District Heating and Cooling Systems

The business case for hot water district energy systems

Credit: Danfoss

Originating in the 19th century, district heating and cooling (DHC) systems today are taking advantage of new technologies to provide the energy efficiency and thermal flexibility needed in 21st-century applications.

Over the last 10 years, as electricity costs hit new highs, DHC system growth in North America has risen, adding an average 27 million square feet of connected customer building space per year. A recent study expects global growth to expand 5.8% annually to make consumption of thermal energy produced by DHC systems a $243 billion industry by 2024.

According to the US Environmental Protection Agency (EPA), DHC growth is being driven by increased environmental awareness, volatile energy costs, a more robust marketplace of developers and operators, and technological advances. Major DHC growth sectors include healthcare and college campuses, which complement traditional DHC opportunities in high-density areas where multiple buildings can be served by a centralized energy system.

The decisions involved in a DHC project are complex because boundaries are being crossed between heating, cooling, and infrastructure application issues. This white paper reviews new technological developments that influence the assessment, feasibility, and implementation of either renovating or building a new DHC plant. The attention here is on technologies that make it possible to use hot water rather than steam for district heating. This particular focus is due to two major factors. Compared to steam:

  1. Hot water cuts operational costs and reduces steam-related risks.
  2. Hot water DHC produces a faster payback due to decreased heat losses in the network and higher utilization of waste and primary heat.

Moreover, new developments are improving the flexibility of hot water DHC plants, cutting the lengthy payback period
of typical DHC plant construction from 20 years or longer to less than 10 years—and, for one university in North America, as short as 6 years.

Factors Influencing the Business Case Defining the District Heating and Cooling Landscape
By nature, DHC projects are complex. A DHC system uses a central plant to produce steam, hot water, or chilled water distributed through a network of pipes to a group of buildings. Because of the quantity of input energy required, DHC systems are often used in conjunction with a combined heat and power (CHP) system. As the name implies, a CHP plant—also known as cogeneration plant—produces heat and electricity all in one process, using much less fuel than when heat and power are produced separately. A CHP system can primarily generate electricity and secondarily produce waste heat (known as a “topping” cycle) that the DHC system can use for heating. Conversely, a CHP system can primarily use waste heat from another source to secondarily drive an electric generator (known as a “bottoming cycle”) that the DHC system can use to power equipment such as chillers.

Using the Four-Phase DHC Development Process
There are many stakeholders involved in a DHC project. At the government level, regulators from federal, state, and municipal bodies are involved. At the project level, utilities, equipment manufacturers, specifying engineers, contractors, and architects work in conjunction with facility owners and operators.

To expedite planning and decision-making, different procedures can be used, such as the four-phase process recommended by the EPA for the city of San Francisco. This process guides the DHC project team through four phases:

  1. Initial assessment to define goals and determine how future growth could affect the system
  2. Feasibility determination to evaluate the commercial and technical viability of the project
  3. Project development to coordinate engineering personnel and vendors involved in designing and building the system
  4. Operation, optimization, and expansion to ensure proper operation and implement improvements and upgrades

Although detailing each of these steps is beyond the scope of this paper, it is worth examining new technologies that should be considered during the planning process.

Getting Insight During the Assessment Phase
Drawing on Experience in North America
In the initial assessment phase, the project team consisting of developers, architects, and engineers will consider the DHC system’s economic potential. The costs of energy, equipment, and infrastructure of a central DHC plant are compared with using individual boilers, chillers, cooling towers, etc.

At this point, it is important that each stakeholder is acquainted with different DHC system implementations. Understandably, there is a global knowledge gap between North American and European experiences with DHC systems. 100 years ago, North American DHC systems began operating with fossil fuel-generated steam, which continues to be the dominant application. Similarly, the original district heating system in Copenhagen, Denmark, dating from 1903, was based on steam. Eventually, district heating was extended to residences using a parallel district heating system based on hot water. In the network, hot water proved to be more cost effective and efficient than steam. Today, Copenhagen mostly relies on hot water district heating. A complete conversion from steam is expected in 2025.

North American planners are benefitting by taking a global view of DHC system design. For example, District Energy St. Paul in Minnesota converted from steam to hot water in 1983. In 1999, a CHP system was constructed that is fueled by municipal biomass. This plant is noteworthy for integrating “natural gas, fuel oil, CHP, and solar energy . . . to better plan its long-term budget and give customers more stable pricing.”

As another example: for more than 100 years, Stanford University in Menlo Park, CA, used a natural gas-fired central plant that provided electricity and steam. Stanford also replaced steam with hot water. Because water has higher thermal capacity than steam, the conversion saved 10% of its heating load due to lower distribution losses. In 2015, a 67-MW (DC) solar PV plant was built to supply 50% of Stanford’s electricity, complemented by purchasing renewable-source energy from the grid. Today, Stanford claims that 65% of its electricity is “generated from renewable sources—approximately 200 million kilowatt hours (kWh) per year.”

