Optimizing the Energy Economy of District Energy

Optimizing district energy use from the building-side (i.e. point-of-use) has many benefits, including lower costs and higher building value.

District energy is the go-to  energy source for many buildings in urban areas.  For a new building, connecting with a district energy network can mean lower up front costs, as investing in boilers or furnaces, air conditioning units, chimneys, and large boiler rooms are rendered unnecessary.

District energy-connected buildings benefit from no energy equipment maintenance.  The district energy provider of course maintains a large plant, and those maintenance costs that it incurs benefit from it’s economies of scale. Those costs are passed on to the customer in the price of energy.

District Energy Rate Structures

District energy providers can charge for the energy they provide in a variety of ways. First, they can charge differently depending on the type of customer, such as multifamily, industrial, or office building. 

Second, there may be different rate structures depending on past energy use.  Users of energy can be shifted by the provider from one rate group or another based on past consumption levels.  Third, and adding some complexity, each one of those rate groups can consist of multiple tiers of energy use, where the first “x” amount of energy use is charged at one level, the next batch of energy used above that would have another rate, the third quantity of energy above that another rate, and so on. 

A fourth component of district energy costs is time-of-use rate.  Some district energy providers charge higher rates, for example, between 8am and noon on weekdays, at certain times of year. These rates are usually posted and published well in advance, and they usually don’t change except for seasonally.

A fifth component is the demand rate.  District heating companies can charge for each unit of energy, such as the peak amount of steam, or BTUs passing through the meter in a short period of time, like 15 minutes, over the course of a billing period.  Providers can define their demand rates differently, so the details matter.

Day-Ahead Rates

Another rate type that is not so common in North America at this time is the day-ahead rate.  It’s possible for district energy providers to anticipate demand ahead of time.  With this knowledge, they can post a rate or rates for the following day.  For example, if the energy provider expects heavy demand from 8am to 10am the following day, they can notify customers of a higher rate during that time slot.  Customers with appropriate technology can then respond by shifting more of their energy consumption to before and after that time slot if the difference in energy costs is significant.

Technology Solutions

Technology that uses artificial intelligence (AI) has been developed that makes it possible to reduce all of these charges, by using the district energy more smartly.  A successful example of this is our Finnish technology partner Leanheat. 

Leanheat’s technology has been successfully deployed in district heating-connected buildings that collectively house tens of thousands of apartment units.  Those apartment units have their heating and cooling costs bundled into the rent by the building owners.  The Leanheat technology saves the building owners from 10-20% over previous energy consumption, without any sacrifice in comfort. 

Contact CIMI Energy for information about the Leanheat district energy optimizing solution.