President’s
Message
It is hard to believe, but January 2007 will
mark my 20th year in the district energy
industry. Time has passed quickly since I
joined The Hartford Steam Co., the world’s
first combined district heating and cooling
system to serve a downtown. While much
has changed in the U.S. energy landscape
over the past two decades and new trends
continue to emerge, certain business issues
in district energy remain constant: managing
the lead/lag risk on capital investment; optimizing customer Delta T for district cooling
systems and condensate recovery for steam
district heating systems; and proving the economic competitiveness of district energy to
potential customers.
As systems evolve and new participants
join the industry, these recurring business
issues demand fresh attention and renewed
study. IDEA has been a resource and trusted
partner to the industry since 1909, and as
we approach our centennial celebration in
2009, IDEA has essentially two primary roles
in the district energy industry.
The first role is internal and focused on
supporting industry members through peer
exchange and best practice discussion and dissemination. The second role is essentially
external, with IDEA promoting district energy’s
benefits to interested parties and acting as an
advocate for policies and legislation more
favorable for thermal energy production and
distribution. IDEA is constantly looking for
IDEA member cases that serve both purposes
– illustrating best practices for industry peers
and illuminating the benefits of district energy
to the general public. We try to merge the
missions where possible. Let me explain….
The Beginning of It All
The U.S. district energy industry has
gone through cycles, beginning in the late
1800s when Thomas Edison was among the
first to recover and sell steam from urban
combined heat and power plants to help
launch the U.S. district energy industry.
Electric and municipal utilities developed and
consolidated downtown steam systems to
harvest and sell the valuable heat over the
next 50 years.
With the urban redevelopment era of
the 1960s and ‘70s, natural gas local distribution companies built 11 of the new-era
downtown district heating and cooling systems, designed to fill in the summer gas
pipeline valley with heat-driven cooling, following Hartford’s lead in 1962. The second
oil embargo of the early 1980s led to fuel
As the district energy
industry continues to
evolve, market and policy
forces are emerging that
could stimulate accelerated
growth in district energy.
industry drivers are fuel flexibility, peak
demand avoidance, increased energy efficiency, and emissions reduction. As the district energy industry continues to evolve,
market and policy forces are emerging that
could stimulate accelerated growth in district
energy.
High costs for oil and natural gas and
global recognition of carbon constraints are
stimulating investor interest in more fuel-effi-cient and environmentally responsible solutions. District energy fits that model in many
ways. By aggregating customer thermal
needs, the scale of a central plant allows for
economic investment in more fuel flexible
technologies like biomass, landfill methane
or geothermal, that may qualify for renewable production tax credits or meet portfolio
standards.
With CHP solutions sized to meet district or campus thermal heating or cooling
demands, the combination of heat-driven
chilling, thermal storage and electricity production can offset significant peak electric
demands on the local electrical grid. For
example, during the sweltering summer peak
in 2005, Princeton University demanded 25
MW of electricity from the local grid. But just
this past July 2006, using a combination of
21 MW of gas turbine CHP, chilled-water
storage, steam-driven chillers, and excellent
data and controls systems, Princeton demanded
only 2 MW during the most expensive summer peak electric periods. While the university
benefited financially by avoiding high peak
charges, the local electricity grid also re-gained
an additional 23 MW of grid capacity for the
local community.
supply constraints and price surges that
slowed domestic development, but spurred
major growth in new district energy systems
in cities across Japan, Korea, Denmark and
Sweden.
In the 1990s, CFC phaseout and electricity deregulation were the primary catalysts
for construction of 35 new downtown district cooling systems across North America.
Today’s Industry Drivers
Today, we are seeing billions of dollars
invested in huge new district cooling systems
under construction across the Middle East to
support the vast real estate development
boom and balance the shortfall in electricity
grid construction. As we move through the
first decade of the 21st century, the new
Learning From Each Other
The Princeton experience is a valuable
story that IDEA members will learn more
about at IDEA’s Campus Energy Conference
in February 2007 in Houston. It also is a
powerful real-world example to educate policy makers in Washington on how district
energy benefits multiple stakeholders – end
users, communities and incumbent utilities.
In fact, representatives from Princeton joined
IDEA this past July in meetings at the U.S.
Department of Energy and with Senate staff
on Capitol Hill to tell this exact story.
IDEA continues to provide technical
exchange for members who may be facing
similar operational challenges. In district cooling, for instance, customer temperature differential and HVAC system performance are
