Toronto's Hospital for Sick Children is getting a new solar thermal hot-water system.

And, thanks to an arrangement with an intermediary that specializes in financing and managing this energy-saving technology, the hospital won't face any up-front capital or continuing maintenance expenditures.

The intermediary, Toronto-based Mondial Energy Inc., is serving as financier, project manager and owner of the solar panels, heat exchangers, holding tanks and other pieces of infrastructure that can cost several hundred thousand dollars but reduce long-term energy costs by using the sun's rays to heat water for everyday use.

Founded in 2004, Mondial has financed solar thermal systems for four non-profit residential buildings to date.

Photo courtesy of Mondial Energy Inc./Newscom
Mondial president Alex Winch checks out the solar panels on the roof of the Woodgreen project.

Earlier this year, Mondial oversaw the installation of 108 glazed flat-plate rooftop solar collectors and other components at one of these, a 170-unit complex operated by Woodgreen Community Services in Toronto.

Proponents say the system will generate one-third of the building's annual hot-water requirements, reduce reliance on natural gas, ease the load on conventional boilers and reduce Woodgreen's annual carbon-dioxide emissions by more than 60 tonnes.

In much the same way a utility charges for supplying electricity, oil or natural gas, Mondial earns revenue by billing for energy at pre-established long-term rates.

Rather than building its own solar thermal hot-water system - at a cost Mondial estimates at $200,000 - and being responsible for any maintenance, Woodgreen will pay only for solar thermal energy delivered at a rate fixed for 10 years under a contract that is renewable.

"Our customers put up nothing, lock in a volatile cost, and lower their environmental footprint, all at a locked-in cost that's displacing their existing fossil-fuel bill," says Mondial president and founder Alex Winch.

"If you own a building, you're committed to buying energy forever, until you sell that building. Our customers realize that it's more advantageous to lock in energy prices than floating with the price of natural gas."

With the Woodgreen non-profit housing contract and three similar projects under its belt, Mondial landed a major customer this past summer - the Hospital for Sick Children in Toronto.

Nearly 100 solar rooftop panels are being connected to a heat exchanger, which will transfer heat to storage tanks that can hold 480 gallons of hot water. The system is designed to store solar energy for use when demand is high but the sun might not be shining.

Currently, the hospital purchases steam from Enwave Energy for hot-water generation, and Winch says this conventional system will remain online for cloudy days. He adds, however, that when the Mondial system is installed - the target is December - the hospital stands to offset more than 750,000 lbs. of steam a year.

Mondial will meter the energy delivered to the hospital's domestic hot-water system and allow the hospital to monitor its energy use in real time.

Fred Girvan, the hospital's director of facility operations, says the immediate advantage is environmental - the facility expects to save roughly 95,000 tonnes of greenhouse gases annually.

He anticipates economic returns, but on a gradual basis. "We're looking at purchasing somewhere around $20,000 a year worth of energy from Mondial, which in our big overall energy budget is very small. We'll have to run it for a year to see just how this works out."

Girvan adds that if energy prices continue to rise - something he expects - then the Mondial deal will ultimately prove cost-effective.

Adam Hinckley, an alternative energy equity analyst with CIBC World Markets, says power-purchase agreements are popular in North America, and he's heard of 20-year agreements.

He explains that it can make sense for companies that specialize in building or managing energy-producing facilities to own and maintain them and sell the electricity.

"It's a no-brainer from the point of view of the consumer," Hinckley says. "They put no money up front, they don't have to purchase anything, they don't have to deal with new technology or maintain anything, and they get a guaranteed rate.

"It makes it an easier sell to the end consumer because the consumer is used to purchasing electricity rather than purchasing the infrastructure that generates electricity - or hot water as may be the case here."

He adds that he sees a potential for immediate savings with increased return as fossil fuel-based energy prices rise.

Hinckley says, however, that he is unaware of any power-purchase agreements involving solar thermal for hot water. "It's not a growth driver. Canada and the U.S. are first-tier nations where hot water is easy to come by. It's generally used in places like China, and Third World countries."

At Energy Probe, a Toronto-based think-tank, senior policy analyst Norm Rubin says he's struck by the technology's slow rollout.

"If everybody's really coming out ahead, then it seems to me this should be scaling out faster than it is. I'm just wondering why nobody has knocked on my door suggesting that my south-facing roof might have a solar hot water heater," Rubin notes.

"There's an awful lot of big buildings in Toronto and an awful lot of big hot-water users. I'm either frustrated or quizzical that this hasn't rolled out like hula-hoops."

Rubin says the utility model does hold attraction. "Lots of us drink milk but we don't own a cow, and there are obvious advantages to doing things that way. Most of us are not in the utility business."

He adds that solar-energy systems can generally be sufficiently small-scale to enable a degree of self-sufficiency and independence from utilities, but the systems can also require significant expertise and monitoring.

"The utility model exists to address nuisance. That's what Mondial does for a living - they install these things so that the Hospital for Sick Children doesn't have to worry about choosing one or maintaining it, or worrying about having a stationary engineer with an expertise in solar power."

Mondial contracts work to specialist companies. Taylor Munro Energy Systems, an energy-systems manufacturer based in Delta, B.C., designed and installed the system Mondial operates at Woodgreen in Toronto.

Taylor Munro president Joe Thwaites says solar-thermal is relatively new in the marketplace and the utility model makes sense for many kinds of customers because it helps them understand the financial issues.

"Mondial has managed to bring it down to a position where people can compare apples to apples on energy," Thwaites says. "If people can understand the economics, there's always been a lot of goodwill towards solar.

"People are keen to have the technology, but the very fact that the capital cost is high makes it a barrier to a purchase, compared to buying electricity or natural gas from your local utility where it's pay-as-you-go."

Thwaites says most of his customers buy their systems outright or through conventional financing plans, but these are mainly single-unit residential and modest-size business users who are buying relatively small-scale, manageable systems. "Mondial comes in for clients that aren't able to purchase it outright but are interested in the technology."

Winch concedes that Mondial is experiencing customer inertia, but he says interest is increasing and he's getting calls from across North America.

"People want to be second, third or fourth, but not first. They want to see it working at other sites and then they'll come and talk to us. We're now starting to see unsolicited requests. The momentum is definitely shifting."

(Saul Chernos can be reached at chernos@businessedge.ca)