President’s
Message
Surveying the district energy landscape
for 2005, four important issues emerge
for IDEA members: the significant
increase in commodity fuel costs; compliance
with environmental regulations like Boiler
MACT; understanding the impact of LEED® on
customer and campus building design; and,
finally, the positioning of recycled energy as a
clean energy technology meriting consideration in a renewable energy portfolio standard.
In the past year, commodity fuel costs
have risen dramatically. IDEA members are
reporting natural gas increases of 15 percent
to 35 percent over the prior year, while prices
for oil and coal are up between 50 percent
and 100 percent. Higher commodity costs are
affecting utility and campus operating budgets, exerting upward pressure on district energy rates, and forcing operators to seek new
strategies for greater efficiency and fuel purchasing strategies. Energy inflation is real, and
action is needed now.
Higher fuel costs are a double-edged
sword for the district energy industry. On one
hand, fuel may account for 30 percent to 50
percent of the base operating costs of a utility
or campus energy system and higher fuel
costs must be recovered through customer
rates. On the other hand, district energy systems typically have better fuel flexibility and
purchasing power than a commercial office
building, which, by itself, is generally limited
to firm natural gas and subject to seasonal
price volatility. Because district energy systems aggregate thermal loads for their connected buildings, they may be able to utilize
the scale of their operation to employ interruptible strategies and opportunity fuels like
biomass, waste wood or co-firing gas with
coal to offset peak fuel usage.
Recovering and recycling waste heat
from a cogeneration plant has greater value
now that natural gas is priced at $7/Mcf ver-
sus $3/Mcf just two years ago. Higher fuel
costs create scenarios where investments in
energy infrastructure like combined heat and
power, hybrid plants, district cooling, thermal
storage and heat-recovery schemes provide
compelling economic returns.
“Investing in Infrastructure” is the theme
of IDEA’s 18th Annual Campus Energy Confer-
ence March 8-11, 2005, in Washington, D.C.
Hundreds of campus energy professionals will
convene to share case studies and exchange
management strategies.
Each year, U.S. News & World Report
publishes a listing of the Best Hospitals in the
Nation. It’s notable that 14 of the top 17 Best
Hospitals on the 2004 Honor Roll rely on dis-
trict energy service from IDEA members. The
conference will open with a plenary panel of
campus energy experts who will share their
experiences in serving the mission-critical
healthcare sector. In addition to more than
30 top-quality technical presentations, we are
planning a panel of national fuel experts to
discuss trends and forecasts in oil, gas and
coal pricing.
In addition, we are arranging a tour of
our host system, the University of Maryland
College Park, and a number of optional techni-
cal tours of other area district energy systems.
There will also be ample networking opportu-
nities, including an expanded user-group ses-
sion for university operations personnel to
interact in a special roundtable discussion.
Two concurrent hands-on workshops will
precede the Campus Energy Conference. The
first, the Environmental Regulations Workshop,
will focus on emissions regulations affecting
solid fuel boilers and strategies for compliance.
For many IDEA-member systems, Boiler MACT
is an important emissions regulation that merits
immediate attention for the 2007 compliance
timetable. The second workshop, dedicated
to CHP on Campus, will feature lessons learned
by developers, system integrators and end
users in construction, permitting, interconnec-
tion and commissioning of CHP systems. The
format will allow for interaction and help
attendees sort through the process of imple-
menting various CHP options.
Likewise, LEED® (Leadership in Energy-
Efficient Design) is driving building design
issues on campuses and in cities. As currently
written, LEED criteria do not adequately
characterize the efficiency or environmental
benefits of buildings connected to district
energy or CHP systems. IDEA will continue
to work with the U.S. Green Buildings
Council to evaluate and discuss scoring con-
siderations for buildings sourcing thermal
energy from efficient central plants. It is
important for LEED scoring to encourage
efficient district energy use and, where
appropriate, recognize the source efficiencies
and environmental benefits. (See the Energy
and Environmental Policy column on p. 45.)
As we enter 2005, IDEA is taking stock of
energy legislation in Washington and monitor-
ing state activities for opportunities favoring dis-
trict energy and CHP. It is clear that renewable
portfolio standards have catalyzed wind, geot-
hermal and solar investments in many states.
With Kyoto ratification and emergence
of emissions trading, IDEA is advocating a
broader, more comprehensive ‘recycling energy’
portfolio standard that equates heat recap-
tured through CHP or district energy systems
with emissions avoided and kilowatts generat-
ed. In many regions, recycling energy oppor-
tunities like biomass CHP and deep lake-
water cooling are accessible and financially
viable. Statutory support could stimulate
additional investment in campus and urban
district energy systems as it recently has with
wind power.
IDEA is committed to enhancing educa-
tion and information exchange in the industry.
We invite everyone to visit www.district
energy.org and search the IDEA archives sec-
tion for years of technical proceedings. Make
plans to join your colleagues for the upcoming
Campus Energy Conference and our 96th
Annual Conference & Trade Show in St. Paul
in June 2005.
Robert P. Thornton
President
rob.idea@districtenergy.org
Column also available at
www.districtenergy.org/de_magazine.htm
