossil fuel power generator, for example, then your backup supply can last longer, really, as long as you've got fuel. But it's not clean, so you will be producing carbon emissions. One emerging technology that we'll likely see more of in the future is using an electric vehicle for this purpose. So while there's only a few different models that allow this right now, the Ford F150 is one of them, and there are some safety and regulatory considerations before you go ahead and do this, we can expect to see more of this in the future as the technology advances and it becomes a bit more widespread. Another reason for DERs is financial. Installing a der can actually help you save money every month, whether that's just by reducing what you consume from the grid, or by pushing back unused generation to the grid for credits, and I'll touch on this a little bit more shortly. Finally, if we're talking about those renewable DERs, they produce clean energy. So that's carbon free emissions, free energy. And if you are concerned about your carbon footprint, you're trying to decarbonize and reduce the amount of emissions that you cause. Renewable DERs are a great way to do that. You can lower your carbon footprint by reducing how much you draw from the electricity grid and any carbon emissions that are associated with that. You know what I love about this is just how simple. Empowering. It truly is. Renewable energy isn't industrial scale anymore. You know, everybody can at least envision themselves playing a part in the renewable transition. There's incentives out there to support putting renewables in the business case. Is starting to make sense for homes, for businesses, it's becoming local. And as these DERs grow, they don't just decarbonize homes, they also strengthen resiliency, and, you know, support the other drivers that people have for their energy, having more control over it, having resiliency and backup during outages, etc. And this theme of people having more agency and control over their energy really ties into the next clip that we're going to show as well. We're revisiting again we played this on the last holiday rewind, but we're revisiting our conversation with the Building Decarb Alliance about buildings. Buildings are one of Canada's largest sources of emissions. They're also one of the biggest opportunities for renewable driven change. So in this conversation with Brian Flanagan, we talk about how renewable energy and electrification, so from heat pumps to solar grid integrated building systems, how these things are reshaping the way we heat and cool and power the places that we live and work. And in this clip, I really think it captures the scale of the challenge and the optimism of the transition. You really can't overstate the importance of buildings in our lives. We eat, sleep, work, learn and socialize in buildings, among many, many other things, a huge percentage of our lives takes place inside buildings. In fact, most of us probably have to make a conscious effort to actually spend time outside of buildings. I know that I try to make a point of spending time outside every day, and I have to be conscious about it, because it might not otherwise happen. And as a result of that, centrality in our lives, buildings are major users of energy. Some estimates say that around 30 to 40% of energy use in Canada is associated with buildings, and they're also a major source of greenhouse gas emissions. So around maybe 18% or so in Canada. That means that the buildings themselves and the way we build them, the way we heat them, the way we use them, are an important part of our efforts to decarbonize and to further the ongoing energy transition.

Bryan Flannigan 07:24

We tend to focus on kind of four main areas, making sure that there's policy support at various levels of government, and understanding which policies might be effective and which ones might be less so, and trying to advance the ones that are high leverage, looking at the grid impacts of electrifying buildings. Because it's undeniable that if you switch from fossil combustion of fossil fuels to electricity, you require a clean electricity system that has to have the capacity and be robust enough to support that. So we want to be clear about that. We want to really address that in a cogent sort of way, and then really mobilizing and activating the sector to implement these changes and to find the solutions, because many of the solutions are at the intersection of different subsets of the of the sector, whether it's banking and finance, or whether it's development community or the utilities, every market actor has a role to play to find solutions. Is very rarely one sub sector that can really act to, you know, to overcome a barrier. And so we try to work at the intersection of these different groups, and by convening the players, we can roll up our sleeves and kind of get to that. And then, last but not least, you know, this is a very complex sort of question in terms of, how do we get there? What are the pathways? It kind of reminds me of nutrition, medicine, things like that, where, you know, at one instance, it's great to eat eggs, and another instance, terrible to eat eggs, and then it's good to eat eggs again, because the evidence is shifting right, and we have to follow the evidence. We have to understand that the systems are complex and that various investments in the grid will alter the landscape. And so we're working really hard to increase the analytical capacity of the sector, to model and to be able to understand how this will really play out when you have exponential sort of technological advancement coming to play, and you know, different investments and different dynamics that are bearing out as the sector decarbonizes, which is, it's really complex, and so we need better tools to be able to grapple with that. So those are the four sort of main areas, and it's a heavy lift. We arrive on the scene with great humility, recognizing that we stand on the shoulder of many, many other organizations who have come into the space, trying to take a slightly different approach by bringing all the players together and trying to find some common understanding of how we how we get this done. You know, we have to do something different. We've been doing energy efficiency for four decades, give or take with the programming that we've had, and it's been very effective. I don't think there's any more old T 12 light bulbs anywhere that worked. That's great, but we need to do something different now to get fossil fuels out of the buildings for heating purposes, right? That's the goal.

