The top three questions to help you decide between onsite natural gas boilers or district energy

Evaluating your energy options and making the right choice for long-term operations and sustainability goals

Choosing the right energy infrastructure for your building is essential. You need to install appropriate equipment to meet your load requirements and it’s important to consider a variety of factors that impact the best investment for you.

Facility managers and building owners have many options to consider when it comes to heating and cooling. In many U.S. cities, it’s common to compare the costs of installing and maintaining onsite natural gas boilers against using a centralized system, like district energy. However, evaluating these two options isn’t always straightforward. To ensure you’re comparing apples-to-apples and making the best energy decision to meet your business objectives, make sure to ask these three key questions:

  1. What are the lifecycle costs?
  2. What are my opportunity costs?
  3. Does this energy option align with our institutional objectives?


Calculating lifecycle costs

Here are our two cents: It’s easy to look strictly at the price of natural gas today and conclude that onsite gas boilers are the right economic choice for your facility. However, this is not always the case. It’s risky to evaluate a long-term investment by only accounting for one variable – fuel costs.

The most effective way to compare between onsite natural gas boilers and district energy is to calculate lifecycle costs. A lifecycle cost analysis is a powerful tool to determine the cost-effectiveness of the different investment options you’re considering. This analysis considers many factors, including the equipment’s purchase price, financing costs and operating and maintaining the equipment over time. Boiler maintenance is often overlooked but can be a significant expense.

A lifecycle cost analysis provides you with the most comprehensive picture of your energy options’ costs and benefits. You can use the data-backed lifecycle analysis to support your decision when discussing energy alternatives with internal stakeholders. Many of us feel the pressure to make long-term investment decisions in an uncertain and challenging environment, where capital and budgets are tight. Using this tool can help you feel confident you’ve done the work to validate and justify your decision through a robust analysis.

In any lifecycle cost analysis of gas boilers versus district energy steam, it’s essential to include and assess the following variables:

  • Financing costs: Both natural gas plants and district energy connections typically require an up-front investment. The investment size will vary mainly depending on the natural gas equipment and connection costs for district energy. Suppose you need to borrow money from the bank to purchase and install equipment or make other modifications to your space, including loan expenses. In that case, you will need to include the capital cost in your analysis. Interest expense is often overlooked and can be quite large, depending on the project’s size and your borrowing rate.Even if your organization has capital in the bank to cover the cost of a new plant, there is always an opportunity cost to using those funds for energy infrastructure, which we’ll cover in Assessing Your Opportunity Costs. You could use the capital to finance projects that are more aligned and core to your institutional priorities or toward revenue-generating investments.
  • Operations and maintenance (O&M): There are always costs associated with owning, operating and maintaining your equipment. O&M could include full-time staff (consider in your analysis the fully burdened labor costs inclusive of taxes, benefits, etc.) or contractors operating the system. It’s essential to check your local regulations to ensure that you factor in the appropriate number of people with the right qualifications/licensing to meet your city’s requirements. You will also need to account for ongoing maintenance, including parts replacements and future upgrades to keep your system running optimally.Natural gas plants tend to require much higher operating costs, especially over time as systems age, whereas district energy requires little to no O&M budgeting.
  • Variable energy costs: As discussed earlier, many facilities managers and building owners look at the low price of fuel and immediately assume an onsite natural gas plant is the answer. It’s undoubtedly a critical input to the decision-making process. But, to assess your variable energy costs, you need to consider not only the commodity itself but also supply costs and any expectations for increases in future consumption, such as an expansion of a hospital wing.While no one has a crystal ball, we are transitioning quickly to a low carbon economy where carbon taxes are more likely to be a reality. Any decision you make today will have consequences for the next few decades. While the fuel costs are a factor for both district energy and an onsite natural gas plant, many district energy companies are evaluating alternatives to gas and fossil fuels. District energy systems can evolve and adapt to different fuel sources as new technologies emerge.And, finally, evaluate the rate structure(s). It’s vital to ensure you fully understand the rates associated with natural gas and district energy. For example, are you being offered a firm or an interruptible rate? If it’s the latter, while often much less expensive, remember that your service can be interrupted at any time and that this could directly impact your operations.
  • Fixed costs: The fixed costs associated with each option need to be carefully assessed. District energy companies tend to charge a capacity rate, a charge to reserve capacity on the system to ensure your load is uninterrupted. Other fixed costs that should be incorporated are taxes and insurance, which can vary depending upon the option you are evaluating.

