Every day, valuable thermal energy flows through Canada’s wastewater infrastructure. For communities looking for practical ways to reduce emissions, decarbonize buildings and make greater use of existing infrastructure, wastewater represents an energy source that is already available.

But recognizing the opportunity is one thing. Developing a viable project is another.

Canadian Water Network’s new report—Unlocking Wastewater Energy Transfer in Canada: Economic pathways, funding strategies, and project de-risking—examines what it takes to move wastewater energy transfer (WET) projects from interest to implementation.

WET systems capture thermal energy from raw or treated wastewater and use it to provide efficient, low carbon heating and cooling. While the technology itself is mature, experience across Canada shows that technical feasibility alone does not determine whether a project succeeds. Policy and market conditions, access to capital, governance, long-term demand and risk allocation can be just as important.

The report examines WET development in British Columbia, Ontario, Alberta, and Nova Scotia. It illustrates how different regulatory frameworks, energy markets, and ownership approaches are influencing projects. It also examines examples from across the country to identify lessons that can inform future development.

For utility leaders, three findings stand out:

1. Economics are driven by policy and market conditions, not technology alone. The strongest WET markets in Canada have emerged where regulatory frameworks, municipal policies, and energy market conditions align to support development. British Columbia has become the national leader because clear thermal energy regulations, supportive municipal climate policies, and favourable energy economics have reduced uncertainty for developers and investors. In contrast, jurisdictions with lower natural gas prices or less developed regulatory frameworks have experienced slower adoption despite possessing the same technical potential.
2. Access to capital and project de-risking remain the primary barriers to scale. Although WET systems offer long-term operational benefits and emissions reductions, their high upfront capital costs and 20-to-30-year payback periods create significant implementation challenges. Successful Canadian projects consistently combine multiple funding sources, including municipal investment, provincial and federal funding programs, private capital, and utility revenue models. Long-term off-take agreements, anchor customers, and adaptive planning approaches are critical tools for reducing risk and creating investable projects.
3. WET performs best when integrated into broader community and energy planning. The most successful projects are located in dense urban environments where district energy systems (DES), major redevelopment projects, or large institutional energy users create predictable long-term demand. Case studies across Canada demonstrate that WET is most effective when incorporated early into land-use, infrastructure, and energy planning rather than retrofitted as a stand-alone technology solution. Communities that treat wastewater as an energy asset and coordinate planning across utilities, developers, and government stakeholders are better positioned to realize both economic and environmental benefits.

Together, these findings point to an important shift in perspective. Wastewater infrastructure does more than provide an essential public service. It can also become part of a community’s energy infrastructure.

For Canadian wastewater utilities, that creates an opportunity to think differently about the assets they manage and the role they can play in building low carbon, resilient communities.

Read the full report to explore the economics, as well as avenues of funding and project de-risking, that can help move WET projects forward.