Learn about getting started with district energy by setting your economic, social or environmental objectives. Begin collecting information on building density, mix of uses, local fuel sources, and age of buildings. Develop an energy map to help plan for an eventual thermal network, capturing the physical barriers and potential development opportunities. Understand the system architecture and technology options aligned with the local conditions.
The entry point for district energy systems will vary greatly based on the social, political and economic goals of the project and the role you play, such as a developer, institutional property manager, or municipal community champion.
Where is District Energy More likely?
Generally, district energy is more likely in communities with a comprehensive plan for climate action, an existing local energy plan, plans for new dense developments or major upgrades to an existing institution such as a hospital, university or government complex. Ultimately, the most welcoming location is in communities where mandatory hook-up to a district system is required, but currently only Vancouver has made mandatory hook-up required.
If hook-up is not mandated, then generally, there are various fertile conditions that make success more likely, such as:
- Clusters of similarly-aged buildings, where the heating or cooling systems are reaching their end of life. During replacement, setting up a district energy system or getting the buildings district energy-ready might be possible – it is not that costly.
- Communities that consider energy security, volatility of price or long-term costs to be issues.
- Communities experiencing congestion of electricity distribution networks and supply security issues?
- Regulatory/policy environments that allow for profiting from selling energy
Depending on your role, you can either advocate for district energy or make district energy a priority for the community using this website as a guide to understand the process and the technology.
Define your community energy objectives
District energy can get built to satisfy various objectives, including economic, energy resiliency and environmental. Having clear objectives from the outset will establish a baseline to benchmark and compare future decisions against. You will also provide a clear narrative to communicate to your community champions.
District energy can strengthen local economies by diversifying the energy supply and accessing locally available, sustainable resources. However, developing the required energy infrastructure to capture local low-carbon resources may come at a higher capital cost than the traditional alternative.
Managing the high capital cost
To manage the high capital cost, you will need to consider:
- how to distribute the higher capital costs, without immediately passing it on to consumers and risk being non-competitive in the short run.
- how to manage the time lag between the major capital investment, revenue generation and cost recovery.
Assessing the economic impact
When considering the economic factors of your project, you will need to consider issues around affordability, client acquisition, and local economic impact.
When assessing your project you will need to manage your energy rates to maintain affordability for lower income households and SMEs. Higher utility bills can lead some residents to cut back on their consumption, forcing them to make the difficult choice between food and keeping the lights on, exacerbating chronic stresses and health conditions.
Attracting commercial clients
When attracting a broad user base for your energy system, you will need to develop a strategy to market to commercial landlords that may find it easier in the short-term to lease properties with lower energy rates.
Understanding the economic impacts
To make a compelling case for a localized energy system, it’s important to understand the local economic impact, including how using local energy sources instead of imported energy will impact the local economy. The major engineering project will also bring new jobs – high-quality local green jobs in the design and construction phases. Knowing this impact will help with your economic-growth narrative.
Energy resiliency and system reliability is important to owners, occupants and businesses. The energy security of traditional commodity fuels is increasingly threatened by global changes to political instability in oil producing countries, population and economic growth, and climate-related risks. Through the diversification of energy supplies, and the inclusion of locally available renewable resources, you can reduce the impact of the volatile global energy market, while keeping the heat going and the lights on during major climatic events. District energy infrastructure has the flexibility to harness, balance, and maximize the efficient use of a variety of available fuel sources.
The transition to a low-carbon economy is underway, and there is a growing and urgent need to mitigate the impact of climate change. More efficient district energy systems, with their lower-carbon footprint, can be a sound and practical approach to building a more sustainable future, as opposed to larger, central power stations, and individual building heating and cooling systems.
For more information on setting objectives, please read Community Energy: Planning, Development & Delivery – Strategies for Thermal Networks.
In order to understand the potential for a district energy system, look at the following conditions:
- Location: Look at the benefits and limitations of:
- available energy sources,
- energy distribution,
- transport networks,
- land use, and
- the form and character (zoning and square footage);
- Development density: Understand the density of existing buildings and the rate of construction of new buildings
- Demand loads: Analyze the existing and likely future energy consumption of new construction and existing buildings, taking into account improvements to their energy efficiency
- Mix of uses: Look at the types of building uses: residential, commercial or industrial
- Age of buildings: Understand the age of buildings and their heating and cooling systems
- Anchor loads: Analyze for potential large energy consumers to support your system, such as institutional building operators (universities, governments, hospitals, etc.)
