The Untapped Potential of District Energy Networks

Cities consume a lot of energy – in fact, the World Bank recently stated that cities account for two-thirds of global energy consumption and for more than 70% of greenhouse gas emissions. This is partly because cities are such high-density areas, with 55% of the world’s population, or about 4.2 billion people, living in cities. Fortunately, because cities are high-density environments, they’re well-positioned to play a leading role in driving global action to address climate change. One of the ways that cities can do this is by lessening their consumption of energy. This can be done through advocating for the use of low-carbon district energy networks.

District energy (DE) is the centralized production and supply of thermal energy (namely heating and cooling) that can be delivered to a “district” or a neighbourhood of a city, and they can generally do this more efficiently than each building having its own equipment. This is done through a network of underground pipes that can cover an entire city, or just a small cluster of buildings. Absorption coolers can use the heat to cool buildings, and some systems can deliver cold water for cooling. 

While traditional DE networks use natural gas or electricity to heat buildings, low-temperature DE systems can make use of waste heat to heat or cool buildings. DE networks often find innovative ways to use waste heat, harnessing the energy from things such as refuse incineration plants, nuclear power plants, data centres, electricity generation, or even crematoriums! However, they’re also great for using renewable sources of energy, such as biomass or geothermal energy, rather than non-renewable and high-emission fossil fuels. Only low-temperature DE has cooling capacity.

As shown in the diagram below, a shift to a modern district energy system will drastically reduce fossil fuel consumption:

Sankey diagram of business-as-usual energy system against a modern DE system (Source: United Nations Environment Program (UNEP))

Not only are DE networks more environmentally friendly, they’re also very cost effective. This is because they have a lower energy cost, require less management, and have lower capital costs. This makes DE networks more accessible than traditional energy networks. In fact, if the potential of DE networks were harnessed around the world, it could also lead to significant benefits that improve human health and quality of life by cutting air pollution, increasing access to energy security, and creating more green jobs. This is likely why the UN Environment Programme calls district energy networks a “secret weapon for climate action and human health.”

District Energy Networks in Action

DE networks are already being deployed in many cities worldwide – and that number is growing. The largest total district cooling capacity is in the United States at 16 thermal gigawatts (GWth), followed by the United Arab Emirates (10 GWth) and Japan (4 GWth). However, while the capacity for DE networks clearly exists, only 8% of the energy from these networks comes from renewable sources, as fossil fuels continue to be a dominant energy source globally.

In Denmark (Copenhagen), Finland (Helsinki), and Lithuania (Vilnius), nearly all heating and cooling energy is supplied through DE networks powered with renewable energy. While these cities are maximizing the potential of DE networks, the energy shift in these three cities is part of an overall shift to renewable energy shift in Europe. The Ecoheat4EU project, which ran from June 2009 to June 2011, catalyzed this shift. Starting with 14 target countries, this EU-funded project has had a positive influence over promoting district heating networks to EU policy-makers, and member states are continuing to implement district energy networks on a large-scale. 

Canada is also starting to normalize the use of DE systems. In 2019, there were 217 operating DE systems across the country, supplying 2.2% of Canada’s heating.  A recent database from the Canadian Energy and Emissions Data Centre is reporting 4,604 MWth of heating and 1,144 MWth of cooling capacity. This has reduced Canada’s GHG emissions for heating by about 5.5%.

Vancouver was the first city in North America to use waste heat from a wastewater treatment facility with its Southeast False Creek District Heating System in 2010. The City of Vancouver actually introduced the sewer heat recovery system as a result of public opposition over concerns around air quality and because of potential delays from regional approvals in building a biomass plant. To minimize the initial high capital costs, the city implemented a mandatory connection requirement to improve the economies of scale for the project. While the city initially ran deficits to make the project cost-competitive in the short-term, the system is now up and running, with a planned system expansion to reduce GHGs by 14,000 tons of CO2-equivalent per year – a 70% anticipated reduction in GHG emissions each year.

In Toronto, the use of DE is a key part of TransformTO, Toronto’s climate action plan. A number of DE systems are currently in operation in Toronto, with long-running DE systems in place at the University of Toronto (operating since 1912!) and York University’s Keele Campus (operating since the 1960s). Local DE provider Enwave is making big moves by using water from Lake Ontario to cool 80 buildings within the Toronto downtown core, and a proposed thermal network in Regent Park will soon provide energy to over 50 buildings.

Currently under construction, Enwave’s massive project The Well is going to use a 2-million-gallon thermal storage tank to supply heating and cooling from its existing deep lake cooling system. This system will supply heating and cooling for the seven retail, residential and office buildings that will serve about 11,000 people daily.

These cases show how the growing usage of low-carbon energy in DE networks is revolutionizing the use of greener energy sources on a larger scale; while energy sources like biomass, sewage, and lake water aren’t feasible or economically viable on a small scale, when employed in a DE network, they can be a solid alternative to fossil fuels.

Source: Enwave

Barriers and Opportunities for District Heating and Cooling

Many social, economic and environmental factors are at play in the development and operation of an urban centre and its energy system. Research has shown that low public awareness and understanding of DE across Canada results in relatively few champions and innovators to drive the industry forward, though this is changing with several key players in recent years. In complex buildings, a transition to DE could be achieved as part of an equipment upgrade. Across Canada, between 2017-2030, it is estimated that 40% to 80% of major equipment in buildings will undergo major renewals, presenting an opportunity to switch over to DE in less energy-efficient buildings.

Despite some barriers, many cities and countries have overcome the challenges and developed supportive policies to enable growth in the industry. A report by UNEP identified 45 champion cities that have collectively installed more than 36 GW of district heating capacity (equivalent to about 3.6 million households) and 6 GW of district cooling capacity (about 600,000 households).DE is not a one-size fits all approach in the same way as buildings that are individually heated or cooled. In fact, in every city, there is a unique technology for their unique situation. In Charlottetown, Prince Edward Island, there is little space for landfills, so it burns garbage to produce heat for its DE system. DE can also provide affordable energy access in Canada’s northern territories, where most communities are off-grid and running off diesel generators. Teslin, Yukon, a village east of Whitehorse of just over 100 people, uses locally sourced wood chips to power their district heating system. The switch to DE has helped the village generate local jobs and save $300,000 a year that would otherwise have gone towards importing diesel.

Biomass boiler in Teslin, Yukon, that burns locally sourced wood chips to produce heat for its DE system. (Source: CBC News)

Moving Forward with District Energy

Transitioning the urban energy system to district heating and cooling combined with renewable energy sources can help meet rising energy needs, improve energy efficiency, reduce emissions, and improve local air quality. With severe weather events increasing in frequency and severity across Canada, including the number of extreme heat days, communities need to recognize the benefits of DE.