3. Economy

Development of district energy systems boosts local economies and revitalizes urban centers by providing reliable, lower cost energy infrastructure and improving urban air quality. District systems increase energy security and cost stability because they increase flexibility to use a variety of energy sources, including renewable resources.

3.1 Economic Growth

District energy system development provides jobs and increases opportunities to use local energy and human resources. System development is very labor intensive, requiring laborers, welders, heavy equipment operators and other types of workers. A study prepared for the Department of Housing and Urban Development (HUD) estimated that 23,400 job-years would be created per $1 billion in district system construction.

About 60% of the costs of district energy system development is labor, and in a large urban area, about 50% of the equipment is typically purchased from local equipment suppliers. The result is that about 85% of district energy capital investment -- labor and equipment -- is retained within the local economy.16

By using local human and energy resources, district energy systems provide added growth as energy expenditures multiply through the local, regional and national economies.

3.2 Urban Revitalization

Many of our urban centers continue to decline, with businesses and jobs departing to the suburbs. Compared to suburbs, the urban core is usually at a competitive disadvantage relative to development costs, infrastructure and air quality. District energy helps the urban core compete, during both system development and ongoing operations.

District energy helps reduce capital costs for new or renovated buildings because no boilers and chillers are required. This is especially significant for downtown businesses struggling to with the phase-out of CFC refrigerants. District energy helps attract and retain businesses by providing heating and cooling which is economical and stable in price.

Most of the savings, employment opportunities, and capital investments in district energy systems will occur in densely developed urban areas -- where the economic stimulus can have the maximum benefit.

3.3 Energy Security

The U.S. is still highly dependent on foreign energy sources, resulting in continued vulnerability to supply disruptions, price volatility and threats to our national security. District energy systems offer the distinct advantage of fuel and energy source flexibility compared to individual building energy systems.

District energy's flexibility means that domestic fuels and/or renewable energy sources can be substituted for imported fuels. It is far easier to change equipment, fuels or operations in a central plant than in many dispersed facilities. Flexibility may be needed to due to:

Through their economies of scale, district energy systems, provide the best means by which existing cities can convert from fossil fuels to renewable sources for building heating and cooling. District systems greatly expand the opportunities for using a variety of renewable resources which can be tapped by district systems more economically than on an individual-building scale, e.g.:

For example, geothermal heat is used in district systems in Boise, Idaho and elsewhere. Nashville, Baltimore and other cities use energy from municipal waste incineration to heat buildings via district energy. Use of cold ocean water for air conditioning has been investigated for Waikiki, Hawaii.

3.4 Electric Demand Management

Demand for electricity is growing faster than overall energy demand, with a projected 243 gigawatts of new power plant capacity needed between 1995 and 2015 to satisfy electricity demand growth and to replace retiring units.3 (Figure 10)

District energy systems reduce the demand for electricity and thereby cut requirements for new power plants. District systems reduce electricity demand by delivering heat or cooling rather than electricity, and by shifting electricity demand to off-peak periods. District cooling thermal storage systems produce and store chilled water or ice during the night for use during the day to meet peak cooling needs. (Figure 11)

The ability to shift electric demand to off-peak periods is important to electric utilities, and some are implementing district cooling systems to accomplish this. Other electric utilities, such as Consolidated Edison in New York, also reduce their peak electric demand through district energy, by using a district heating system to supply steam to drive absorption chillers located in customer buildings.

Figure 10. Projected power plant capacity, 1995-2015 3

Figure 11. Electric load shifting through cool storage5

| District Energy in U.S. Climate Change Strategy | Quantitative Analysis |