Markham District Energy (MDE) has announced it is beginning work on the world's largest wastewater energy transfer (WET) project, expected to reduce carbon emissions by 30,000 tonnes annually and significantly reduce natural gas consumption.

This 18.5-megawatt system will rely on heat pump technology to recover and repurpose underground thermal wastewater energy to heat and cool a network of 240 buildings spread out over 15 million square feet across the community of Markham, Ont.

Part of a broader effort to build a low-carbon energy network in Markham, the WET project provides the region of 350,000 residents with a reliable and cost-effective renewable energy solution that reduces reliance on conventional carbon-emitting sources.

"Today represents a milestone in our 25-year history," Bruce Ander, president and CEO of MDE, said. "The WET project . . . is (the result of) cooperation and strategic support from all levels of government."

Funding for the project coming from multiple sources

MDE, a thermal energy utility owned by the City of Markham, is financing the project with federal government support, including $16.7 million from the Low Carbon Economy Fund and $8.2 million from the Green Municipal Fund. 

The majority of funding for the WET project, however, is being provided by a $135-million loan facility from the Canada Infrastructure Bank and a $135-million credit line from CIBC. Enbridge Gas also contributed $700,000 from several demand side management and fuel switching grant programs.

The announcement of the WET project took place July 16 at a groundbreaking ceremony held in Markham attended by federal and municipal officials including Chrystia Freeland, deputy prime minister and minister of finance.

WET system uses water from York Region 

A critical aspect of the WET project is its ability to recycle previously untapped warm water flowing through a York Region sewer trunk that has long been coveted by Ander as a source of free, renewable energy.

"A very large York sewer trunk runs right by one of our plants," Ander said in an interview with Sustainable Biz Canada. "That energy has been lying there even before we came into being 25 years ago.

"It's taken us this long to begin construction on the WET project and harness that energy. When we finally decided to proceed about two and a half years ago, our first call was to the York Region, asking for access to their wastewater main.

"They were very cooperative. The only thing they asked from us is that we couldn't mess with their wastewater management and had to bear any costs of repairs or spillages."

This set in motion the process by which MDE is now building a major facility equipped with the latest heat pump technologies to operate in parallel with the WET project.

"This plant, which we call the 'wet well', is a 30-foot deep underground chamber the size of two Olympic swimming pools which will store the wastewater being diverted into it. Heat exchange technology sends the water to our plant and then we feed it back into the sewer system."

CGF contract for difference was final piece of WET puzzle

The final piece of the puzzle allowing MDE to green light the WET project was a financial hedging mechanism backed by the $15-billion Canada Growth Fund (CGF).

This 10-year contract for difference (CfD) has been structured as a two-way contract. MDE will make compensatory payments to CGF should the actual carbon policy price exceed the specified strike price, whereas CFG will compensate MDE for the difference should the carbon policy price fall below the strike price.

"It's a carbon hedge protecting us from future changes in carbon pricing policy . . . We're locking in our costs. We're giving up some of the upside if the price of carbon keeps rising, but we're also protecting our (WET) project in the event of future government (carbon pricing) policy changes.

"All these things needed to come together to help us move forward with WET. This project puts us on course to becoming a net-zero carbon utility."