All district energy business models create and harvest value by producing
electrical and/or thermal energy and conveying it to a cluster of nearby
buildings. The amount of customer value created depends upon how
economically and efficiently the district energy provider does this relative
to rival centralized energy sources or customer solutions such as on-site
boilers and chiller plants, electric space heating, individual heat pumps,
or building-scale cogeneration facilities.
Energy Charges: District Energy vs. Onsite
Source: DESP/Xcel Energy 2005 Via International District Energy Association
Since urban energy consumers typically have multiple alternatives for
heating and cooling buildings, the economic competitiveness of the district
energy option is enhanced by the ancillary benefits including capital
savings from avoided investment in building equipment; reduced labor and
maintenance expenses due to simplified operating systems; lower costs for
water, chemicals, insurance and fuel (including storage); and generally
higher operating efficiencies due to scale and better load matching.
Additionally, in a dense urban environment, there is often a premium value
for space that can be reclaimed for other productive uses by displacing
mechanical equipment, flues and cooling towers. In particular, rooftop and
penthouse space can be shifted from a cost center for large mechanical
systems to profit center for third parties (i.e. cell and microwave towers;
restaurants, leasable footprints).
Content Courtesy of International District Energy