What is District Energy?

How district energy is helping our local communities and society at large

District energy uses local resources to tackle broad, global energy and environmental challenges. But what is it, exactly?

District energy uses a centrally located facility, or facilities, to generate thermal energy – heat, hot water or chilled water – for a number of nearby buildings that in effect form an “energy district.” These resources are transported through underground pipes to meet the needs of communities, cities, or campuses – such as colleges, hospitals, airports, or office parks. This provides multiple advantages:

• Freedom from asset ownership and maintenance, including the costs associated with this
• Energy pricing stability and cost effectiveness
• More efficient energy delivery
• Greater reliability and redundancy in energy supply
• Reduced carbon footprint

The International District Energy Association created this great short video that provides a solid introduction to how and why district energy works so well:

Although district energy has an impressive history (did you know it was originally used to heat the baths of Ancient Rome?), it’s also a constantly evolving technology that uses innovative techniques, fuel sources and infrastructure to provide more efficient, resilient, and environmentally responsible energy than conventional generation sources. According to the United Nations Environment Programme, district energy systems “typically reduce primary energy demand in heating and cooling by 50%,” and can achieve operational efficiency of up to 90%.

Let’s dive into some specifics and focus on three primary factors that make district energy a strong choice, both for our communities and society at large.

District energy is cost-effective 

So, is district heating better than onsite energy generation?

There’s a common misconception that onsite energy generation is cheaper than connecting to a district energy network. This faulty conclusion usually arises when the start-up costs of generating energy onsite and the ongoing operations and maintenance (O&M) expenses associated with onsite infrastructure are not considered.

Because district energy customers receive a finished thermal product, they don’t need to pay the millions in upfront capital costs for installation of chillers and/or boilers or the ongoing costs to maintain their own equipment. Onsite heating and cooling infrastructure can represent one of the largest startup costs for a new building and are repeat offenders when it comes to breakdowns that require pricey repairs. It’s important to conduct a lifecycle economic comparison between district energy and onsite generation when comparing the two.

By evaluating variable energy costs, recurring fixed operating costs and upfront capital costs, oftentimes, district energy is the optimal economic solution.

District energy also takes up much less space in a building than onsite generation would. On average, district energy connection infrastructure requires about the same amount of space as a parking spot, which means buildings can make smart, economic use of all the space they would have needed to dedicate to boilers, water towers, cooling systems, thermal storage, and more.

District energy is reliable 

One thing that makes it so reliable is that district energy systems have built-in redundancy within its central plants and networks, meaning they can leverage multiple generating assets and fuel, power and water sources. If a piece of equipment or utility source is compromised or experiencing any issues, the system can continue to operate by drawing from its back-up sources and infrastructure. Compare that to what happens to a building’s operations if an issue occurs with an onsite boiler – no heat or hot water until it’s fixed. In fact, a building’s district energy service could eliminate the need for onsite N+1 redundancy.

As global climate and weather conditions become more extreme, the ability to ensure reliable energy even during severe conditions is a growing concern. Because many district energy grids can black-start (meaning they can restart without the aid of external electrical transmission) and can use a range of fuel sources, such systems can maintain a high level of energy uptime even during extreme weather events.

District energy is more reliable in terms of its components and delivery too. With insulated carbon steel conduit piping encased in concrete, a district energy network’s distribution system is more robust and resilient than conventional utility alternatives.

District energy is sustainable 

With climate change in full force, every decision we make plays a critical role in healing the planet and minimizing our negative impact on the environment.  

Energy production is responsible for a substantial portion of the greenhouse gases that trap the sun’s heat within the earth’s atmosphere. Fossil fuels, such as coal, oil, and gas stand out as the most predominant culprits for climate change, as they are responsible for over 75 percent of global greenhouse emissions and 90 percent of all carbon dioxide emissions. These numbers paint an urgent picture: everyone must play their part in cutting emissions in half by 2030 and reaching net-zero emissions by 2050. 

Despite these concerns, a clean energy future is well within reach. The International Renewable Energy Agency (IRENA) estimates that around 90 percent of all decarbonization solutions in 2050 will involve harnessing green energy from renewable sources to improve energy efficiency and supply innovative electrification technologies.

By centralizing and aggregating the production of heat, hot and chilled water to multiple buildings, district energy cuts down on the amount of fuel that would be required by individual buildings using onsite generation, and the resulting carbon emissions. Furthermore, it allows for faster, more complete transitions to clean energy sources as they become available: district energy systems can employ renewable energy sources, like biofuels, wind, solar, and hydro, to produce carbon-free steam and maximize energy efficiency.

District systems and infrastructure can easily be updated to integrate new technologies and/or renewable fuels that benefit a great number of buildings in a geographic footprint. This allows for carbon footprint reductions at a scale that would be impossible to achieve on an individual basis.

As an example, Vicinity Energy delivers thermal energy to over 100 million square feet of space throughout Philadelphia. As the central plant in the district adopts cleaner, green energy approaches, the ripple effect is massive! For example, combined heat and power (CHP) is one technology that Vicinity has employed in several of its districts, including Philadelphia, to provide sustainable, efficient thermal energy to its customers.

Vicinity has also implemented the use of biogenic fuels in our operations. Otherwise wasted vegetable oil from restaurants is then collected and can be burned in our district energy systems as-is, resulting in huge energy and carbon savings. Other technologies include waste-to-energy, geothermal, and other sustainable distributed energy resources.

Check out what Vicinity Energy CEO Bill DiCroce had to say about biofuels and the next steps required to put them into action across district energy grids:

Bringing it all together, locally and globally

This shift to more efficient renewable fuels and the impacts that only district energy can achieve at such a large scale has brought considerable carbon reductions here in the US and the world over. For example, the city of Anshan in China is projected to reduce its use of coal, a heavy pollutant, by 1.2 million tons each year by combining separate networks into a district, and simultaneously capturing 1 gigawatt of heat wasted by a city steel plant.

Another example is Paris, which has utilized district energy for years to combat air pollution. Today, 50 percent of Paris’s social housing, all of its hospitals, and 50 percent of its public buildings are supplied by district energy. That’s the heat-demand equivalent of 500,000 households! Or look at London, which has a number of district heating projects underway, including the Lee Valley Heat Network, which will provide heat and hot water to over 5,000 homes by capturing waste heat from a nearby EcoPark.

Whether for reasons of price, reliability, efficiency, or to create more sustainable infrastructure for future generations, communities across America and the world are looking locally, joining together, and making a change for the better with district energy.