Energy and Environmental Policy

Dear Mr. Friedman

Mark Spurr
IDEA Legislative Director

Fourth Quarter 2007, District Energy Magazine

I would like to share with you a letter that I have sent to Thomas L. Friedman, syndicated columnist for the New York Times, commenting on a recent column of his on energy policy (see www.iht.com/articles/2007/08/22/opinion/edfriedman.php).

Dear Mr. Friedman:

For years I have read your column with great interest and admiration. You make a great deal of sense about a great many things. In my opinion the greatest contribution you have made to our national discourse is on the link between energy policy and national security. Thank you for repeatedly and articulately describing the massively stupid and tragically ironic cycle of U.S. petrodollars funding regimes that work against global stability and U.S. interests, precipitating misguided policies that lead to a staggering waste of the human, economic and political resources of this country.

I am moved to write to you about your column published Aug. 22, which focuses on a particular energy policy opportunity: decoupling the volume of sales from the return on investment of regulated electric utilities and making it profitable for these companies to invest in efficiency.

I agree with you and Jim Rogers on this. But I suspect that you may not be fully aware of the role that many other players can take in moving the U.S. toward a sustainable energy future, or of the clever technologies they employ.

The Players

These nonutility players include colleges, universities, nonprofit and for-profit thermal utility companies, city governments, industrial companies and others. They use a range of technologies, with the common thread being district energy systems, which distribute heating (as hot water or steam) and/or cooling (as chilled water) from central plants to provide space heating, domestic hot water and air conditioning.

IDEA’s progress on this legislation is a testament to the efforts of the many IDEA members who participated in signing on to support letters and/or contacting their legislators directly via fax or in person. Many thanks to all of you! You truly have made a difference.

District energy is an old concept that new technology has transformed. The Romans used it in crude form. A century ago it arose in the downtowns of many U.S. cities, distributing waste steam from power plants (a process we now call combined heat and power, or CHP). By the middle of the 20th century, the availability of cheap oil made CHP less attractive, leading to the shrinkage of many U.S. district heating systems. The concept evolved as Europeans adopted the idea, using hot water rather than steam to distribute heat, and increasing the efficiency of heat transport.

As air conditioning became more commonplace, during the 1970s Americans invented district cooling, providing chilled water for air conditioning. District cooling grew substantially during the ’80s and ’90s, then hopped across the oceans, to Europe and, more recently and spectacularly, to the Middle East.

Now, with the International District Energy Association (IDEA) approaching its 100th anniversary in 2009, district energy is a worldwide phenomenon. In the U.S., there are an estimated 5,800 systems serving downtown areas, universities, large real estate developments, hospitals, airports and military bases.

What is exciting about these systems is that they make it possible to ‘recycle’ waste heat or tap local renewable energy resources.

Recycled and Renewable Energy

U.S. fossil fuel consumption can be drastically reduced by using waste heat, renewable energy to heat and cool buildings. The U.S. wastes more energy in power generation than Japan’s total energy consumption. More than 27 percent of total U.S. energy consumption ends up as power plant waste heat – energy thrown away in the smokestack or dissipated in cooling towers (U.S. Energy Information Administration, Annual Energy Outlook 2007).

This usually wasted energy can be ‘recycled’ in power plants through CHP to heat and/or cool buildings. (Heat can used to produce chilled water through a well-known technology called absorption cooling.) Combined heat and power, or ‘cogeneration,’ plants are more efficient and cost-effective on a larger scale. That’s why district energy systems are the key to tapping this massive source of recycled energy.

District energy systems can also reduce fossil fuel reliance by tapping the substantial renewable energy resources that exist in our communities, including bioenergy, geothermal and natural sources of cooling energy (cold lake or ocean water). These systems can also tap recyclable thermal energy in the form of stack gases, cooling water, landfill gas and other waste streams from many industrial processes and municipal operations.

Let me give you some examples of waste heat recovery and renewable energy development, and thereby introduce you to some of the nonutility entities that make these things happen.