Trevor Freeman 09:53

So what resonates most for me about Bryan's message is the idea that buildings aren't obstacles to decarbonization. They're really. The engines for it, as the renewable electricity systems we have our buildings will become smarter, cleaner, more efficient, and as we talk about we spend a lot of our time in buildings. And so when we think about grid interactive homes to solar ready construction and thermal storage, the building sector is really becoming a major driver, or has the potential to become a major driver of renewable transformation. So speaking of storage, this next clip is a revisit of the conversation that I had with Justin Rangooni from Electricity Storage Canada, and we explored one of the biggest enablers of renewable energy growth, which is battery storage, because, you know, let's face it, the sun isn't always shining and the wind isn't always blowing in the right direction. And with batteries, you can really create flexibility and stability for your renewable systems. And ultimately, that comes down to possibility. So my conversation with Justin really walks through how these battery systems both utility scale but also behind the meter, kind of more individual sized unlock far more renewable energy by making it dispatchable, resilient, responsive, et cetera. And I think in this next clip, we really capture that beautifully.

Justin Rangooni 11:16

Okay, so the best way to think of it is. There's an analogy that one of our members had always said, and we continue to use it when we talk about energy storage. And the great things that can do is that it's like bacon. It makes everything better. I don't eat bacon, but I take I understand the concept, and what that means is, if you look at it from a grid management point of view is that we have all in Ontario, we're lucky to have a pretty clean grid. If it's nuclear power, or it's water power, or it's intermittent generation like wind and solar and even some gas too, which is which is near zero, low, low carbon, and we don't have coal, so it's a clean grid, and energy storage can make that better in the sense that it will optimize those generation assets so we're not wasting it. So those days before we would hear about when energy is needed but the wind's not blowing, or the sun's not shining, or we don't need the energy and we have to spill water, or, you know, we may have to power down a ramp, down a bit of the nuclear ramp, or the natural gas units. Now, energy storage can make sure we don't waste that now we can collect that power when it's done, when it's when it's being done, when it's being made, and we're holding it for when it's needed. And from a grid management that is the real key. That is the game changer that energy storage provides. And if we break it down, down to the customer themselves. You know, you're trying to think of now, not just helping keep the lights on. We're also talking about your rates now in terms of, now, we can kind of defer those investments in terms of more generation, because now you have energy storage that's getting more out of it. We're also talking from the distribution side of poles and wires. Maybe you don't you can defer those investments a little longer with more distributed, connected energy storage. So now the customer is starting to see the benefits of energy storage in their rates and in their electricity bill. And look, I just got an electric car, so really excited about it, and I can see the possibilities of that car being a battery from my home for my use, which, again, now maybe that's still a bit down the road with B to G and, you know, using it to power a residential energy storage unit in my house. But the possibilities are really endless. So this is really the exciting thing about energy storage, from a Grid Manager down to the customer,

Trevor Freeman 13:38

Yeah, and I think it's, it's important to think about the different contexts that energy storage can play, or the different roles that it can play for our individual customers, a homeowner. There is a role for storage there, and you get some of those benefits that you just mentioned, but then we can scale that all the way up to the grid level. And you know, us in the utility space also have some things that we can do with energy storage. And like you said, we can manage things a little bit better. We don't have to waste that energy. We can generate it when it's cheap and hold on to it and use it when it's maybe a bit more difficult in those peak periods. So lots of different uses. Thanks for laying that out for us. Now we hear a lot about, you know, decentralization and community based energy systems kind of more control at the community level. When it comes to energy what's the role of energy storage in systems like that?

