Energy independence

Drake Landing tries district energy in Alberta.

At almost 120 years old and with $25 million in annual revenue, Seattle Steam is no wide-eyed tech startup with a 20-something founder. But the privately owned utility, which provides heat in the form of steam piped underground to about 200 buildings in downtown Seattle, is at the forefront of a major shift underway in the country’s district energy industry.

Last year, Seattle Steam plunked down $30 million to convert one of its boilers to run on wood waste and cut the company’s carbon footprint by 50 percent. By 2013, CEO Stan Gent, buoyed by an $18.75 million federal stimulus grant, plans to bring online a combined-heat-and-power system that would crank out electricity and capture waste heat from the process, distributing both through the city’s existing power and thermal energy networks. If successful, the utility estimates it would reduce its carbon footprint by another 30 percent while dramatically lowering the cost to produce steam for its customers.

District energy, in which a central plant using any one of several energy generation technologies pipes steam or hot or chilled water to nearby buildings to be used for space heating or cooling, is hardly a flashy technology. But the centuries-old industry is on the cusp of a renaissance. Private developers, utilities and government agencies of many stripes are taking a fresh look at district energy largely because it can deliver energy so efficiently, particularly when capturing and then distributing waste heat, and because it can shift buildings en masse toward clean energy by using boilers or turbines fired by renewables. District energy proponents also are quick to tout its other benefits, such as lower lifecycle and capital costs, higher reliability and more, compared with today’s conventional, building-based heating and cooling systems. As energy conservation and clean energy have become a bigger slice of the national conversation, and federal incentives, district energy’s ability to deliver both has brought it increased attention.  
At the same time, some advocates envision an even larger role for district energy, beyond the urban downtown and campus settings where it is primarily found today. They see a future in which small-scale, neighborhood-level district energy systems—serving, perhaps, a single block of homes—are commonplace. District energy, in this vision, would become as integral to a community as the local park.

Supporting renewables
District energy systems often serve dozens to hundreds of buildings at a time. Con Edison (NYSE: ED), for example, one of the nation’s largest investor-owned companies, serves 1,800 customers in Manhattan with district energy. The scale of district energy, according to Rob Thornton, president of the Westborough, Mass.–based International District Energy Association, makes the technology a powerful platform for transitioning the country toward renewables. Rather than replacing old boilers and chillers in each building with ones that run on clean energy, a district energy company could convert an entire campus or downtown sector in one fell swoop—just as Seattle Steam has done with its embrace of wood waste. Thornton estimates that at least half of his trade group’s members are considering shifting away from fossil fuels and toward renewables or waste heat.

But there is much work to be done. The cheap price of coal and natural gas has in large part resulted in less than a third of the 2,800 district energy systems operating in the United States using alternative fuels, Thornton says.
The use of waste heat, such as from an industrial process or through combined heat and power (CHP) technology, seems at first glance like a no-brainer for district energy companies. CHP plants produce as much as twice the amount of energy per unit of fuel consumed as traditional systems, which generate power or heat but not both. Yet market and technical barriers have held CHP plants back, according to a 2008 report by Oak Ridge National Laboratory. These barriers include a lack of familiarity with the technology, regulatory ambiguity and interconnection issues between the CHP owner and the local electric utility, among others.

Large power plants, which lose tremendous energy through waste heat, would seem obvious partners for district energy companies. But power plants tend to be located far from population centers, and building the infrastructure needed to pipe heating or cooling more than a few miles is too costly to make it pencil out.