Assessing your opportunity costs

Even if you have the capital on hand to finance new equipment, there are always opportunity costs with every investment decision, such as losing potential gain from other alternatives. If you spend your cash on a new mechanical room, that leaves less budget to invest in your core operations. For a hospital, this could mean new technologies or equipment to treat patients, upgrades or expansions to tenant spaces for commercial real estate, or a new lab building on a college campus to educate students. All these examples tie directly to an organization’s core mission. Depending upon the required capital cost for an energy infrastructure project, it’s important to think about the investments you’re giving up or foregoing that could better serve your customers or constituents.

In addition to capital, there are opportunity costs associated with space, particularly in cities where it’s limited and expensive. How property managers utilize and leverage space is vital to the bottom line. Typically, mechanical rooms, large chiller or boiler plants and cooling towers take up a considerable amount of precious space within urban buildings. Of course, there could be other valuable uses for your space to consider, from amenities and retail to storage and parking.

Finally, consider the opportunity cost associated with an outage. Outages can impact your tenants’ safety, comfort or well-being of your patients. Interruptible rates are less expensive but provide the utility with the ability to interrupt your service on what could be a peak winter day or a critical business operation. Evaluating the cost of an outage and downtime is vital in assessing which option to select to best meet your energy needs.

Alignment with other institutional objectives

The last piece worth considering is the alignment of your decision with other institutional objectives. While it’s often difficult to put a dollar figure around objectives, positioning your energy investment to align with your organization’s goals can be valuable.

Many companies and institutions today have environmental, health and safety (EH&S) objectives. Energy decisions have a direct impact and correlation with environmental or sustainability goals. As organizations seek to reduce their carbon footprint, an energy infrastructure decision can be heavily influenced by expected emissions output. However, there are other EH&S-related impacts from an energy infrastructure decision, including the safety of occupants from onsite combustion, other onsite mechanical equipment, air quality and many other factors to consider.

As you evaluate your organization or facility’s options, carefully consider how each of them supports or detracts from your objectives. For example, will steam deliver more immediate carbon savings, relative to onsite combustion, to meet sustainability goals? And, importantly, review the policies your local jurisdictions are considering. These financial impacts on your organization shouldn’t be overlooked.

Making the right choice

Ultimately, the factors that lead to your energy infrastructure decision will be unique to your organization’s goals and circumstances. While there are many factors to consider when making an energy decision – from incentive programs, opportunity costs, sustainability objectives and more – a lifecycle cost analysis ensures you are comparing apples-to-apples to make an informed energy decision that meets your institution’s goals and objectives.

2023 Cambridge Chamber of Commerce Visionary Awards

Vicinity Energy has been recognized by the Cambridge Chamber of Commerce for its commitment to innovation in the launch of eSteam™, the first renewable, carbon-free thermal energy product in the United States. Vicinity and IQHQ team members talk about the impact eSteam™ is making in Boston and Cambridge in this video highlighting Visionary award winners.

District energy in a climate-uncertain future

With climate change and its clear and present danger upon us, communities must act to embrace resilient energy infrastructure and prepare for a future in a very uncertain climate. Extreme weather events, like the unprecedented cold weather in the midwestern and southern regions of the United States in February 2021, and Superstorm Sandy in 2012, have devastated people living in these areas, presented major challenges to the nation’s energy systems, and driven resilience to the forefront of national conversation – not to mention the extensive financial response required to recover from these events.

While pursuing new energy technologies and solutions is critical to our eventual success as a society, we must balance this future-looking approach with an emphasis on strengthening existing infrastructure and cost-effectively protecting citizens and current energy networks. District energy is a proven energy delivery framework that is resilient, affordable, scalable, and already utilized by grids across the country. With underground carbon steel pipes, insulated and encased in concrete, and fed by central energy facilities, district energy is, by its very construction, extremely resilient. It has the added benefit of enabling a rapid shift to renewable sources and other green energy approaches. Based on these key attributes, district energy is a key component of the solution to our climate-uncertain challenges.

