Squamish Neighbourhood Energy Utility: Final Feasibility Presentation Prepared for: District of Squamish and Project Sponsors Prepared by: Compass Resource Management Ltd. June 15, 2010

Squamish NEU Study – Final Presentation, June 2010, Page 2 Study Overview  Demand forecast (five target areas)  Analysis of business as usual (BAU)  Screening of many supply options  Detailed analysis of short-listed scenarios  Area A + expansion scenarios (Waterfront and Oceanfront)  Biomass, ocean heat, and natural gas co-generation  Staging and sensitivity analysis

Squamish NEU Study – Final Presentation, June 2010, Page 3 Demand Forecast – Focus Areas and Phasing

Squamish NEU Study – Final Presentation, June 2010, Page 4 Demand Forecast – Phasing

Squamish NEU Study – Final Presentation, June 2010, Page 5 Supply Screening – Shortlist  Biomass  Abundant local resource  One of lowest cost options in screening and greatest GHG emission reductions  Ocean Heat  Potentially slightly higher cost than GX but more available resource  Best heat pump option for this location  Some further optimization may be possible with cooling service to commercial loads  Natural gas cogeneration  BC Hydro is interested in systems which also produce electricity  Best commercial electricity production option at this scale.  Natural gas cogeneration is a stepping stone to biogas cogeneration  GHG emissions depend on whether we use provincial perspective or regional trade perspective.

Squamish NEU Study – Final Presentation, June 2010, Page 6 Summary Results – Base Case No Grants, Private Financing, Property Taxes Included

Squamish NEU Study – Final Presentation, June 2010, Page 7 Total Capital Costs by Demand and Supply Scenario ($,000)

Squamish NEU Study – Final Presentation, June 2010, Page 8 Sample Phasing of Capital (All Three Service Areas)

Squamish NEU Study – Final Presentation, June 2010, Page 9 Sample Cashflows - Municipal Financing

Squamish NEU Study – Final Presentation, June 2010, Page 10 Summary Results - GHG Reductions Demand Scenario BiomassOcean Heat Cogen (BC Perspective) Cogen (Regional Perspective) tonnes / year change at build out Area A Only(1,300)(1,100)1,100(900) Area A + Waterfront(3,000)(2,200)3,700(1,800) Area A + Oceanfront(5,000)(4,100)3,700(3,500) Area A + Waterfront + Oceanfront (6,600)(5,200)6,100(4,300) % change at build out Area A Only (74%)(62%)62%(51%) Area A + Waterfront (79%)(58%)97%(47%) Area A + Oceanfront (81%)(67%)60%(57%) Area A + Waterfront + Oceanfront (80%)(63%)74%(52%)

Squamish NEU Study – Final Presentation, June 2010, Page 11 Summary Results – Gas and Electricity System Impacts Demand Scenario Biomass Scenario Ocean Heat Scenario NG Cogen Scenario Area A + Waterfront + Oceanfront Incremental gas increase (reduction)(35,300)(28,500)38,400 Incremental electricity increase (reduction)(9,200)(1,000)(9,200) Additional electricity production--26,900

Squamish NEU Study – Final Presentation, June 2010, Page 12 Summary Results - Grant Requirements BiomassOcean HeatCogeneration Private Financing Scenario 8,60013,80018,500 % of total capital 30%41%50% Municipal Financing Scenario 1,9008,30013,400 % of total capital 7%24%36% Grant required to achieve competitive rates and target return on investment. Municipal financing scenario assumes 100% debt financing and no property taxes.

Squamish NEU Study – Final Presentation, June 2010, Page 13 Summary Results – Conclusions  All options require some level of grants to achieve competitiveness and break-even requirements.  Biomass is least cost option in all demand scenarios and has the highest total GHG emission reductions and greatest reliance on local resources.  All options exhibit economies of scale. Competitiveness increases as total system size increases. Securing a large service area is critical to success.  Under a municipal financing model and excluding property taxes, the larger biomass system starts to approach BAU costs, even before taking into account grants.

Squamish NEU Study – Final Presentation, June 2010, Page 14 Possible Optimizations (Design Phase)  Solar DHW  Alternate siting of energy centre  Multiple energy centres  Distribution layout  Actual sizing and staging of capital items  Specific technology / vendor selection

Squamish NEU Study – Final Presentation, June 2010, Page 15 Key Implementation Risks for District Energy  Securing loads  Marketing  Relationship building  Policy / bylaw support  Minimizing installed capital costs  Technology selection  Coordination with other infrastructure  Competitive tendering  Performance contracting  Phasing of equipment relative to loads  Just in time capital where possible  Build in flexibility  Optimize staging and siting  Ensuring optimal building performance  Developer design document  Design and commissioning support  Retrofit support

Squamish NEU Study – Final Presentation, June 2010, Page 16 Paths Forward District Vision / Policy Support District or Community Ownership District or Community Responsible for Design, Build, Own, Finance and Operate (some outsourcing). Decisions on ownership structure and governance required Private Ownership District find third party owner and negotiate infrastructure agreement. Third party DBFOO. P3 District find third party to lead or share Design, Build, Finance, Operate and/or Own (split assets)

Squamish NEU Study – Final Presentation, June 2010, Page 17 District Policy Role  Establishing target core service area boundaries  Cultivating community support  Developing measures to promote/require interconnection  Establishing commitment to interconnect municipal buildings  Creating mechanisms to support efficient planning/installation of linear infrastructure  Establishing policies and programs to encourage/facilitate access to energy resources  Facilitating the selection of site(s) for energy center(s)  Establishing policies for property taxes and franchise fees