Justin Rangooni 14:34

Well, I think that's energy storage can really make that a reality. Now, again, I think I'll go back to my example having an electric car, it seems like more getting closer to being more a prosumer than just a consumer now. So I can see the possibilities of using electric vehicle. You could and then you start to pair that with other kind of your thermostat or your other smart technologies in your home. So now, when we're talking about decentralizing community-based energy. Systems, the consumer, the utility, the system operator, you're all able to get in the space of playing with the technologies. And that's really again, where it gets kind of exciting, that everyone's playing a role. There are different possibilities to use, and we think energy storage is the key to doing that, because it can store that energy when it's not needed, and you can use it when it's needed. And if the technology evolution continues, eventually, the homeowner, the business owner, can start to use that. I can use buy power from the cars. I can use my power that I'm generating myself or from the distribution grid. And now I can start to play with it and use it store overnight when rates are low or when it's excess supply, I could store that energy and use it when it's needed during the day. So really exciting times, and that's why we think energy storage is key to any decentralized or community-based energy systems.

Trevor Freeman 15:53

Yeah, really unlocks that ability to push control into the hands of the end user, whether that's the homeowner or the business owner or the community, kind of pushes it downstream into their hands. So really, every renewable energy expansion story has, you know, a chapter on storage. Batteries are no longer just an add on. They're becoming really an essential part of the conversation and a consideration for all these projects. And like Justin said, you know, a battery is like bacon. It makes everything better. And I couldn't agree more about bacon and batteries, from batteries powering homes and emergencies to grid scale storage, smoothing out renewable intermittency to neighborhood level systems, supporting micro grids, these are all things that we'll hopefully start to see more in our lives and in our communities. Battery storage is really what turns renewable energy into performance, great performance, and we're actually going to see those impacts. It's also tying into our next episode, because if batteries make renewables flexible, then something like a district energy system is how you really take that to scale. So in this episode that we're going to play a clip from, we took a deep dive into a world that often operates behind the scenes. And it was really great to reconnect with kind of an old friend and colleague, Scott Demark, about district energy systems. These systems provide heating and cooling to entire neighborhoods or campuses by using centralized, efficient infrastructure. And you know, you maybe you're asking, why does this tie into renewable energy? And that's because district systems are one of the most effective ways to integrate large scale renewable heat sources, whether that's taking waste heat from existing sources or geo exchange biomass, you know, ultra-efficient thermal storage, and putting that to good use. And so listen to this clip from my conversation with Scott that kind of captures that idea. So we've kind of touched on this a little bit, but let's dive right into, you know, we talk a lot on the show about the energy transition this, this push to one, move away from fossil fuel combustion to meet our energy needs, and two, shifting from a kind of static, centralized energy system like we have right now, big generators, large transmission lines, etc, to more of a two way flow, distributed energy system. What is the role of district energy systems within that transition? How do they help us get closer to that sort of reality that we talk about?