What we’re up against

Since the 1980s, there has been a significant increase in the number and severity of U.S. power outages due to extreme weather. February’s unprecedented winter outages in Texas are just the latest example. Millions of Texans were without power or heat when about half of Texas’s electricity generation was offline. As a result, fuel supplies were slowed by frozen natural gas lines, some towns had to turn off their water supply, and carbon-monoxide exposure skyrocketed when many Texans turned to home generators to keep the heat and lights on. Last year was a record-setting one for wildfires, with over 10 million acres burned nationwide, leading to $20 billion in costs and damages. A decade ago, in 2012, Hurricane Sandy left much of New York City without electricity for days, in addition to causing flooding that shut down power plants and fuel refineries. 117 people were killed, and 8.5 million Americans were without power.

In addition to severe disruptions of everyday life and threats to the health and welfare of residents, these events are costing Americans dearly. According to the National Oceanic and Atmospheric Administration, climate disasters have cost the United States over $1.875 trillion since 1980. The United States cannot afford to continue to operate such vulnerable utility infrastructure, especially as the situation continues to escalate. Americans are paying in tax dollars, and – more importantly – in lives, every moment that goes by without the prioritization of resilience in our nation’s energy infrastructure.

Many communities have already officially recognized the need to put energy resilience at the very center of civic planning. For example, in 2020, Maryland launched the Resilient Maryland Program to fund innovation around energy resilience and distributed energy resources. The Massachusetts Division of Capital Asset Management and Maintenance has a specific resilience program in place to protect key infrastructure from the effects of climate change. And last fall, the city of Philadelphia hired its first Chief Resilience Officer; someone whose entire mission is to ensure that the city’s resources can withstand the impacts of climate change.

How district energy models resilience now

While acknowledging the problem is certainly the key first step of progress, and research toward future improvements is more than necessary, what can communities do right now to protect citizens from the climate disasters that are sure to come at an increasing rate? One solution is district energy.

District energy uses a centrally located facility to generate thermal energy – heat, hot water, or chilled water – for a number of nearby buildings that form an “energy district.” Microgrids, such as can be found at colleges, hospitals, airports, and office parks, are examples of district energy arrangements. District energy offers multiple benefits to its users, including freedom from asset ownership and maintenance and corresponding costs, and price stability. Most important to this issue, however, is that district energy provides energy islanding capabilities that offer far greater resilience than broader-reaching conventional utilities.

For example, during Hurricane Sandy, Princeton University relied on its own microgrid, allowing the university to maintain power and resources while the rest of the city was offline. In fact, Princeton was able to offer emergency workers and the general public a place to warm up, charge their phones, and access the internet, since they were not reliant upon the town’s non-functioning energy supply.

How is district energy so resilient? One major factor is that the generation facilities are often located in urban centers, within or nearby to the grids they serve, as opposed to energy needing to be transported over hundreds of miles from a major power plant. These microgrids can then operate autonomously, even if those around them are without resources.

In addition to proximity, many district energy systems are able to ‘blackstart’ – that is, they can restore operations independently without relying on an external source to recover from a shutdown. Because of this ability to island and blackstart, some district energy systems have upwards of 99.99% reliability, making them desirable infrastructure in an increasingly climate-uncertain world. In fact, many major American military facilities, including Fort Bragg and Andrews Air Force Base, operate on district energy systems due to its superior energy resilience and security.

How district energy can contribute to a greener future

In addition to helping protect communities from devastating climate events right now, district energy can help pave the way to a greener future, in which global warming is addressed and the effects of climate change limited, to help reduce the number of climate-related disasters to begin with. Here are some key ways district energy helps reduce carbon footprints:

  • Reduces primary energy consumption for heating and cooling by up to 50%
  • Many district systems integrate Combined Heat and Power (CHP), which has an average efficiency of 75%, compared to 50% for traditional generation methods (significantly offsetting carbon emissions that would have been emitted through conventional means)
  • A diversity of buildings (such as commercial buildings with daytime use and residential buildings with more evening use) in a district can lead to waste energy sharing and load balancing
  • Central district energy facilities can be easily electrified. Once switched over to new renewable fuel sources and/or technologies, all buildings that are part of the district system will benefit from the carbon footprint reduction instantly, since they are all connected to the same generation facility

Fortunately, the world is catching on to these benefits. The United Nations launched the District Energy in Cities initiative to encourage urban centers to take advantage of the greening power of district energy to help reduce cities’ carbon footprints and thus their contributions to climate change. Campuses, hospitals, and research facilities around the country are already relying on district energy to both meet current energy security needs and to do their part in working toward a greener future.

