District Energy Projects Highlight the Concept’s Strengths

August 5, 2016 By Carl Weinschenk

district energyDistrict energy – an approach in which clusters of buildings are served by a central plant – are popular. This week, The Rocky Mountain Institute released a study suggesting that net-zero district energy (NZE) projects also are proliferating. At the same time, however, RMI says that there is an “industry-wide perception” that the approach is too expensive.

The organization lays out an approach that it says can neutralize those concerns. The heart of its concept – the way in which the organization can reassure the district and parcel developers and tenants – is the creation of an integrated energy services provider (IESP). This entity, the brief says, will…

…manage multiple energy-related operations and act as a multipurpose developer, financier, operator, and administrator of energy systems, as well as a regulator of building performance requirements. The IESP may be one organization or multiple organizations acting in cooperation, but the key is to execute multiple functions in concert to achieve performance objectives in the most economical way.

It is quite possible that net-zero district energy have the reputation of not being economical because upfront costs are high, the release says. RMI’s business model makes the case, however, that if properly planned and managed, net-zero energy districts can save money over the long run.

Planning collectively can be the difference. “There is a material difference between the opportunity to optimize with distributed approaches (i.e. a community of NZE buildings put together one building at a time where site efficiency, equipment efficiency, economies of scale and meeting peak demand have to be optimized at a single building level) versus community-wide approaches where optimization is undertaken at community scale,” Iain Campbell, a Managing  Director of RMI, told Energy Manager Today. “The latter model providing far greater opportunity for site efficiency, economies of scale, etc. leading to much lower overall cost.”

There are several interesting district energy projects in the news. The Nelson Star this week posted an update of an ongoing project in the city of the same name in British Columbia, Canada. The project, which is being built by Nelson Hydro, will replace natural gas to with lumber mill waste to heat several buildings. At this point, the targeted structures are the city hall, civic center, a health coop and the hospital.

The story offers a good overview of the issues involved, including emissions and air quality concerns related to the burning lumber. Nelson Hydro is working with a $6 million budget. One-third is from grants and two-thirds from British Columbia’s Municipal Finance Authority. The payback period is 15 years.

The Kansas City Star reported last month on the district energy system that Veolia is running in the city. District energy has long roots in the city. Currently, users include government buildings in the downtown area, hotels, office buildings, the Sprint Center and the Truman Medical Center.

The biggest news is that the plant is transitioning from coal to natural gas. The story goes into great detail about the reaction of customers and other interested parties to district energy. One company quoted says that the approach saves money compared to generating their own energy. The writer adds, however, that some potential users are reluctant to try something new. The move to natural gas will open up four acres on the Missouri River waterfront due to the elimination of coal yards. It is, however, disappointing to construction companies that used the bottom ash and fly ash that Veolia’s plant formerly produced.

The final district energy project recently in the news is in Richmond, British Columbia, Canada. In June, The Alexandra District Energy Utility (ADEU) was named the International District Energy Association’s System of the Year.  Voice Online says that the ADEU is a ground source system that provides heating, cooling and domestic hot water to residential and commercial customers in the city’s West Cambie neighborhood. The third phase of the project, completed last December, provides energy to almost 1,200 units in five residential units and one non-residential building. The next phase will expand the system to what the story says is a large commercial development. It is expected to be finished in the fall.

District energy has been around for a long time. Despite one setback — the troubled Guelph District Energy Network in Ontario — the science seems to be evolving and the concept finding success. District energy seems to be in line with the increasing emphasis on renewables and energy efficiency. Organizations with the opportunity to be powered in this way should take a close look.

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