Scott Demark 18:29

I think the biggest way that they help is economies of scale. Okay, so by that, I'll explain that. Imagine there's a lot of technology that's been around a long time that is very scalable to the building level, but most of them are fossil fire. Okay, so the cheapest way to heat a building in Ottawa is to put a gas fired boiler in. That's the cheapest capital cost, first cost, and it's also the cheapest operating cost, is to put a gas boiler in. That industry is well established. There's lots of trades who could do it. There's lots of producers who make the boilers. When you start to try and think about the energy transition and think about what you may do to be different, to be lower carbon, or to be zero carbon, those industries are just starting right. Those industries don't exist. They don't have the same depth and so they don't have the same cost structure. And oftentimes they don't scale well down to the building. And therefore a district energy system aggregates a bunch of load, and so you can provide a thermal energy so at scale, that becomes affordable. And that is, you know, a very good example of that would be where you know you might want to go and recover heat from some process. And we'll talk about Zibi as the example. But if you want to go recover heat from some process and bring it in, it doesn't make sense to run a pipeline to a source to heat one building. You can't make financial sense of it. But if you're heating 20 buildings, that pipeline, all of a sudden makes sense to take waste heat from somewhere, to move it somewhere else. The other advantage is that truly, district energy systems are agnostic to their inputs and outputs for heat. So once you've established that hydronic loop, that interconnection of water pipes between buildings, what the source and what the sources doesn't matter. So you may have at one point, built a district energy system, and Markham District Energy Systems a great example of this. Markham district energy system was built on the concept of using a cogeneration facility. So they burned natural gas to make electricity. They sold electricity to the grid, and they captured all the waste heat from that generation, and they fed it into a district energy system. Well here we are, 20 plus years later, and they're going to replace that system, that fossil fired system, augment, not fully replace, but mostly replace that system with a sewer coupled energy recovery and drive those heat recovery chillers to a sewer system. So they're putting a very green solution in place of a former fossil solution. They don't have to rip up the pipes, they don't have to change anything in the buildings. They only have to change that central concept. Now, again, Markham could never do that at a one building scale. They're only that at the community scale.

