What's the deal with district energy?

District energy refers to a system in which a shared central plant distributes steam, hot water, and/or chilled water to multiple buildings via underground pipes. In this episode, Rob Thornton of the International District Energy Association shares about district energy’s newfound popularity and the role it could play in the clean energy transition.

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David Roberts

District energy is one of the oldest concepts in all of energy, dating back at least to the ancient Romans. It simply refers to connecting multiple buildings to a common source of heating and cooling — a furnace, heat pump, geothermal well, or what have you — and distributing the heat via water or steam flowing through underground pipes. There are hundreds of district energy systems in operation, in every country in the world. (Virtually all of the buildings in Iceland, which I visited recently, are heated by district energy systems running on geothermal.)

However, fossil fuel heat has been so cheap for so long that district energy has never quite become the default — it’s just been too easy to stick a natural gas furnace in every building. There hasn’t been much pressure to share heat.

But with the climate crisis and the clean energy transition, that’s changing. These days, lots of people are looking for cleaner sources of heat and more efficient ways to share it, so district energy is becoming sexy again. Among other things, it’s a great way for cities to meet their carbon goals without overburdening their electrical grids.

With all that in mind, I contacted Rob Thornton, the head of the International District Energy Association, to chat about the clever new sources district energy systems are drawing on (everything from sewage to deepwater lakes), the infrastructure they can integrate with, and the other services they can provide.

All right, then. With no further ado, Rob Thornton of the International District Energy Association. Welcome to Volts. Thanks so much for coming.

Rob Thornton

Thanks for having me, David. Pleasure to be here.

David Roberts

I am super into district heat, so I was delighted when you all reached out to me. I've been meaning to do something on it, but I think it's, at least in the US, not particularly familiar or well understood to most people. It's relatively rare in the US, which we will discuss later. So, let's start with a definition. What is district heating?

Rob Thornton

So, we call it district energy because it's both heating and cooling in cities, campuses, communities. Essentially, it's a central plant that's providing steam, hot water, and/or chilled water to an underground thermal piping network to provide heating and cooling to buildings in a city central business district, campus, airport, hospital, healthcare, et cetera. So, it really is the aggregation of multiple users of heat or cool provided by a central plant. So, each individual building doesn't need to dedicate space or equipment, right, to boilers, chillers, et cetera. So, yeah, that's the simple definition.

David Roberts

Could not be more simple. It's using one source, a single source of heating and cooling for multiple buildings, which you think seems like an obvious thing to do. What, in terms of existing district energy systems in the world, what is that central source? Typically, empirically, what's the most common current central source?

Rob Thornton

I'd say at the moment, still natural gas.

David Roberts

Just a big boiler?

Rob Thornton

Well, often large boilers, sometimes gas turbines, recovering the heat, making additional electricity. So, combined heat and power. But that's shifting with the energy transition appetite for lower carbon solutions. There's a lot of integration, optimization happening. Industrial heat pumps, renewable heating and cooling, a variety of sources. That's the advantage of district energy. You change the central plant, and actually the benefits flow to multiple, sometimes hundreds, thousands of customers by updating the central plant.

David Roberts

Is it safe to say these days that all things being equal, natural gas is probably the cheapest, that's why it's the most common?

Rob Thornton

Well, it's cheapest, it's cleaner than some other solutions. It's dispatchable, available, widely available. And it wasn't always that way. District energy started really by the Romans, but then Thomas Edison I would really characterize as the inventor back 140 plus years ago, and he discovered he couldn't really just sell electricity. He had to actually sell heat, too. Building owners saying, "Oh, I'll buy your power, but what am I going to do with the dynamo in my basement that provides the heating?" And so Edison realized, in order to make a profit at this enterprise, I have to sell both the heat and the power.

So, while it's not commonplace, in fact, district energy is prevalent. 900 systems in North America, thousands all over the world. Every major city has district energy from Paris to New York City, obviously, Boston, San Francisco, Denver to Moscow. And even recently, though, the shift in the United Arab Emirates, all across the Middle East, massive investment in district cooling. As you would expect, right. Air conditioning is the driver there, so the industry is growing quite substantially.

David Roberts

What does it look like, just as a side thing here? Because I think a lot of people run up on this. Their intuitions break a little bit when they think about this. If you have a central source of heat, how do you use that to cool buildings?

Rob Thornton

Well, I mean, heat in the form of steam can move equipment, right? So, steam, you use the pressure to drive a compressor. And in New York City, there's hundreds of buildings that use steam — turbine drive chillers, so they're still making cold water, but they're using steam instead of a motor.

David Roberts

Got it.

Rob Thornton

Right. Instead of electricity to drive the compressor, they're using steam. You can also use heat with an absorption machine. And that basically you use heat to kind of change the chemicals, and you will absorb the heat from water. So, I don't want to get all nerdy and too scientific for you, but it isn't so much heat as much as sort of the optimization of process in a central plant to both make heat and cool and or power.

David Roberts

Got it. And for the record, we love scientific and nerdy here. Don't feel like you need to restrain yourself at all.

Rob Thornton

All right, noted.

David Roberts

One of the cool things about these systems, and you alluded to this, is that as they evolve, we're discovering that there's all kinds of things that you can use as that source beyond natural gas, boilers and turbines. Really, you just need a big source of heat or cool to tap into. And it turns out this is something this podcast returns to over and over again is the sort of as the energy transition proceeds, we're starting to think more about heat. We're starting to think about it more than we used to because it just was very, very cheap.

Fossil fuel heat was just very, very cheap. And we didn't value it, think about it much, or optimize it much, or worry about it that much. But now we're trying to phase out fossil fuels. So, we're thinking a lot more about where is heat, how can we use it, reuse it, where can we find it? So, talk about some of the other clever ways that district energy systems are — where they're finding that heat? Like, for instance, sewage.

Rob Thornton

Yeah, so one of our members, CenTrio, they own systems in multiple communities across North America. They're recovering heat out of the wastewater treatment, as you mentioned, the sewer system. So, Vancouver has a very similar system. I forget the year of the Olympics, but basically, the district heating system that was built to support the Olympics in Vancouver, British Columbia, was constructed to provide low carbon, reliable heat from the sewer main to the Olympic community, like the housing campus, which has become Falls Creek. And it's really been a whole economic development success. So, yeah, you're right. We were talking earlier offline about the oil embargoes, right, the first and second oil crisis that really hit Scandinavia.

And they were highly dependent on imported oil. And basically, the valve closed and the price quadrupled overnight. And some of these countries, Norway, Finland, Denmark, they said, "Well, if you're going to make electricity here, you got to recover the heat." And so they required cities to do heat planning and to develop municipal heat plans. And so they recognized the value of heat, not so much for heat itself, but as a byproduct of making electricity — let's not throw it away, let's use it. And so now, today, Copenhagen, for instance, 98% of the buildings in Copenhagen are on district heat.

They don't have their own boiler. And it is both like an environmental as well as an economic strategy. So, I'll come b