Drawing on Experience in Europe
These examples accord with experiences of using hot water in Denmark. Most DHC heating in the city of Copenhagen is done with pressurized hot water below boiling temperature. This development marks a so-called “third generation” of DHC design in Europe. The “first generation” used steam, and the “second generation” used hot water near boiling point. Today, new technologies are ushering in a “fourth generation” of DHC system design capable of using supply/return hot water at temperatures as low as 122/68°F (50/20°C). At these temperatures, lower-grade waste heat can be used from various sources, such as heat reclaim chillers. Several DHC companies near Copenhagen are using large-scale thermal storage and solar heating projects to produce hot water at a price that is competitive with natural gas-fired boilers.

Focusing on the Technologies Used to Implement DHC with Hot Water
Advanced DHC systems that generate and distribute hot water employ several new technologies. These technologies should be well understood when determining a project’s feasibility.

In general, DHC systems draw upon a wide range of technologies, which can include:

  • Central heating and/or cooling systems
  • Central condenser water system
  • Central heat reclaim chillers
  • Ground-source or water-source heat exchange
  • Combined heat and power (cogeneration) and cooling (trigeneration)
  • Renewable energy sources—photovoltaics, solar thermal, biomass

At the heart of any DHC system are the technologies that distribute and control the flow of the thermal medium. These technologies perform such basic functions as:

  • Piping used to circulate the thermal medium (steam, pressurized hot water, low-temperature hot water, chilled water). Depending on the medium, piping could be in situ insulated steel pipes or pre-insulated steel or even flexible pipes.
  • Circulation control using central and decentralized pumps and valves to regulate pressure and flow
  • Heat exchangers for water-based systems, which are typically plate heat exchangers
  • Metering used to measure flow and temperature in substations and final elements of the system (controls for zones, rooms, and radiators)
  • End-distribution devices used to condition the space, such as radiators for high-temperature steam, high- and medium-temperature hot water, and radiant floor heating. Fan-coil units, air-handling units, chilled beam, and other ventilation equipment may also be used with hot and chilled water.
  • Thermal storage used to provide additional thermal capacity when energy costs are low, or when dealing with excess electrical energy from renewable sources. Devices include directly or indirectly heated hot water tanks, with the latter often employing heat exchangers and buffer tanks. Ice-making and cold water storage tanks can also be employed to produce chilled water.

Given the array of technologies and options, the DHC project team will benefit from expert consultation to get a solid understanding of each technology’s relevance for the given application.

Considering Hot-Water Distribution Technologies
At the heart of any DHC system is the technology that controls the circulation of hot and chilled water between the central plant and buildings.

DHC distribution systems are typically divided into three levels:

  • Production: central boiler/chiller plant
  • Distribution: via pre-insulated pipes
  • Consumption: regulated by substation, also referred to as an Energy Transfer Station (ETS)

The entire system is connected by piping circuits, which differ in size, layout, and configurations. To achieve optimum performance, temperature settings, operating pressure level, and building connections need to be properly specified and implemented.

Of the three types of pumping systems that could be used—constant primary flow, primary/secondary flow, or variable primary flow—a variable flow system benefits the most from a hot water DHC system.

Energy Transfer Stations

It is well known that various chilled-water piping configurations have different effects on energy consumption. Here, it is worthwhile examining a technology recently developed for hot and chilled water control and distribution: ETS.

An ETS is a pre-engineered and assembled solution that is a critical contributor to efficiency. It boosts system efficiency by enabling a return water temperature with a high Delta T in the network and the building.

An ETS substation separates the piping network of the central plant from the piping circuit of the building. As a result, an ETS can handle the daily and seasonal variations in consumption that cause water pressures to change as the flow varies in the primary supply. Pressure fluctuations are handled by differential pressure controllers to ensure consistent water supply to the substation in the building.

For these reasons, an ETS that can provide temperature control and hydronic balancing must be selected. Other factors influencing ETS selection include:

  1. The size of an ETS, which is determined by the building’s heat load
  2. Maintenance staff’s preference for controlling the network and the building directly or indirectly—a decision that is determined by the ownership of the network and buildings and by the party responsible for the integrity of the system, components, and piping. Special control components, such as pressure-independent control valves, may be needed to balance the building’s circuit, depending on the connection requirements and each resident’s individual heating habits.

The Advantages of DHC with Hot Water Are Being Realized Today
To make DHC circuits with hot water feasible, a complete line of ETS program stations and substations was developed by Danfoss for heating ranges from 15 kW to over 4 MW. ETS units can either be pre-defined or pre-ordered custom-build solutions and can be used in conjunction with several other technologies:

  • Coil units or plate heat exchangers provide efficient transfer for hot water, as well as domestic water systems.
  • Control and balancing valves secure precise and stable control of important system parameters, such as domestic hot water (DHW) supply temperature and chilled/hot water supply.
  • Pumps can maintain consistent water supply by using pressure- or temperature-controllers in all circuits with a varying flow.
  • BTU meters effectively measure thermal energy in the hot water system.