Trevor Freeman 21:24

And because district energy systems make renewable energy more affordable through scalability and shared infrastructure, in some cases, the economic case for entire communities or neighborhoods or even large industrial complexes to adopt them is really becoming something that people are looking at. It's becoming more compelling. It's not going to work in every instance, as we talk about with Scott in the full episode, but it really kind of opens the door to more possibilities. And that brings us to our final episode highlight, which is a big picture look at some of the politics and trends and strategies that helped shape renewable energy in 2025 now we played a clip from this episode in our last rewind episode, but I want to revisit another part of that episode, and this is the beginning of the year when I kind of laid out some of the trends and things that we thought might shape energy politics in the year ahead, in 2025 and we looked at Canada and the US and global markets to really try and get a sense of where renewable energy was heading, just to remind you of where we were back then. We were facing a couple of elections ahead of us and the possibility for new or different federal governments, political government or provincial government. Sorry, looking at affordability conversations worldwide, momentum around clean generation. In this clip that we're going to play, we really talk about how renewable energy doesn't advance in isolation. It moves forward because of political, economic and technological factors that really help shape those conditions and create those conditions for growth, and those are essential if we do want to grow together. So I'm going to play this clip here and have a listen to kind of what we were thinking about at the beginning of 2025 and just a quick teaser, we'll be doing something similar in the early part of 2026 and so that'll give us a chance to maybe pick apart how close we were to reality. So without further ado, let's dive into those areas. Area number one is politics. So energy is political, and energy shapes politics, and politics shapes energy, and that's the same every year, but 2025, is shaping up to be a pretty significant year when it comes to political change that might impact energy policy. So to start with, we are mere days away, a little over a week away, as I record this from a new US administration. The Trump administration will take over on January 20, and like any change in administration, in what is arguably the biggest economy in the world that will have an impact on climate change policy, Energy policy, the flow of goods across borders. You know, there's talk of tariffs between Canada and the US. So just because it is in the United States, that doesn't mean it won't impact us here in Canada. So we'll be looking to see what change that does bring, what how that influences politics and energy policy and the flow of goods and all of those things that can impact what we do with energy a little bit closer to home. However, we also have some change potentially coming here in Ontario, at least, we are looking at potentially two elections this year. So to start with, there's the federal election. It is very, very likely, almost a sure thing, that we will see a federal election in the coming months. Justin Trudeau has recently announced his resignation, which will almost definitely trigger an election. So we could be looking at a new government or a new mandate for the existing government. So what might that mean? Well, if the. The liberal party, the current government manages to get another mandate and remain in power, we kind of know what their priorities are. They've been going down a path for the last little while. They will probably continue to invest in clean energy infrastructure. They will continue to push for net zero goals and look for ways to support others to achieve Net Zero targets as well. If there's a change in governments, which the polling suggests is likely that conservatives get into power, they are likely to look to prioritize affordability and resource sector competitiveness. They may also adjust timelines for emissions targets as a result of that, the one big thing that's worth mentioning, of course, is the price on carbon. This was brought in by the existing Liberal government, and they stand behind it. The Conservatives are very much campaigning on a platform of getting rid of the price on carbon, the Federal price on carbon, that will have significant impact on energy policy and how things move. There are a few previous episodes that you can listen to that talk a little bit about that, and I'm sure we'll talk about it throughout the year as things play out. And finally, in this section, in Ontario, it's very likely that we might see a provincial election as well. All signs are kind of pointing towards a provincial election this year. So what could that mean? Well, similarly, our existing government has kind of made their energy policy known. We know what their focus is, so they are focused on expanding our traditional energy mix, so nuclear, some natural gas, as well as some investments in renewables in order to make sure that the grid can handle growth and electrification in the sort of rising demand that we're seeing. Should we see a change in government to one of the opposition parties? There may be more of a push for more renewable sources and lowering those carbon emissions faster than the current pace of change, at least based on what they are saying. So we'll keep an eye on that and how that comes into play. Obviously, energy is sort of primarily in the provincial jurisdiction here, so a change in government or a new mandate for the existing government would certainly have a big impact on energy policy. So area number one politics, area number two is energy affordability. So as we've said, renewable energy progress doesn't just depend on the technology itself, it depends on the systems around it. 2025 really turned out to be a pretty pivotal year. And I think we'll probably look at every year in recent history and moving forward as pivotal years, because there was this convergence of political shifts and economic pressures and policy decisions that in some ways created a supportive environment for renewable energy planning and implementation, but not without barriers and not without challenges and so we're probably not where we would have wanted to be at the end of 2025 if we Were being absolutely optimistic. And thinking about a great outcome for the end of the year, but that's not to say progress wasn't made. As we close out part two of our holiday rewind, one thing becomes crystal clear, and something that I want to highlight, renewable energy isn't just a single technology or single story, it's a movement made of many different interconnected pieces, from the specific technologies of DERs that empower our customers to the buildings that are evolving into clean energy assets, to the batteries that are helping unlock flexibility in our renewable energy systems, to systems like district energy that are really transforming communities and campuses, and finally, to the policies and trends and, you know, other forces that are really shaping the pace of all this progress together, they show that there is a future that's cleaner and smarter and more resilient and far more electrified. These things are possible, and we are moving in that direction. The big question is always the pace that we're moving at. Thanks for joining me for our final rewind of the year. In fact, our final episode of the year. On behalf of the entire thinkenergy team, we really are grateful for your time, your curiosity and your commitment to understanding the energy transition, and, quite frankly, to your expertise. I know a lot of folks listening, and everybody that I have on the show really has a lot of great thinking and knowledge on these topics, and I'm really appreciative of getting to talk to those folks and bring some of that insight to the show. We will be back in the new year, absolutely, with more conversations that the goal is to illuminate and challenge and inspire and really continue this conversation with all of you and with our fantastic guests. Until then, stay warm, stay safe and stay energized. Thanks for listening. Thanks for tuning in to another episode of the thinkenergy podcast. Don't forget to subscribe wherever you listen to podcasts, and it would be great if you could leave us a review. It really helps to spread the word. As always, we would love to hear from you, whether it's feedback comments or an idea for a show or a guest. You can always reach us at thinkenergy@hydroottawa.com.