It’s not always the case that the technology that can help us stay safe now is the same technology that can help us move systemically in the right direction. In the face of a danger as pressing and dire as climate change, we’re fortunate to have that present and future solution in district energy.

What is district energy?

How district energy is helping commercial buildings and local communities

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%.

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.

BNN News Interview with Matt O’Malley Vicinity Energy

In this interview with Boston Neighborhood News Network host Faith Imafidon, Vicinity’s Chief Sustainability Officer Matt O’Malley discusses how eSteam™ is revolutionizing district energy by providing steam with heat pumps and electric boilers, rather than cogeneration or gas boilers.

White paper: Revolutionizing urban sustainability

We’re amid an energy transformation driven by a mounting global crisis: climate change. Across the world, we are experiencing more extreme weather events due to accelerating levels of atmospheric greenhouse gas emissions. Mitigating carbon in the production and distribution of energy is now just as critically important as our society’s ever-growing need for energy itself. It’s clear that we need resilient, reliable and agile energy solutions…now. 

District energy systems, like Vicinity’s, are uniquely positioned to take advantage of existing infrastructure in conjunction with critical technological advancements to cost-effectively decarbonize quickly. This white paper highlights the benefits of district energy in a decarbonizing world, specifically how electrifying district energy can help urban centers rapidly and affordably achieve city and state carbon reduction goals.

Learn more about how the electrification of district energy systems can help U.S. cities achieve building decarbonization.

Boston Mayor Michelle Wu Kicks off Vicinity Energy’s electrification plans

Boston Mayor Michelle Wu helped kick off our electrification plans with the deconstruction of the steam turbine at our Kendall Green Energy Facility, paving the way for the installation of our new 42 MW electric boiler.

This monumental step forward accelerates our efforts to reach net zero carbon emissions and offer carbon-free eSteam™ to our Boston and Cambridge customers.

Mayor Wu Kicks off Vicinity Energy’s Electrification Plans

Cambridge, November 17, 2022 – Vicinity Energy, a decarbonization leader with the nation’s largest portfolio of district energy systems, serving over 70 million square feet of building space across Boston and Cambridge, has officially kicked off its electrification plans with the deconstruction of a steam turbine at the Kendall Green Energy Cogeneration Facility. Vicinity will install an electric boiler in its place, marking a critical step in the company’s Clean Energy Future commitment to reaching net zero carbon emissions across all its operations by 2050.

Boston’s Mayor Michelle Wu commemorated the day at Vicinity’s Kendall facility. Marking a crucial step toward a clean energy future for Boston and Cambridge, the deconstruction aligns with the Mayor’s latest move to file a home rule petition to ban the use of fossil fuels for new buildings in Boston.

“It is remarkable to be able to say that Vicinity is the first energy company in the country to electrify its operations. That is a huge deal and one that will have ramifications for generations to come. For every gigantic natural gas boiler that’s going to be decommissioned, for every new building that will use eSteam™, those are jobs created right here for our residents and our communities,” said Boston Mayor Michelle Wu. “It is clear that the work of ensuring our planet remains livable is going to require all of us: every level of government, business, and community. We’re very grateful that Vicinity’s carbon-free eSteam™ product will power the leading industries we’re already known for here in Greater Boston such as life sciences, healthcare, commercial real estate, and many more.”

“With the installation of this electric boiler, we are enabling a seamless conversion to carbon-free eSteam™ for our customers, including innovative commercial building owners and developers like IQHQ,” said Bill DiCroce, president and chief executive officer of Vicinity Energy. “This is game-changing for our communities and a prime example of what happens when government, the business community, and the energy sector work together and embrace the region’s Green New Deal.”

