District Energy Systems Overview
The fundamental idea of district energy is simple but powerful:
connect multiple heating and cooling energy users (buildings)
through an underground piping network to environmentally responsible
energy sources (central plants), such as combined heat and power
(CHP), industrial waste heat and renewable energy sources such as
biomass, geothermal and natural sources of heating and cooling. (See
Figure 1)
District energy systems produce and pipe steam, hot water or chilled
water underground through a dedicated piping network to heat or cool
buildings in a given area, reducing energy costs and greenhouse gas
emissions, while freeing up valuable space in customer buildings by
centralizing production equipment and, through economies of scale
and equipment management, optimizing the use of fuels, power and
resources. District energy (primarily district heating currently)
delivers about 3.5 % of the total final energy demand in the
industrial, residential, public, and commercial sectors1.
About 6.5% of commercial buildings in the
U.S. are heated with district heating2.
Figure 1
District heating and cooling systems serve multiple buildings within
a given area from an energy-efficient central plant.
In North America, district energy systems are typically located in
dense urban settings in the central
business districts of larger cities; on university or college
campuses; and on hospital or research campuses; military bases and
airports. District energy systems in North America typically serve
“clusters” of buildings, which are sometimes commonly owned, as in
the case of a private or public university campus or hospital.
Frequently, however, in downtown systems, the customer buildings
have distinct and separate owners; are generally located near each
other in a central business district or segment of the city, and are
interconnected individually to the distribution piping network. The
number of customer buildings served by a typical district energy
system may range from as few as 3 or 4 in the early stages of new
system developments as many as 1,800+ customer buildings served by
Con Edison Steam Business Unit in Manhattan, the largest district
steam system in the world.
Mature steam systems in U.S. cities like Philadelphia, Indianapolis,
Boston or Denver serve between 200 and 400 customer buildings.
Larger and established combination district heating and district
cooling systems such as those in Hartford, Minneapolis, and Omaha
generally serve between 65 and 150 customer buildings on heating and
between 50 and 125 customer buildings on cooling. In most cases, the
urban district energy system typically serves over 50% of the Class
A commercial office space in the central business district and in
many cases, market share exceeds 85%3.
District energy systems are the preferred method of heating and
cooling most major college and university campuses. In the U.S.
hundreds of campus energy systems provide highly reliable and
scalable energy supply. Many U.S. universities are adding or
increasing their ability to generate electricity on campus and are
recycling heat from power generation to heat buildings and drive
steam chillers for campus air conditioning4.
Typical District Energy System
District energy systems enjoy the economy of scale and operational
benefits of connecting to a large, diverse portfolio of customers.
By aggregating the thermal requirements of dozens or even hundreds
of different buildings, the district energy system can employ
industrial grade equipment designed to utilize multiple fuels and
employ technologies that would otherwise simply not be economically
or technically feasible for individual buildings, such as deep lake
water cooling; direct geothermal or waste wood combustion. As
depicted in Figure 3 below, the diversity of energy options and fuel
flexibility creates a market advantage for district energy systems
and establishes the district energy system as an asset for community
energy planning. Additionally, the availability of district energy
service reduces the capital cost of developing an office building by
cutting the boiler and chiller plant capital cost from the project.
Figure 2
This figure illustrates how a central district energy facility can
utilize various sources of fuel to create electricity, heating and
air conditioning to supply a variety of users in a community.
Courtesy of District Energy St. Paul.
In many cases, the district energy facility can utilize local fuel
resources (such as waste wood in St. Paul5 or oat hull
by-products at the University of Iowa6). This keeps
energy dollars recirculating in the local economy and as a renewable
energy source, may qualify for a production tax credit under a
renewable energy portfolio standard.
Urban district steam systems primarily provide space heating and
domestic hot water service, and in some cases, steam is used for
commercial or industrial processes such as commercial laundries,
breweries, and for production lines in biotech laboratories.
Combination heating and district cooling systems provide chilled
water that is used for air conditioning of building space and
process cooling for data centers and switchgear. In a city, there is
generally a diversity of load as different types of buildings (i.e.
residential, commercial, retail, convention, etc) will use energy
under different operating conditions and set peak demands at
different times of day. Serving this variety of loads allows the
central plant to operate at optimal output over a longer time
period. Additionally, many district cooling systems incorporate
thermal storage systems to further expand peak capacity and increase
the operational flexibility and efficiency with the ability to
operate equipment at optimal output.
Features and Benefits of District Energy Systems
Economies of Scale Yield Energy Efficiency
All district energy business models create and harvest value by
re-capturing or producing thermal energy, conveying it in one or
more forms to an energy conversion or usage point in the customer
building. The amount of customer value created depends upon how
economically and efficiently the district energy provider does this
relative to rival centralized energy sources or customer solutions
such as on-site boilers and chiller plants, electric space heating,
individual heat pumps, or building-scale cogeneration facilities.
