Energy Manager

District heating and beyond: Lessons from Scandinavia

These days, residents of Finnish cities, towns and villages, nestled among thick forests and thousands of cold lakes, are kept warm by wood. Clean, green energy from wood pellets, chips or bio-oil fuels a central boiler and pipes the heat into the local hospital, schools, and homes.  For many of these towns, co-operative district heating models have brought not only a lower carbon footprint, but the foundation for a thriving, local economy. So why aren’t the fledging forest towns in Northern Ontario, B.C. and New Brunswick following suit? 

March 24, 2010  By Crystal Luxmore

The Canadian Bioenergy Association’s annual conference in Edmonton last autumn, set out to address that question. Leading community models and the latest technologies were put on show—and the speakers explored how they could be applied to position communities, like Bingwi Neyaashi Anishinaabek First Nation, in Northern Ontario, as models for a sustainable future.

The secret to district heating? Planning and co-operation
“In Finland in the early 1990s, we talked a lot about the potential of heating our communities with wood waste instead of fossil fuels, but it took a lot of time before things got off the ground”, said Dominik Röser of the Finnish Forest Research Institute.
The situation is all too familiar for Canadian companies and municipalities looking to turn their rich wood resources into an economy with a future.   From adding value to existing sawmill operations, heating the town’s large buildings with wood energy, or building a full-scale bio-refinery, Canada’s forestry towns and cities are talking and dreaming big.  Most have no choice. A plummeting U.S. housing market has routed the Canadian sawmill industry, and globalization has sounded a death knell for many pulp and paper mills, and it looks as if the federal government is limited in its ability to come to the rescue.

Röser offered municipalities new hope at the Canadian Bioenergy Association’s annual conference and trade show in Edmonton, Alberta this October by sharing success stories from Finnish cooperatives, which have implemented district heating systems.
“Heat entrepreneurship in Finland continues to rise,” said Röser.  Beginning with just a few communities in the mid 1990s, there are over 430 district heating plants in Finland today. Röser said putting a solid co-operative or network of owners together is essential right at the beginning of any project. In Finland heating co-operatives take three forms—the most common is a network of forest companies looking to turn their existing forest waste into profit; the second is owned by the heating customers themselves and the third is municipality-owned.

“In Canada, all of these models can be applied,” said Röser. “All of these cooperatives are usually non-profit, so all the benefits stay with the members, which is very interesting for customers because they benefit.”  He admits the forest company model would require a re-think as most of the forests are on crown land and recommends a case-by-case analysis. “To move things forward, it has to be municipalities and entrepreneurs that take charge, the key is that someone really has to take the initiative,” he said. 


Doug Bradley, president and executive director of the Canadian Bioenergy Association (CanBio), points out that the Finnish co-op model could be easily applied in Canada if the co-ops were run by the Sustainable Forest Licence (SFL) operators.

Eco-heat in Eno, Finland
A typical example of a heating co-operative, are the district heating networks in Eno, Finland. In 2004, 3000 metres of heating pipes were laid in Eno Alakylä.  Hooking up a municipal office building, health centre, fire station, old age home, local businesses and ten terrace houses to a 1.2 MWth and another 0.8 MWth boilers, these buildings are now heated with local wood chips, peat and pellets. The system cost $1,384,000 (CAD), before renewable energy subsidies of $319,000. Across the EU subsidies differ, but typically a heat plant project receives up to 40 per cent of the investment cost from regional, national and EU governments.

Subsidies for renewable heat are one critical area where Canada falls short. Biomass heating consultant and CanBio’s Ontario director, Christopher Rees says to get off the ground, district heating appliances need a 30 percent capital subsidy rate and recommends the subsidy should be in place for a minimum of five years. 

Quebec is pioneering one such program, launched in September by the Agence de l’efficacité énergétique du Québec, the “Program to Aid the Utilization of Forest Biomass Residues for Heat” provides subsidies to help institutions, commercial buildings, churches and other public buildings convert from light oil to heating systems using woody biomass. CanBio also hopes the program will include options to fuel buildings with renewable bio-oil made from woody biomass, by Canadian companies like Ensyn and Dynamotive, rather than undergoing the process of installing boilers in every case.

District heating offers many benefits to rural communities.  Eno has three small, district heating systems owned by a co-operative of private forestry companies. Besides creating a new market for already existing material, the renewable heat from the cooperative replaces 1.6 million litres of oil every year and reduces carbon dioxide emissions by over 4,000 tonnes. 

Röser gave municipalities a step-by-step plan for building a successful district heating network. 

