When Does a District Energy System Make Sense?

Strategies for Distributing Heating, Cooling, and Electricity

District energy systems are highly flexible in terms of generation technologies at the central energy facility, said Kevin Hagerty, president and CEO of Vicinity Energy.

“One example of this is, in a building, you may only have an electric chiller, or a chiller that uses steam—an absorption chiller,” Hagerty said. “At a central energy facility, you’ll probably have both, and you’re flexible enough to change what technologies you’re using to generate the chilled water based on what the commodity pricing is. If the gas price is low, you’ll use the steam chiller. If electricity prices are low, you’ll use the electric chiller.”

Heating in district energy systems often incorporates natural gas boilers with oil boilers as a backup, as well as cogeneration technologies that can recover waste heat, Hagerty added. “We’re starting to see a lot of high-temperature, high-pressure heat pumps that we’ve seen being deployed in earnest over in Europe. We’re in the process of installing a large-scale, 35 MW heat pump up in Boston,” he said. “We have electric boilers going in across our fleet. You’re starting to see heat pumps and electric boilers as the next generation.”

The key to choosing technologies and deployment strategies for a new district energy system is to think about what the buildings need the most, Howe advised. “Whatever the system is, it’s a function of getting that energy to the end user,” Howe said. “What the end user needs is the driving force.”

For some buildings and campuses, this can require an unconventional approach. One Vicinity Energy system uses supply heat from waste incineration, while another incorporates used vegetable oil, Hagerty said.

Best Candidates for District Energy Systems

Higher education and healthcare campuses are common places to find district energy systems due to their large scale, densely packed layouts, and criticality and resiliency requirements, Howe said.

“Any time there’s scale, density, and criticality, district energy can make sense,” Howe added. “These could be government complexes, manufacturing facilities, military bases, corporate campuses, airports, and others. If there’s a need for heating, cooling, or electricity that needs to serve more than one building, district energy is something that should be considered.”

Buildings and campuses that opt for district energy solutions tend to do so for three key reasons, Howe added:

1. Economics. “A lot of times, district energy systems can be a lower first cost than if you were to individually put in the same equipment spread out over multiple buildings,” Howe said. Economies of scale make it possible to cost-effectively serve more than one building while also ensuring efficient operation.
2. Consolidation. Equipment that would otherwise be distributed through multiple buildings is placed in one central location, so any noise, vibration, or potential disruption from maintenance staff is centralized too instead of occurring in each individual building, Howe explained. Consolidation also allows the use of multiple backup systems that would be less practical for single buildings, improving resiliency for all of the buildings connected to the district energy plant.
3. Decarbonization. “There’s a benefit of having all of the energy come through one central location,” Howe said. “A lot of these central utility plant systems come with thermal energy storage, sometimes in the form of a tank that can collect energy. If it’s not needed at that point in time, it can store it until it’s needed. The energy pass-through in one central location allows you to really improve efficiency.” You can also incorporate lower-emissions strategies and technologies at the central generating plant and confer those benefits onto every connected system, Hagerty added. “If you want to decarbonize a district energy system, you simply change how you’re making the steam or chilled water back at the plant,” he said. “You’ll only have to change a handful of large pieces of equipment and then you decarbonize every building and every load connected to that system. If you don’t have a district energy system, you have to go by a building-by-building basis. The flexibility of district energy is a real advantage.”