Renewed focus on the green transition in the Unites States – so far so good! But what about district energy...?
The calendar shows March 2021. A renewed focus on green energy is a reality in the United States. The big question is what it actually means for the district energy (DE) industry and markets locally and for Danish companies in the future. I will try to elaborate on that in this article.
By: Niels Vilstrup, Head of District Energy Advisory, Royal Danish Embassy / Ministry of foreign affairs Denmark
Challenges in the US DE market First, it is worth noting that most district heating systems in the US are still
Compared to Denmark, the limited federal regulation also presents challenges when working with DE projects because the states can regulate as they see fit, which means the local landscape is generally harder to navigate. For instance, some states are against putting up individual energy meters in households, e.g., billing hot water and cooling water, because they can be viewed as someone trying to resell energy through the meters rather than making sure that you only pay for what you actually use. Another challenge is the lack of financial incentives and supports schemes. The business case for larger DE systems, especially in cities, is often not in place. As a result, we experience a great need for knowledge-sharing and expertise to create a long-term and profitable business case for DE. This is one of the areas where Denmark has excellent potential to contribute going forward. The return of investment horizons for implementing DE systems is often down to 5-7 years. And this is one of the main barriers to why many DE systems cannot materialize in the U.S.
based on steamwith supply temperatures up to 220 °C / 430 °F or sometimes even higher. That goes for cities and campuses like universities, colleges, medical campuses, military bases, etc. Therefore, the general perception in the U.S. about hot water as surplus heat, from e.g., industries, power plants, etc., with a temperature less than 70 °C / 160 °F, is mainly viewed as a waste product. As a result, DE has not been high on the political agenda. Neither on the federal level nor state levels. That might still be the case in the future. However, the fact that the U.S. has a renewed focus on climate change, has re-joined the Paris Agreement and plans to approve trillions of USD for a greener transition and climate change adaptions will, without doubt, boost the DE market in the USA. The fact that DE has not been high on the political agenda both has its advantages and disadvantages. One disadvantage is that DE is not strongly regulated. Therefore, financial incentives and support schemes on federal and state levels to support and boost the development and implementation of DE have been limited.
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