History of District Energy
Denver, CO: One of at least 85 Urban Areas with District Energy
The commercial U.S. district energy industry can be considered in two
distinct segments: pre-1960 downtown steam systems, and post-1960 combined
downtown district heating and cooling systems. In many cases, the systems in
the first segment actually date back to the late 1880's or 1890's when
investor-owned utilities were first being formed to provide electricity
services in central cities.
In fact, when the original "Edison Electric Utilities" were being formed
in major US cities like Boston, New York, Chicago, Detroit, Philadelphia,
Baltimore and others, many utility operators found that steam service
revenues were very important to the profitability of the early enterprise.
In some cases, the offering of a.c. (alternating current) electricity
service from the fledgling investor utility required displacement of an
in-building dynamo or a dc generator which also happened to produce the
steam used for building heating. In order to convince the prospective
customer to purchase electricity from the local nascent power grid, and
therefore shut down his building generator and heat source, the electric
utility had to sometimes simultaneously agree to provide "piped-in steam".
These large urban district heating systems in center city locations
(e.g., New York City, Boston, Philadelphia, Denver, Indianapolis, Cleveland,
San Francisco, Baltimore, etc) generally distribute steam (78 % of all U.S.
heating systems distribute steam versus hot water) to multiple buildings for
buildings to use for space heating, humidification, and domestic hot water.
In some cities, district steam systems supply high pressure steam (125 to
150 psig) for buildings to operate on-site steam driven chillers for air
By and large, these vintage steam systems were originally owned by the
local investor-owned or municipal electric utility. The steam distribution
was essentially a by-product of electric generation at downtown combined
heat and power stations. In the 1960's and 1970's, with the advent of larger
power generating stations (both coal and nuclear stations) being constructed
in more remote locations and funded by utility consortiums, many electric
utilities began to cease electricity production at these smaller scale
generating plants downtown. Additionally, the combination of emission
restrictions taking hold in central cities and fossil fuel cost escalation
with the Second Oil Embargo, a number of investor-owned electric utilities
began to make plans divest of steam business assets. Without electricity
production and running boilers to only make steam, steam rates began to
increase and the businesses needed to re-allocate fixed and variable
operating costs to lessen rate impacts on existing steam customers.
Content Courtesy of International District Energy