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A Neighborly Approach to Heating Gains Steam

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The Seattle Steam Co. broke ground this week on a new district heating plant, which will burn waste wood from construction and demolition debris, along with natural gas, to create steam. The plant will replace the existing natural-gas fired system, which serves approximately 9 million square feet in the city’s central business district, according to the Seattle Times.

District energy projects, which generate steam or hot water in a central facility and pipe it to a network of nearby buildings where it is used for central space and/or water heating, are nothing new. Seattle Steam’s existing system has been operating since 1894 and the industry’s trade association will celebrate it’s centennial anniversary next year. But the technology is heating up across North America, as cities recognize its potential to reduce their carbon footprints.

District energy projects eliminate the need for multiple on-site boilers, improving cities’ overall energy efficiency and helping utilities manage more effective district-wide demand response activity. They can also use diverse technologies and feedstocks, since the distribution system is independent of the generation. That means projects can evolve as new, greener feedstocks emerge. Seattle Steam’s existing district heating system was previously fed by burning natural gas and, before that, coal. Adding wood-waste to the equation cuts carbon emissions from the project by capturing an otherwise landfill-bound waste stream.

In Vancouver, British Columbia, an innovative project will capture waste heat from raw sewage to meet 70 percent of the space heating and hot water needs of the ├╝ber-green city’s Olympic Village and Southeast False Creek development, according to the International District Energy Association’s third-quarter 2008 publication. The “neighborhood energy utility” approach will also allow the system to take advantage of other thermal energy resources in the district — including rooftop solar thermal — using net-metering policies that have supported the growth of residential solar photovoltaic systems.

Tom Osdoba, manager of the City of Portland’s sustainable economic development initiatives, told Earth2Tech at our West Coast Green afterparty that Portland’s Office of Sustainable Development is investigating a large-scale investment in district heating beyond the dense central city, although first steps are likely to be taken in such a region. The city is looking into raising funds for its program through a combination of private investors and voter-approved bonds, but Osdoba said there’s lots of research, legwork and vetting to be done before the city is ready to move forward with such a plan.

While Portland’s effort would top most U.S. projects in size, funding will be a critical element. Rafael Coven, managing partner of Cleantech Indices LLC, says district energy investment is mostly driven by project finance needs, not technology development, meaning private equity firms, not venture capital, are likely to lead growth in the space. Still, technology will play a role, and as district heating and power gains popularity, the big winners, Coven says, are likely to be well-capitalized component manufacturers, like Cummins, GE, Caterpillar and Danfoss. He cautions that startups such as Capstone, which have aimed to enter the market with microturbine products, would need to raise a significant amount of capital in order to become competitive; in the existing economic climate, he says that seems unlikely.

Startups aiming to provide integration services, such as software and system-wide services for managing delivery and reliability of energy distribution throughout a district, may have better luck in the market. Coven pointed to the example of Connected Energy, which was acquired by smart-grid firm BPL Global earlier this year.

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