The electric boiler will enter service in 2024. At that time, the company will procure electricity from renewable, carbon-free energy sources such as wind, solar, and hydro to generate eSteam™, the first-ever carbon-free renewable energy product. IQHQ will be Vicinity’s first customer to power the rapid decarbonization of its buildings in Boston’s Fenway neighborhood: 109 Brookline and Fenway Center Phase 2 with carbon-free eSteam™.

“Today, we are excited to be celebrating the installation of the electric boiler,” said Jenny Whitson, director of sustainability & ESG at IQHQ. “By Vicinity taking this step to offer developers like us the opportunity to source electric steam generated by renewable energy, we are able to achieve our climate goals and carbon emission reduction targets for our projects.”

Over the years, Vicinity has evolved as new, cleaner fuel sources have become commercially available. The company’s predecessors burned coal to generate steam before migrating to oil, natural gas, and combined heat and power (CHP). Because district energy systems are agnostic to fuel type, they can quickly implement these new, more sustainable technologies and fuel sources. Electrification is the next crucial step to decarbonize Boston and Cambridge at scale and ensure both municipalities meet their new energy standards and emission mandates.

The Kendall Green Energy Cogeneration Facility simultaneously produces thermal energy and electricity in one efficient process to serve approximately 75% of Vicinity’s customers throughout the region. When the electric boilers begin service, all of these facilities will have access to carbon-free, renewable energy at once.

“Here in Kendall Square, a place known for global innovation, we are proud of Vicinity’s contribution to urban decarbonization with eSteam,” said Beth O’Neill Maloney, executive director at the Kendall Square Association. “Vicinity’s electrification plans will help contribute to the decarbonization of Cambridge and Boston without building-level changes. Vicinity is a global sustainability leader, charting a new path forward for district energy.”

Vicinity is on track to fully electrify its steam generation in Boston and Cambridge and introduce other technological advancements into its operations, including industrial-scale heat pumps and molten salt thermal energy storage. The company’s other locations across the country will undergo similar electrification processes in the coming years.

Click here to read more about eSteam™, district energy systems, and Vicinity’s commitment to innovation and the environment.

About Vicinity Energy

Vicinity Energy is a clean energy company that owns and operates an extensive portfolio of district energy systems across the United States. Vicinity produces and distributes reliable, clean steam, hot water, and chilled water to over 230 million square feet of building space nationwide. Vicinity continuously invests in its infrastructure and the latest technologies to accelerate the decarbonization of commercial and institutional buildings in city centers. Vicinity is committed to achieving net zero carbon across its portfolio by 2050. To learn more, visit or follow us on LinkedIn, Twitter, Instagram, or Facebook.

Media Contact

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Could steam heat, long used by cities and colleges, be a solution to climate change?

Could steam heat be a solution to climate change?

by NPR Radio: The Morning Edition | October 2022


Beneath the streets of hundreds of North America’s oldest cities lies a network of pipes delivering steam heat to office buildings and hospitals. These steam loops could be a clean energy solution.

The Morning Edition of NPR Radio discusses Vicinity Energy’s district systems as a valuable tool to decarbonize cities at scale. Susan Phillips of NPR member station WHYY in Philadelphia reports these steam loop systems could be a climate change solution.

About NPR

NPR is an independent, nonprofit media organization that was founded on a mission to create a more informed public. Every day, NPR connects with millions of Americans on the air, online, and in person to explore the news, ideas, and what it means to be human. Through its network of member stations, NPR makes local stories national, national stories local, and global stories personal.

District energy is charging Philly’s ever-growing life science market

Life sciences are currently booming in the United States. An outpouring of new products and technology coupled with capital inflows from public and private investors are transforming the industry, allowing new implementations to take shape. As talent within the field continues to rise, new treatments for diseases such as cancer, HIV, and cystic fibrosis are finally within reach. There has also been a growing emphasis on the standard of care patients receive, demonstrated through the quality and performance management requirements gaining particular attention in life science professions. With this surge in technology, funding, talent, and performance, the demand for lab space across significant markets is stronger than ever. 

