InstarAGF Asset Management Inc. is preparing to make a $50-million investment in community energy infrastructure through a partnership with British Columbia-based utility company Creative Energy.
The InstarAGF Essential Infrastructure Fund is taking a 50-per-cent stake in Creative Energy, which operates 14 kilometres of thermal pipelines to keep 210 buildings in downtown Vancouver comfortable. The Toronto-based infrastructure investor envisions using this platform to build more urban energy networks.
Creative Energy's business is building and managing local "district energy" systems in municipalities. The underground networks of thermal pipes – mostly full of hot or chilled water – are used to heat and cool a neighbourhood or a group of buildings. Creative Energy pushes 1.7 billion pounds of steam through the system to heat residential and office towers and retail facilities.
"The types of infrastructure that we're building today – given where technology and sustainability has gone – is much different than we would have built 10, 20 or 30 years ago," said Gregory Smith, chief executive officer of InstarAGF.
Mr. Smith has been interested in investment opportunities in district energy for the past few years. He says community energy needs are being increasingly handled on a local level and are moving away from sources such as gas-fired power plants toward renewables such as solar and wind power.
District energy systems work best when buildings are clustered, so new neighbourhoods can be good candidates. Right now, Creative Energy is working on $150-million worth of development projects at Oakridge in Vancouver, Horseshoe Bay in West Vancouver and Mirvish Village in Toronto.
The plan is to take this technology to other North American cities and communities.
Beyond Creative Energy, Mr. Smith's investment interests for 2018 include transportation, particularly at the intersection of rail, port and trucking, as well as some facets of renewables such as bio-energy, where power is produced using organic material.
InstarAGF was formed several years ago as a joint venture between Mr. Smith's Instar Group Inc. and AGF Management Ltd. The firm is perhaps best known for its purchase of the terminal at Billy Bishop Toronto City Airport in 2015 along with a group of investors.
InstarAGF has also acquired wind power assets, oil and natural gas infrastructure and aviation management and services company Skyservice. With its latest investment, about half of InstarAGF's $740-million fund has been committed or invested.