Thanks to the development of packaged, skid-mounted ETS solutions, third- and fourth-generation hot water DHC systems are now feasible. The ETS simplifies installation with precisely selected and fine-tuned components. Pre-build ETS skids reduce installation time, which is especially important for renovation projects where building connections need to be restored as soon as possible. Packaged and pre-engineered ETS skids are also tested and configured to simplify setup and maintenance.

To understand how a DHC system and related components work with hot water, the following case histories will be helpful.

Case History 1: Assessment and Feasibility of Hot Water DHC at Dartmouth College
Background: Dartmouth College is a private Ivy League research university in Hanover, NH. Established in 1769, Dartmouth today serves nearly 6,000 students on a 120-building campus. The estimated peak winter heat load is 30 thermal megawatts (MWt). A cogeneration plant has been in use since 1898, and CHP currently produces almost 40% of the campus’ electricity.

Technology considerations: In central New Hampshire, fossil fuel choices are limited (no natural gas), as are renewable energy sources (poor solar and wind availability). Consequently, planners considered replacing the old fuel oil-fired CHP plant with a 100% renewable biomass system. The new plant would function to provide heat only or combined heat and power. Planners also focused on the benefits of switching the existing steam system to hot water.

Feasibility trial: To support the Dartmouth DHC project team with application knowledge, a test site was equipped with a Danfoss ETS and related control valves. The same day after the ETS was installed, it circulated hot water at the designed temperature levels. Danfoss pressure-independent control valves were also installed to secure precise and stable room temperature and prevent overflow that leads to low Delta T. Together with the ETS, this solution comprises a fourth-generation DHC solution that allows hot water temperatures to be fine-tuned to achieve comfort and energy goals. Energy costs are expected to be cut in half following building renovations, which Dartmouth is still considering during the final stages of its feasibility study.

Case History 2: A Complete Hot Water DHC Project at University of British Columbia
A steam infrastructure in one form or another had been serving the University of British Columbia (UBC) campus since the beginning of the 20th century. The “newest” boiler was installed in 1969. Engineering reviews determined that the cost for modernizing the existing steam system would be $190 million. The cost of building a new hot water system would be $88 million.

Technology considerations: Given the cost differential, the goal was to convert the central plant from steam to hot water, which is then distributed through a system of pipes to 130 buildings on campus. Heat exchangers transfer the thermal energy from the primary district hot water to the secondary building hot water system. The building hot water is then circulated through the building to radiators and heating coils.

The conversion involved the following:

  • 11 kilometers of insulated pipes
  • Over 100 energy transfer stations across campus
  • A 60-megawatt, natural-gas-powered Campus Energy Centre (CEC) hot water plant
  • The demolition of the existing UBC steam powerhouse and de-commissioning of the existing steam system.

The conversion enabled greater efficiency and more flexibility. Significant project metrics include:

  • Thermal energy consumption was cut by 24%.
  • Greenhouse gas emissions were reduced by more than 22% (compared to the 2007 baseline).
  • Operational and energy savings amount to $5.5 million per year.
  • Estimated payback with incentives is 6 years.

As with any capital-intensive project, the business case for a DHC project is based on decisions about initial capital expenditure, operating and maintenance costs (O&M), and energy costs, all of which combine into the total cost of ownership.

By addressing energy and O&M issues, a DHC solution has several general advantages, which include:

Improving utility and energy utilization by:

  • Reducing demand for inefficient conventional on-peak generation
  • Supporting grid stability and diverse investment in large electric power facilities
  • Alleviating constraints in transmission and local distribution
  • Being flexible and fuel source-agnostic to respond to shifts in energy availability and pricing
  • Providing backup power for building tenants

Enhancing property value by:

  • Contributing to potential CO2 mitigation—reducing the carbon footprint of a facility to create an environmentally responsible reputation that responds to community values
  • Boosting EPA ENERGY STAR and USGBC LEED ratings
  • Generating significant economic value through superior efficiency—allowing owners/tenants to control and even reduce their energy costs

When considering a DHC project that utilizes hot water instead of steam, there are several advantages that apply to TCO, as well as to O&M and energy efficiency. These benefits include:

  • Cutting operational costs and reducing steam-related risks
  • Producing a faster payback due to decreased heat losses in the network and a higher utilization of waste and primary heat
  • Ensuring a high Delta T between supply and return water temperatures by using advanced Energy Transfer Station technology in the network and buildings to boost energy efficiency and cost effectiveness

Given the complexity of factors affecting DHC project decision-making, it’s important to estimate potential performance by using modeling programs available from manufacturers. Knowing how a DHC system will perform at different conditions and at varying ambient temperatures will answer questions about annual energy consumption. It will also demonstrate how taking advantage of advanced hot water technologies available today can dramatically lower O&M cost, energy costs, and TCO tomorrow. DE

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  • Joseph T.

    The operating cost of existing power plant with steam plant for HVAC purpose is most expensive and upgrading foe DHC or other upgrade from Steam to HTHW(High Temp Hot Water) systems is much cheaper and efficient; also renovating an existing system to HTHW is almost 50% cheaper than a Steam Plant. Maintenance labor is also cheap
    JOSEPH Thaickal BSME,CEM


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