Since urban energy consumers typically have multiple alternatives
for heating and cooling buildings, the economic competitiveness of
the district energy option is enhanced by the ancillary benefits
including capital savings from avoided investment in building
equipment; reduced labor and maintenance expenses due to simplified
operating systems; lower costs for water, chemicals, insurance and
fuel (including storage); and generally higher operating
efficiencies due to scale and better load matching. Additionally, in
a dense urban environment, there is often a premium value for space
that can be reclaimed for other productive uses by displacing
mechanical equipment, flues and cooling towers. In particular,
rooftop and penthouse space can be shifted from a cost center for
large mechanical systems to profit center for third parties (i.e.
cell and microwave towers; restaurants, leasable footprints).
Customer Benefits
From a customer perspective, there are a number of advantages to
connecting a building to district energy service, including:
Ease of use and simplified building operations
Avoided capital costs for in-building heating and air conditioning
equipment
Reduced labor, repair and maintenance expenses
Space is made available for alternative uses and other income
activities
Highly reliable energy services
Less fuel and chemicals stored and combusted on-site
For commercial real estate developers, especially in dense urban
settings where real estate acquisition and construction costs are
high, economics demand high yield from every available square foot
of leasable space. District energy services displace large
mechanical equipment and eliminate the need for stacks and flues
throughout the building core. Valuable rooftop or penthouse space
can be reclaimed from noisy and unsightly rotating equipment and
structural loads for equipment can be reduced. Moreover, by removing
aging or operational boilers and chillers from existing buildings,
usable space can be reclaimed and the electrical capacity of
building transformers and vaults can be freed up and re-used for
tenant electrical demands.
Simplified Systems and Operations
District cooling services simplify building operations by removing
the chilled water production cycle from the building. District
chilled water is delivered to the building intake valves at 42 - 37
Deg F. A heat exchanger or energy transfer station circulates the
cold district chilled water building water across the coil. The
building side water gives up its heat to the district water and is
re-circulated through building air handler coils to absorb more heat
from the building.
Figure 3
Depicts how district cooling service connects with the building
system and displaces on site equipment for air conditioning.
Highly Reliable Service is Hallmark of District Energy Industry
The benefits most frequently cited by district energy customers are
the convenience, ease of use and reliability of district energy
service. Most district energy systems operate at four nines of
reliability (service is available 99.99 percent of the time on an
annual basis)7. In fact, operational reliability has been
a hallmark of the district energy industry. When conducting due
diligence on operating history, the former owners of Minneapolis
Energy Center reported only three hours of unscheduled outage over
25 years of operations. Similarly, with the natural disasters of the
San Francisco earthquake of 1989; the great Ottawa ice storm in
1998; and the Seattle earthquake of 2001, the only utilities that
reported continuous and uninterrupted service were the respective
district steam systems in San Francisco, Montreal and Seattle.
Service reliability is critical when serving a primary or tertiary
care hospital, a campus research laboratory or a Federal Government
operations center. District energy systems offer highly reliable
service.
Fuel Flexibility and Optimal Operations
The principal business challenge in a district energy business is to
manage plant production capacity and fuel risks to meet coincident
customer heating and cooling peaks most efficiently. This might
involve diverse production units to more efficiently supply seasonal
load characteristics. With the recent escalation in commodity fuel
costs for coal, natural gas and oil, and concomitant increase in
power costs, many district energy providers are exploring
alternative fuel sources to increase fuel flexibility as a hedge
against fossil fuel costs and to potentially qualify for renewable
production tax credits and portfolio standard programs. Most
district energy businesses have a mechanism in rates that allows for
fuel cost adjustments and recovery.
Better Use of Capital
When a commercial building owner or developer does not have
the option of connecting to a district chilled water network, the
most common approach is to install electric drive chillers and
rooftop cooling towers. When a consulting mechanical engineer
designs the onsite chiller plant, consideration is given to a number
of design factors that effect the cost, size and operational
performance of the stand alone cooling system for that building. The
designer and mechanical contractor must install sufficient cooling
capacity to meet the air conditioning demand on a peak day, although
that peak may only occur a few hours every few years. The array of
chillers are selected with some redundancy so that if one should
need repair or be out of service for maintenance, there is still
adequate capacity available to meet cooling demand. The chillers are
designed to operate at part load efficiency but are most in demand
when outside temperature and humidity are highest and operating
performance is least ideal.
With the increase in computers, lighting and density of personnel in
buildings today, many commercial office buildings require some base
load level of cooling 24/7/365. In winter months, some buildings
utilize winterized cooling towers to reject heat for core cooling.
With the internal heat generation in today’s typical commercial
office building, cooling is much more of a 12-month operation than
simply comfort cooling in summer months. Finally, a prudent
consulting engineer will consider the useful life of the chiller
plant of around 23 – 25 years and plan for performance degradation
over time due to fouling, wear and tear and simple depreciation. All
of these factors lead to installation of more cooling capacity than
actually required and can result in higher operating costs, less
efficient operations and in some cases, higher electricity demands
than necessary.
A district cooling customer has the advantage of contracting for the
optimum contract cooling capacity from the district energy provider.
In most cases, the customer will contract for the actual peak hourly
cooling demand as set under peak summer conditions, yet the contract
capacity is still often 30 to 50% less than would have been
installed in the building with its own standalone chiller plant.