A real estate shift is occurring

The COVID-19 pandemic ignited a shift in how traditional office spaces are used. Lockdowns proved that employees did not have to be in the office to complete projects and tasks, and productivity increased with remote tools such as Zoom and Microsoft Teams for collaboration. This new paradigm has diminished the need for office space in numerous industries.

Needle inserted into covid 19 vaccine vial

The opposite is true for careers in medicine and biotechnology: the pandemic verified the crucial need for health care workers and researchers to have hands-on lab space for their life-saving findings and operations. The outcome of these two factors was a real estate scramble.

Because of this transition, city landlords are desperately converting their vacant office spaces into laboratories, making way for the world of life sciences to thrive.

How is this affecting Philadelphia?

In 2017, researchers at the University of Pennsylvania and Children’s Hospital of Philadelphia boosted Philly’s status in the medical industry by developing an FDA-approved treatment for a rare form of retinal blindness. That same year, the University of Pennsylvania’s CAR T cell therapy was approved by the FDA to treat a specific type of cancer found in children and young adults. This treatment has now won its third FDA approval in 2022. 

Philadelphia has since maintained its glowing reputation as a hub for the life science market, as seen by the industry’s employment rate, which has grown by a staggering 116% since 2001. Medical and biotech organizations flock to Philadelphia not only for their growing pool of talent but also for their valuable real estate. Compared with other top life science markets such as Baltimore, San Francisco, and New York City, Philadelphia’s market displays significant cost advantages in building operations and maintenance. 

These cost advantages can be attributed to Philly’s thriving district energy network, a crucial motivator for labs, hospitals, and other research and development establishments to expand into this region.

Meeting rigid requirements for laboratories

Laboratory operations require a lot more energy than those of a typical office building. In the U.S., labs can use anywhere from 30 to 100 kilowatt-hours of electricity and 75,000 to 800,000 Btu of natural gas per square foot every year. In a standard laboratory, most power is sourced for cooling, lighting, and space heating, with lighting and space heating accounting for approximately 74% of total energy use.

The ceilings of laboratories must also be appropriate for ductwork and equipment. There must be sufficient airflow for the safety of technicians as well as viable interior wall and ceiling space to meet upgraded mechanical and utility conditions. More importantly, laboratories require a large volume of high-quality, reliable thermal energy to support their fundamental operations. Specific ventilation, space temperature, and humidity measures are necessary to sterilize laboratory tools and equipment.

Surgical tools being set on a sterilized table

An error in any of these requirements can result in millions of dollars lost in research and development. This could cause a significant financial burden for biotech and pharmaceutical organizations as well as catastrophic setbacks in the advancement of medical discoveries. 

Establishing lab space in Philly

As progressive climate action goals continue to develop throughout the U.S., low-carbon sustainable energy will soon become a non-negotiable requirement in cities like Philadelphia. Additionally, individual biotech companies typically have sustainability initiatives, making green energy increasingly vital to operations.

With the speed at which life science firms are growing and expanding, ground-up construction is not an option. Existing buildings must adapt to these requirements, which are becoming increasingly rigid, to meet rapidly approaching sustainability goals. District energy builds upon existing infrastructure, so buildings do not need to make expensive renovations to decarbonize their operations. This energy alternative has been proven to be both environmentally green and cost-effective.

Vicinity’s Philly district energy system

Vicinity Energy offers affordable green steam to Philadelphia’s renowned universities, medical research facilities, hospitals, and other commercial institutions. This steam system is one of the largest district energy systems in the U.S., covering over 100 million square feet of the city’s grounds.

Vicinity has already made multimillion-dollar investments to improve Philly’s critical energy infrastructure, enabling this district energy network to reduce carbon emissions by nearly 300,000 tons annually. 

District energy is considerably more affordable than other onsite alternatives, such as building in hefty electric boilers, which are expensive to install and maintain, take up excess space, and detract from valuable real estate. Vicinity’s interconnected steam facilities provide built-in redundancy, backup generation, and multiple water and fuel sources to ensure these crucial life science organizations can stay up and running 24/7.

The result

As Philly’s district energy system expands, hospitals and laboratories can devote more time, money, and physical space to their life-saving operations. District energy users also enjoy peace of mind knowing that their building supports renewable energy distribution as Vicinity strives towards a cleaner and greener future for Philadelphia.