The city has selected two companies to install, own and operate solar-thermal equipment at 20 municipal sites, which are expected to include community centres, water treatment facilities, shelters and seniors' residences across town.
In return, the city has signed a 20-year contract to purchase the heat energy from those sites at a fixed price competitive to current natural gas rates. Heat is captured from the sun and used to produce hot water for showers, swimming pools and some industrial processes.
Mondial Energy Inc. of Toronto was chosen for 15 of the sites, with the remaining five going to CC Solar Inc., also of Toronto.
Both companies are among a new breed of service providers called "solar utilities," which sell energy – heat or electricity – rather than technology and equipment to customers.
Alex Winch, founder and president of Mondial, said the contract with Toronto sets a precedent that other municipalities are watching as part of efforts to reduce greenhouse gases that contribute to climate change.
"We've already been contacted by other cities," said Winch, adding that cash-strapped municipalities like the idea of purchasing clean energy without having to purchase the equipment that produces it. "Toronto has cast the die, made the mould, so that other municipalities will follow in the same footsteps."
City officials, including chief operating officer Bruce Bowes, have hailed the approach as a great way to reduce the price volatility and carbon dioxide emissions associated with using natural gas.
Mondial is spending the next few weeks with city staff scouting ideal sites for the solar-thermal systems. Once locations are set, construction will likely begin in March and the systems are expected to be operational sometime next summer.
Marion Fraser, an independent energy consultant and president of Fraser & Co., said the solar utility model fits well within the larger concept of a "micro-grid" – thousands of renewable or low-emission energy systems producing heat and electricity on site.
Fraser said regulations need to change so larger, established utilities with trusted brands are permitted, and mandated, to pursue similar business models. There's no reason an Enbridge Gas or Toronto Hydro shouldn't be in the game, she said. "We have to reinvent the whole model."
The announcement comes as the renewable-energy industry grapples with an uncertain economy and how it might affect clean-energy projects, particularly with falling oil and natural gas prices.
Winch, speaking from the Solar Power International conference in San Diego, Calif., said optimism is high in the solar industry despite the troubles on Wall Street.
"Everybody knows the fossil-fuel future is going nowhere," he said.