Start by surveying the community and the potential buildings, he said, make sure you have sufficient heating space to justify the investment cost. Next calculate the power capacity of the boiler and shop around for different options.  Then plan the heating pipe network and calculate the profitability for the co-operative and customers. Now calculate the network fees. In Finland, every member of the co-operative pays an entrance fee to join the network (usually about $25,000 – $30,000 CDN).  Members also pay a flat monthly fee to cover fixed costs like loans, and an energy fee, which pays for the energy each member uses.
The co-operative should now be ready to put out a tendering contract for the plant. Röser said municipalities have to work hard to demonstrate the project’s feasibility and profitability to co-op members and potential customers before starting negotiations on equipment and suppliers.  After that, municipalities will be in good shape to apply for subsidies, and after receipt, they can start building.

A Canadian district heating model
It’s easiest and cheapest to implement a district heating system in a brand new community. That’s why JP Gladu, president of Lake Nipigon Forest, an association of four First Nations communities around Lake Nipigon, and CANBIO director, is pushing for a district heating system when Bingwi Neyaashi Anishinaabek First Nation moves back to its traditional territory. 

In the 1960s, the Bingwi Neyaashi Anishinaabek people were forcibly moved from their traditional lands to make way for a provincial park. After decades of negotiations the Federal Government has agreed to cede the provincial park back to the First Nation, whose members are now scattered around the region. JP says if all goes according to plan they hope to have the final approval in Spring 2010 and the first houses and large buildings on the land by 2014.
On a CanBio study tour to Eastern Finland last May, Gladu saw Finnish district heating systems up close. Gladu is in talks with Röser and another Finnish expert, Jouko Parvianen, to draw up plans for a district heating system for the community.

“This project would be the first of its kind in Ontario. And with our First Nation building a new community, the opportunity to develop a district heating system with the Finns prior to erecting building and roads is exciting,” said Gladu who began talks with two other Finnish suppliers at CANBIO’s Edmonton conference.

The community plans to build a sawmill and use the residues from there along with forest harvest residue to fuel the district heating system.  He says community support for the idea of heat from local wood is high because of the First Nation’s strong traditions of relying on a sustainable forest for subsistence and its ties to the land.

Pellets, heat and power – new technologies let municipalities produce all three
Most of the recent bioenergy activity in Canada’s western provinces and British Columbia involves building dedicated pellet plants that export much of the product to Europe. And market demand is insatiable. Canada’s pellet exports are expected to double from 1.5 million tones to 3 million tones in three to four years, says Doug Bradley. Meanwhile, in Eastern Canada, combined heat and power plants are on the top of the agenda. 
Christofer Rhén of GreenExergy put a new, more efficient solution on the table at CanBio’s annual conference. It’s a combination plant – producing green electricity, pellets and heat.

“It’s a technology that’s available right now, combination plants are more energy efficient and profitable so they should be considered in Canada,” says Doug Bradley. Ontario Power Generation plans to eliminate the use of coal by 2014 and fuel some of its generators with biomass, to do so it will need two million tones of biomass. Communities like Bingwi Neyaashi Anishinaabek First Nation will have a ready market if they were to consider pellet production, says Bradley, as will communities near ports because they can ship pellets to growing European markets. 

The heart of GreenExergy’s combination plant is its innovative steam dryer, which can take all kinds of woody biomass, like sawdust, chips, wood branches and treetops, and upgrade them to an even quality and size.  Then they can either go to a generator to produce electricity, a pelletizer to produce pellets and either a district heating grid to produce heat or a sawmill dryer to produce dried wood products.

GreenExergy is currently operating two combination plants in Sweden. Its Hedensbyn plant commissioned in 1996 has a 98 MW CFB steam boiler, a 34 MW steam turbine. Every year it produces 260 GWh district heating and 170 GWh of electricity along with 130,000 tonnes of pellets. Its Storuman plant commissioned in 2008 has a 32 MW steam boiler, an 8 MW steam turbine and annual production is 105,000 tonnes of pellets, 40 GWh of heat and 48 GWh electricity.

Rhén says Finland’s rural communities, which used to have the same high jobless rates as Canada’s forest towns, are reaping the rewards of bio-economy development. The trick, he says, is to focus wood energy development on rural communities with high unemployment and a need to diversify their local economies. By 2020 jobs in the forest fuel supply chain and in machinery supply in Finland are expected to increase five times, and management jobs will double. 

Higher wages mean Finland and Canada can no longer compete with Asia and Latin America when it comes to forestry, says Rhén. “It’s time for us to co-operate in research and development and technology transfer to create new markets for our boreal forest resources.”

Find out how Vermont became the state with the most installed biomass-heat in North America on CanBio’s bespoke Bio-Heat Tour and Information Session to Burlington, Vermont on April 20-22. Whether you are in the final planning stages of installing a community bio-heat system, or you’re curious about the potential for biomass heating in small, medium, and large public buildings—this study tour is the perfect opportunity to get a first-hand look at bio-heat installations that work.

Crystal Luxmore is a journalist & communications consultant in Toronto. 

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