Community Biomass Energy

My favorite example is one from my own backyard. District Energy St. Paul is a nonprofit company created by the City of St. Paul and the downtown building owners in the late 1970s. They built a highly efficient hot water district heating system that now heats 80 percent of downtown buildings. In the 1990s they built a district cooling system that now has a 65 percent market share.

More recently this community-based energy company developed a CHP plant that produces electricity, heating and cooling from community waste wood. This fuel consists of tree trimmings, old pallets and other clean, woody biomass that would otherwise end up in a landfill or on Uncle Joe’s back 40, generating carbon dioxide or methane.

Other communities, such as Hudson, N.Y., and Brattleboro, Vt., are seeking to develop similar biomass-based ‘community energy systems.’

Energy Dispatch Based on Real-Time Price Data

Princeton University uses sophisticated computer programs to monitor real-time price signals from the wholesale power grid to determine how to most effectively meet power, heating and cooling requirements. Princeton combines natural gas-fired CHP with electricity-driven and heat-driven chillers and thermal energy storage (TES). With TES, chilled water or ice is produced at night when electricity demand is low. Then the stored cool energy is used during the day to meet peak air-conditioning demands, thereby minimizing demands for electricity during peak load times, when it is most expensive (and often dirtier) to generate.

Through these clever technologies, Princeton minimizes costs, fuel consumption and peak electricity demand. In fact, they have cut their peak power demand from 26 MW to only less than 2 MW – a reduction of more than 90 percent!

Nature’s Air Conditioning

Cornell University has cut air-conditioning energy consumption by about 90 percent. How did they manage this? Cornell simply pumps water out of adjacent Lake Cayuga that is cold enough to air-condition the campus with almost no use of mechanical chillers. They wouldn’t be able to move this natural source of cooling to campus buildings without their district cooling system.

The same approach has been implemented by a district energy company called Enwave Energy Corp. for air-conditioning downtown Toronto. Sweden has been using this technology for years. And there are plans to implement this energy-efficient approach in Honolulu.

Bottom Line

There are many other examples. For instance, the University of California, Los Angeles receives more than 30 percent of their annual fuel as landfill gas from a nearby landfill and University of Missouri-Columbia displaces more than 10 percent of annual fuel consumption from tire-derived fuel from waste tires. For now, suffice it to say that there are enormous opportunities for nonutility players to implement fuel-flexible energy solutions that will reduce reliance on fossil fuels, including increasingly foreign fuel sources.

By using recycled energy or renewable resources, district energy systems can make significant contributions to national goals – reducing reliance on fossil fuels; cutting emissions of CO2 and air pollution; and increasing power grid reliability, national security and local economic development.

Achieving these benefits is capital-intensive – and constrained because these benefits are currently not valued in the marketplace. Policies such as greenhouse gas cap and trade will help reflect the carbon benefit in the marketplace, but implementation of greenhouse gas trading will take a long time to establish and begin functioning. In the meantime, I believe that the Congress should pass legislation now to encourage action to implement sustainable thermal energy recycling and distribution.

I would be most interested in your reaction to these ideas and your insights into how they can fit into the politics of crafting a comprehensive U.S. energy policy.

By the way, I plan to reproduce this letter in my column in the IDEA magazine, District Energy. I will send you a copy upon publication.

With great respect and best regards,

Mark Spurr
Legislative Director
International District Energy Association
 

Mark Spurr is legislative director of IDEA. He also is president of FVB Energy Inc., a U.S. consulting firm specializing in district energy and CHP business development, engineering and marketing, with offices in Minneapolis, Minn., and Bahrain. In addition to the U.S. office, FVB has offices in Edmonton and Toronto, Canada, and in Stockholm, Västerås and other cities in Sweden. Spurr represents the United States on the executive committee of the International Energy Agency Implementing Agreement on District Heating and Cooling, including Implementation of CHP. He may be reached at mspurr@fvbenergy.com.

Click below to view earlier columns:

Third Quarter 2007
Second Quarter 2007
First Quarter 2007
Fourth Quarter 2006
Third Quarter 2006
Second Quarter 2006
First Quarter 2006
Fourth Quarter 2005
Third Quarter 2005
Second Quarter 2005

Click here to see some landmark buildings served by district energy systems that are past IDEA system of the year award winners.