Why District Energy?

The District Energy market continues to grow and interest in District Energy from the electric utility sector is growing rapidly as well as from the gas industry. Many utility companies decided to enter the district energy market in order to protect their revenue stream from their customers by offering a new, higher valued service. Energy service companies, equipment suppliers, Independent Power Producers (IPP), developers, electric, gas, and oil companies are all in the business of looking for new ways to connect with energy users and their communities. Investment bankers and other financial institutions are paying more attention to DES than ever before because of the potential to create business opportunities.


Increased activity continues in the development of district cooling systems in North America. District cooling is either being added as an additional service to existing district heating systems, being developed in conjunction with a new district heating system or as a stand-alone business. One of the main driving forces behind district cooling is the difficulty for individual building owners of dealing with refrigerants such as chlorofluorocarbons (CFC's). The majority of cooling fluids that exist in building chillers today contain CFC's. Significant capital will have to be spent by building owners to retrofit or replace their existing cooling equipment due to legislative changes.

Another good reason that municipalities are focusing on the development of district energy systems is the environmental benefits realized from the various technologies available. Cleaning up the environment in any way possible is becoming a mainstream mindset and studies have proven that district energy systems provide reduced green house gas emissions compared to conventional in-house boiler and chiller facilities.

An additional driving force is the current focus on demand side management for electrical usage. Chillers usually have significant electrical peak demand requirements, however there are significant utility savings available to building managers who can reduce these peak electrical requirements. Peak shaving is the ability to relieve electrical load/demand on the system during times when electricity prices are most high. To achieve peak shaving, some district cooling companies are negotiating with local electrical utilities for subsidies under existing demand side management programs. Select chilled water plants are able to provide chilled water from ice storage during times of the day when electricity prices are high, and the ice is made during the time of day when electricity prices are lowest. Some chiller plants can even be run on electricity produced from a generator on site (Combined Heat and Power-DHP) rather than a grid for peak shaving abilities.

Municipalities are realizing the benefits of offering a district energy system in higher density areas as a marketing tool to attract new businesses who are looking for a high efficient, lower cost energy solution.