Because the district energy provider is actually selling “rejected
heat on a real time basis”, the district cooling customer is then
able to maximize building systems to better manage peak cooling
demand and can take the correct amount of cooling as determined by
the load rather than the lower limit flow rate determined by an on
site chiller system. This is particularly valuable during spring and
fall months where low loads are most likely.
District Cooling Contract Capacity vs. Installed OnSite Capacity
Depicted in Figure 5 below are three commercial office buildings
that were constructed and connected to the district cooling system
in Hartford, CT in the 1980’s. The chart compares the difference
between the chiller capacity that was designed for an in-building
chiller plant and the actual contract cooling capacity experienced
by each building in operations. The design for stand-alone chiller
plants typically call for installation of between 30 % and 100% more
cooling capacity than will be required from a district cooling
provider. When district cooling is an option, the building owner is
able to avoid the full capital investment in on-site chiller plant
and can allocate that capital to other income-producing activities
or tenant amenities. With an average capital cost of at least $1,000
per ton of installed cooling capacity, the capital savings range
from $800,000 to over $2.4 million in these buildings. In the case
of Building B in Figure 5 below, the contract capacity of 695 tons
for a 540,000 gross sq ft commercial office building equates to 775
square feet per ton of capacity. This is about twice as capital
efficient as a stand alone chiller plant which would typically be
sized at 400 square feet per ton of installed chiller.
Figure 4
Indicates the difference in actual cooling capacity requirements in
three buildings in Hartford, CT between capacity designed for an
onsite chiller plant (blue) and the actual contract capacity
required (yellow) for peak hour cooling capacity in Tons from the
district cooling system.
The distinction between contract capacity and installed capacity
becomes very important in an existing building that is
considering replacement of an aging chiller plant with connecting to
the district cooling network. In many cases, the district cooling
provider is placed in the unique situation of trying to sell less
contract capacity than the building operator currently has installed
on site. It is important to accurately set the contract capacity
based on the peak hour rejected heat demand of the building, and not
based on the volume of chiller capacity installed on site. District
cooling rates are typically fixed over a twelve month capacity
charge based on the peak annual requirement, along with a unit
consumption charge based on the variable monthly metered volume of
rejected heat. The competitiveness of the district cooling offering
often hinges on the difference in contract capacity at 70% to 50% of
the installed cooling capacity.
Flatter Electricity Demand Profile With District Cooling
From an operational perspective, the impact of district cooling
service on electricity demand profile is illustrated below from an
actual 350,000 sq ft commercial office building in Cleveland, OH in
Figure 6 below.
Figure 5
Actual electrical meter readings kilowatt demand in 350,000 SF
office bldg “Before - Orange” and “After – Green” district cooling
service was installed and electric chillers displaced.
Displacing two electric drive chillers resulted in a flattening of
the peak electric demand from 1485 KW to 798 KW in July. The end
result for the building was a much flatter electric demand profile
year round, varying by less than 2% from January through July to
December. This flatter electric demand profile has great value to
the customer, the tenants and the local electrical grid.
In some cases, installing district cooling and displacing peak
electric demand from chillers provides additional benefits to the
building owner and major tenants. In some cases, this “frees up”
valuable electrical transformer or vault capacity for other
electrical needs in the property. Sometimes, electrical supply is
limited, capacity can be constrained and replacing or upgrading
electrical transformer faults can be expensive and difficult in
certain sub-basement conditions. Space can be difficult to work in.
Available space can be at a premium and the timing and difficulties
of downtime can also be problematic for certain tenants. By
displacing the chiller load, which is typically the single largest
source of peak electric demand in a commercial office building, the
property owner can “harvest” additional electrical capacity for
other beneficial uses.
From the perspective of the local electricity grid operator,
displacing nearly 700 KWD in one building may not seem like much,
but with district cooling potentially serving dozens of buildings in
a congested urban setting, there is potential to shift many
megawatts of peak electric demand from the overtaxed power grid to
either steam driven chillers, thermal storage or more efficient
district cooling facilities. A district cooling system provides
greater operational flexibility to a central city or college campus.
Sources:
1
Sven Werner, “Globally avoided carbon dioxide emissions during 1998
as a benefit from the current use of DH/CHP,” presented at the
Euroheat & Power annual conference, Brussels, March 5, 2002.
2
U.S. Energy Information Administration, “Commercial Buildings Energy
Consumptions Survey,’ 1999.
3
(See District Energy St. Paul,
www.districtenergy.com,
Hartford Steam Company;
www.hartfordsteam.com)
4
http://www.districtenergy.org/guidebook/CHP.Webdoc.Homepage.htm
5
http://www.districtenergy.com/CurrentActivities/chp.html
6
http://www.districtenergy.org/CHP_Case_Studies/University_of_Iowa.pdf
7
http://www.districtenergy.com/Advantage/communities.html
The above article is courtesy of the International District Energy
Association. To view the full publication, follow this link -
http://www.districtenergy.org/pdfs/IDEA_Industry_White_Paper.pdf
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