- Barriers and opportunities: Examine different barriers and opportunities, including the fuel and power sources and how the energy will be delivered or transported
Build an energy map
You may choose to assemble and present this data as an energy map, which may help facilitate the planning of thermal networks. Energy mapping can be a thorough and exhaustive or shallow and quick to build process, depending on the data available to you, time you are willing to dedicate to this stage of project development, and purpose for the energy map (i.e. to convince investors that a project location is sound, to convince surrounding buildings to join a project, to pitch a project to a municipal council, etc.) An energy map, may include the following components:
- Potential physical barriers: a map can identify potential barriers, such as railway lines/subways, storm water drains, highways, canals, or rivers.
- Potential opportunities: a map can identify likely energy solutions, such as implementation of a district energy network, as part of an urban renewal project.
- Priority projects: a map might point to possible investment opportunities for a project proponent.
- Growth options: a map can provide information that can aid decisions on the allocation of development sites.
- Exclusion of inappropriate areas: for example, where nature conservation or landscape character are concerns.
For more information on collecting data, consult QUEST’s data collection roadmap report, and read Community Energy: Planning, Development & Delivery – Strategies for Thermal Networks. For more information on energy mapping, consider QUEST’s energy mapping workshop.
Understand system architecture and technology options
Generally, an energy system is expected to last between 15 and 40 years, although the underlying infrastructure may last far longer. The choices made at the outset can have long-term repercussions. They may lock an owner, occupier, or entire community into one system for a long time, limiting their options in the energy market and tying them to particular suppliers and equipment.
Flexibility is key for the long-term
Over time, there will be changes in technology and the supply chain, from which consumers could benefit. This is why flexibility is important and a strategic, long-term perspective on energy supply should be taken as early as possible. It is also important to consider the longevity and environmental sustainability of different low- and zero-carbon energy technologies.
Many district energy systems start with natural gas to ensure a stable low-cost source of energy and adopt low-carbon technologies over time. That being said, the increasing climate risk may accelerate low-carbon transition timelines to avoid dangerous climate change, rapidly changing fossil fuel cost projections. Historical data is no longer an adequate predictor for the future.
Take local conditions into account
District energy can be customized based on a multitude of energy sources and proven production technologies. Crafting the system architecture and identification of technology options for a certain area also means taking existing or plans for new infrastructure into consideration.
The International District Energy Association recommends you consider the following for each technology:
- Scale of the development.
- Parts of the site served, including connection to surrounding development.
- Annual energy output.
- Annual CO2 emissions reductions.
- Ability to integrate local or renewable energy sources.
- Implications for phasing the system.
- Key project delivery requirements.
- Contribution to regulatory and planning requirements.
- Indicative benefits, including consideration of revenues.
- Indicative project costs.
The process may include a rough analysis of different scenarios for sourcing, producing, and distributing the energy. You may also choose to conduct a high-level feasibility study to understand what technical options best meet the objectives and energy needs of the project.
Read more about Technology options.
Conduct an initial market assessment
Assessing the market potential in the early phase includes using the data you’ve gathered, and any data on existing or past developments that is available, so you can then benchmark your idea. The results of this assessment may include a baseline energy demand and heating/cooling loads in current and future markets for the project area. The assessment may also identify the buildings that would connect to the district energy system and lead to discussions on the expectations and motivation of the building owners that would ultimately support the development of the project.
This can also be a technical exercise to investigate the technological options. At this point, you can assess the different fuel types and generation options; consider what the configuration of thermal production equipment and storage within the plant facility could look like and its optimum location, network design, and route; and the potential phasing of development. This is an opportunity for a high-level assessment of the financial viability of potential options.
Although financial and business modelling are carried out in detail later, it is important that they are considered from the start and revisited throughout the process. For example, different investors have different expectations of rates of return, so understanding the business model at the outset is crucial. This is particularly critical in the case where a project proponent has choices of different procurement, financing, and operation models, because technology selections may change slightly, or participants may desire comparative scenarios for risk assessment.
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Attention: Alex Versluis, Senior Vice President, Property Management and Development