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Kickstarting Renewables and Energy Projects in Cities by Building Strong Business Cases

Session leaders

  • Stephanie Cairns, Director- Cities and Communities, Smart Prosperity Institute (Presentation)
  • Jonathan Frank, Director of Projects, CoPower (Presentation)

Presentations

This session featured a case study of a potential brownfield redevelopment project in Calgary, Alberta. Jamie Goth from the City of Calgary described a 20-acre site, significantly contaminated with heavy metals, that the city has recently purchased. Calgary City Council hopes to redevelop this land for a solar brightfield development and to provide direct, tangible benefits for the adjacent residents as well as opportunities for community investment. The site is close to a planned light rail transit station and adjacent to residential areas, and is located on the flight path of the Calgary Airport.

The council has directed staff to assess the business case for supporting community investment in solar generation on this site. This includes exploring:

  • How should the City of Calgary invest in this project?
  • What are some options for community investment?
  • How can the city ensure that any development on this land, including a renewable energy project, benefits the adjacent community?

To assist participants in developing answers for these questions, Stephanie Cairns and Jonathan Frank presented some of the results of their work, at Smart Prosperity Institute and Co-Power, respectively.

Stephanie Cairns reported on a three-year project evaluating the state of community energy planning. Of the 275 community energy plans studied, 60% have yet to move from plan to implementation, and the project looked at how to overcome barriers to implementation. Cairns’ study looked at economic analyses and case studies to identify the common value propositions identified in implementation of community energy plans and specific projects.

These value propositions included:

  • Improved energy affordability for local residents and businesses
  • Keeping ‘energy dollars’ in the local community
  • Local and regional job creation
  • Better ability to attract new corporate investment – examples of this include IBM who moved their corporate headquarters to Markham, Ontario, given the access to reliable sources of renewable energy
  • Contribution to community health goals, such as improved air quality and active transportation
  • Increased energy resilience, preventing impacts on energy systems from emergencies, like the Calgary floods

Cairns argued that assessing these benefits might improve or expand traditional business case valuations. Expanding the economic case or valuation of a project should help municipal governments, or other project proponents, to expand investability of a project, bringing more partners and funders to the table.  

Next, Jonathan Frank spoke from a lender perspective about the challenges of developing strong business cases for distributed clean energy projects. Frank reported a trend in clean energy projects: moving away from large, institutionally funded energy projects, to smaller and community-based projects, due to rapid expansion in the market for these types of projects, and the growth of online platforms and impact investment models (such as the one offered by Co-Power). Frank argued that projects should be created and designed with fundability in mind, and that those seeking finance for a renewable energy project likely will need to include most of the following criteria in order to secure private investment:

  • Strong counterparty and clearly defined revenue model
  • Asset-backed project finance structure
  • Proven technology (like solar, wind, geo-exchange, etc.)
  • Experienced management team (the project managers, engineers, etc.)
  • Detailed investor presentation with a financial model
  • Ability to achieve scale on single project or a portfolio of projects

Further, Frank advised that project proponents look to bundle projects where possible, as bundled projects may be more investable than single or one-off projects due to their scale, because bundled projects may suggest the underlying project is more replicable, or due to the ability to find other efficiencies and spread out counterparty risk.

Dialogue

After some clarifying questions, participants, newly armed with these insights into how to best build business plans for clean community energy projects, split into three groups, each answering a separate but related question in regards to this proposed brownfields redevelopment project in Calgary.

How can the City of Calgary design the solar brightfield development project to create value for the community?  

The first group looked at the ways that the City of Calgary might best design the solar brightfield re-development in order to create value for the community, including the residential neighborhood directly adjacent to the project site. A variety of community engagement strategies were suggested, including that the City bundle this development, and other brownfields redevelopment projects with local skills training and job development; the local community be engaged in creating the name for the project; and that the City include plans for community gardens or other public spaces on the project lands. It was also suggested that the project include a micro-grid supplying local businesses and residents with renewable energy from the solar installation. Participants also felt strongly that as this land is adjacent to a planned light-rail station, that the City plan on including car and/or bike-sharing spaces as well as electric vehicle charging as part of the project.

How can the City of Calgary design this project to best attract investment?

This group did not so much propose recommendations for the City of Calgary to consider as it did generate a further list of questions that need to be answered before recommendations could be made. Most of these questions centered around the enabling policies that work at both the municipal and provincial levels: the regulatory environment in Alberta, and how recent changes proposed by the Alberta government might affect the 20-year outlook for a solar project like the one proposed in Calgary. Detailed information about the type of contamination in the soil of this brownfield, and its location in the city, were also identified as essential before any recommendations could be made.

What is the best role for the City of Calgary in this project?

The third and final group explored the best role for the city in such a project. This group debated the positives and negatives of the city acting as landlord/owner of a project, or whether it might make better sense for the city to donate the land to a project developer or community group. Participants acknowledged that further information about the environmental contamination at this site would be needed before making a specific recommendation, although they agreed that a long-term fixed-rate lease might allow the City of Calgary to retain control over the land should any further contamination issues arise. This group also thought that the city was best positioned to lead any remediation activities, such as plantings, to help decrease the level of heavy-metal contamination. Participants recommended that the city act as an enabler, consulting with the community, working with utilities and managing permits, as these could be much more difficult for a private project owner, without city assistance. This group also thought that the city should use this site as a way of engaging with multiple partners and stakeholders, and could imagine a number of creative and innovative approaches, such as partnerships with educational institutions to use the project as on-site skills training in a number of fields. Finally, this group proposed that the city engage local arts communities to build an artistic component to this project, something that could reflect both Calgary’s heritage and involvement with energy production and reflect the city’s desire to innovate in the future. One example would be to incorporate visual aesthetics in the design and placement of solar panels, such that the solar installation would be visible to airplanes flying over the site.

The session was closed by thanking participants for the creativity and expansiveness of their recommendations. The recommendations and suggestions will be brought back for consideration from the team working on this project proposal at the City of Calgary.

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