Industry News

From District Energy Magazine, Third Quarter, 2011

At our recent 102nd Annual IDEA Conference in Toronto, we heard of a number of encouraging trends for the district energy industry. The theme of the conference, "District Energy/CHP 2011: Essential Infrastructure for Energy-Efficient Communities," was on full display in the opening plenary session as global industry leaders described roadmapping strategies, insightful policies and robust investments in district energy infrastructure aimed at more fully integrating combined heat and power and harvesting useful heat to make thermal energy an integral plat­form in a more sustainable urban future. It has long been my belief that any city that wants to reasonably claim the mantle of sustainability must have vibrant, effective district energy infrastructure to fully realize a low-carbon future. The economic and environmental health of our urban centers cannot rely solely on wires and natural gas piping to support growing population den­sities. It is folly to continue to throw away two-thirds of the fuel consumed in making electricity when that thermal energy resource can be effectively used in district heating networks.

Across Europe, concerns about reli­ance on natural gas supplies from Russia have served as a catalyst for the develop­ment of new district energy networks in order to take better advantage of local sources of energy. In addition, many countries have realized the double bonus of job creation with an economic multipli­er effect where energy dollars recirculate in the local economy rather than flow out of the country. The history of Denmark's success with district energy starts with the first oil embargo in 1970 that exposed foreign oil dependency as the Achilles Heel of their economy.

Mayors and city planners are awaken­ing to the trend that smart, sustainable development must include district energy networks. In the United Kingdom, and especially across greater London, new sys­tems are proliferating as a primary means to reduce carbon emissions and stabilize energy supply. After World War II, many district heating systems that had supplied social housing networks fell into disrepair, leading to an image problem for district heating as part of the municipal welfare state. In the last decade, thanks to strong leadership from Mayor Boris Johnson and the advent of the Olympics, London has embarked on a plan to recover and use surplus heat from power-generating sta­tions and to build multiple district energy schemes that utilize geothermal, waste heat and other forms of trigeneration. When a strategy like district energy also delivers substantial carbon reductions, it becomes a compelling public-private investment vehicle that appeals to all political stripes.

In Germany, CHP currently produces around 11 percent of the total electricity, which is analogous to the 9 percent share in the United States. The German govern­ment recently announced an objective to increase the relative share of CHP electrici­ty to 25 percent by 2020. Today, the total length of the district heating grid in Germany is approximately 100,000 km and over 84 percent of district heating is generated in highly efficient CHP plants. When evaluating energy usage in larger cities, the Germans found that district heating leaves the cityscape untouched and is essentially "invisible" as infrastruc­ture. In the German energy model, the growth of CHP and district energy are inextricably linked. As penetration of CHP electricity grows, the thermal sink of dis­trict energy infrastructure will expand to more fully utilize greater volumes of avail­able heat, which, in turn, displaces com­bustion of other fuels that would have been burned in individual boilers. Germany has recognized that district energy infra­structure is, in fact, essential to their strat­egy of higher electric generation efficiency and reducing carbon emissions through combined heat and power.

The single most important finding at the conference was that heat dominates all other forms of end-use energy, as reported by Jayen Veerapen of the International Energy Agency (IEA). In its May 2011 report, "Cogeneration and Renewables," IEA research indicates that heat dominates all other energy uses, accounting for 47 percent of total end-use energy in non-OECD countries and 37 percent in OECD countries. These percentages make sense when you consid­er that richer countries tend to consume more energy for transportation and electri­fication of home and industry.

Moreover, heat is largely produced from fossil fuels such as coal, petroleum and natural gas. In OECD countries (Europe, Asia-Pacific, North America, etc.), natural gas accounts for 50.5 percent of heat production, while around the world, about 27 percent of heat is produced with natural gas. For economic and environ­mental reasons, heat production needs to be as efficient as possible, yet it is barely a blip on the policy radar screen. The IEA analysis of the dominance of heat deserves greater visibility and consideration in poli­cy-making. In the U.S., energy policy has almost exclusively focused on electricity and has been remarkably silent in consid­eration of thermal energy, except for the 2010 Thermal and Renewable Energy Efficiency Act (TREEA). In bringing recogni­tion to the dominance of end-use of heat, we need to leverage the work of the IEA to influence policy makers in integrating heat as a key element to increasing energy efficiency and, in turn, reducing energy dependence and cutting emissions.

"Cogeneration and Renewables" rec­ognizes the gap in the energy discussion by focusing on heat and applying a more holistic approach to the synergies between the low-carbon options of cogeneration and renewables. Efforts to constrain greenhouse gas emissions and concerns over security of fossil fuel supplies have recently led to increased policy support for renewable energy. Shares of renewable energy (RE) supply have risen and the trend is likely to continue as countries transition to low-carbon economies. However, as the IEA report points out, transitions take time, especially on the scale needed to decarbonize our energy system. Even though the share of renew­ables will rise in the coming decades, fossil and other alternative fuels will still play a major role. For that reason, it is important to use these fuels as efficiently as possible. Cogeneration serves a dual purpose, since it is a proven energy-efficient technology and can accelerate the integration of renewable energy technologies.

In many instances cogeneration and renewables complement each other. Several renewable technologies can be operated in cogeneration mode, making both power and heat, including biomass, geothermal and concentrating solar power (CSP). Cogeneration, often fossil fuel-based, can assist in balancing electricity production from more intermittent and variable renewable sources. By increasing production efficiency, cogeneration repre­sents a low-carbon balancing solution. While electricity supply is a crucial aspect of the energy debate and will continue to remain as such, decision makers must rec­ognize that heat supply is a sizable part of the energy system and if the system is to be decarbonized, changing the heat sup­ply will also need to be considered.

In markets where intermittent wind power has grown to a significant share of electricity capacity, the need to provide balancing reserves is growing, and in order to preserve the environmental gains, it is critical that balancing capacity be as ener­gy-efficient as possible. Further, to provide better grid stability, locating renewables and distributed generation throughout the grid allows for greater penetration of both cleaner and greener sources of power. Rather than build large remote power stations away from load centers, CHP with district energy has the advantage of sup­plying dense power, heating and cooling loads of cities, campuses, research and healthcare with excellent capital and oper­ating efficiencies. The important point is that district energy and renewables are more complementary than competitive. We must dispel the notion that energy is a zero sum game of either energy efficien­cy or renewable energy. Grid operators and supply competitors should embrace the complementary advantages of highly efficient CHP as a means to load-balance with clean intermittent sources like wind or solar.

The City of Toronto offers a compel­ling case for the value of district energy infrastructure as a means to strengthen grid resiliency and drive economic growth. The economy of Toronto experi­enced estimated losses of $4.2 billion during the four days of the 2003 North American Blackout. New York City, on the other hand, with substantial local CHP facilities and 102 miles of district energy infrastructure, was able to respond and recover much more rapidly. Learning from that lesson, since 2004, Toronto has cut 151 MW in peak power demand through the Better Buildings Partnership and Enwave's Deep Lake Water Cooling System, enough capacity to support approximately 25 major new office buildings. When city leaders com­pare the 50:1 ratio of tax revenue from a surface parking lot at $90,000 per year to a 40-story office building at $4,500,000 per year, clean local energy capacity is critical to economic growth.

As the larger trends of urban popula­tion migration converge with a desire for lower carbon solutions, planners and poli­cy makers alike will invariably discover that district energy infrastructure is a key component of a more sustainable eco­nomic model.