DISTRICT heating and cooling (DHC) system distributes Athermal energy from a central source to residential, commercial,
and/or industrial consumers for use in space heating, cooling,
water heating, and/or process heating. The energy is distributed by
steam or hot or chilled water lines. Thus, thermal energy comes
from a distribution medium rather than being generated on site at
each facility.
Whether the system is a public utility or user owned, such as a
multi-building campus, it has economic and environmental benefits
depending somewhat on the particular application. Political feasibility
must be considered, particularly if a municipality or governmental
body is considering a DHC installation. Historically,
successful DHC systems have had the political backing and support
of the community.
District heating and cooling systems are best used in markets
where (1) the thermal load density is high and (2) the annual load
factor is high. A high load density is needed to cover the capital
investment for the transmission and distribution system, which usually
constitutes most of the capital cost for the overall system, often
ranging from 50 to 75% of the total cost for district heating systems
(normally lower for district cooling applications).
The annual load factor is important because the total system is
capital intensive. These factors make district heating and cooling
systems most attractive in serving (1) industrial complexes, (2)
densely populated urban areas, and (3) high-density building clusters
with high thermal loads. Low-density residential areas have
usually not been attractive markets for district heating, although
there have been some successful applications. District heating is
best suited to areas with a high building and population density in
relatively cold climates. District cooling applies in most areas that
have appreciable concentrations of cooling loads, usually associated
with tall buildings.
District heating and cooling systems consist of three primary
components: the central plant, the distribution network, and the consumer
systems (Figure 1).
The central source or production plant may be any type of
boiler, a refuse incinerator, a geothermal source, solar energy, or
thermal energy developed as a by-product of electrical generation.
The last approach, called cogeneration, has a high energy utilization
efficiency; see Chapter 7 for information on cogeneration.
Chilled water can be produced by
• Absorption refrigeration machines
• Electric-driven compression equipment (reciprocating, rotary
screw or centrifugal chillers)
• Gas/steam turbine- or engine-driven compression equipment
• Combination of mechanically driven systems and thermal energy
driven absorption systems
The second component is the distribution or piping network
that conveys the energy. The piping is often the most expensive portion
of a district heating or cooling system. The piping usually consists
of a combination of preinsulated and field-insulated pipe in
both concrete tunnel and direct burial applications. These networks
require substantial permitting and coordinating with nonusers of the
system for right-of-way if not on the owner’s property. Because the
initial cost is high, it is important to optimize use.
The third component is the consumer system, which includes
in-building equipment. When steam is supplied, (1) it may be used
directly for heating; (2) itmay be directed through a pressure-reducing
station for use in low-pressure (0 to 15 psig) steam space heating,
service water heating, and absorption cooling; or (3) it may be
passed through a steam-to-water heat exchanger.When hot water or
chilledwater is supplied, itmay be used directly by the building systems
or isolated by a heat exchanger (see the section on Consumer
Environmental Benefits
Emissions from central plants are easier to control than those
from individual plants. A central plant that burns high-sulfur coal
can economically remove noxious sulfur emissions, where individual
combustors could not. Similarly, the thermal energy from
municipal wastes can provide an environmentally sound system.
Cogeneration of heat and electric power allows for combined efficiencies
of energy use that greatly reduce emissions and also allow The preparation of this chapter is assigned to TC 6.2, District Energy.
Fig. 1 Major Components of District Heating System
11.2 2000 ASHRAE Systems and Equipment Handbook
for fuel flexibility. In addition, refrigerants and other CFCs can be
monitored and controlled more readily in a central plant. Where site
conditions allow, remote location of the plant reduces many of the
concerns with use of ammonia systems for cooling.
Consumer Economic Benefits
A district heating and cooling system offers the following economic
benefits. Even though the basic costs are still borne by the
central plant owner/operator, because the central plant is large the
customer can realize benefits of economies of scale.
Operating Personnel. One of the primary advantages to a building
owner is that operating personnel for the HVAC system can be
reduced or eliminated. Most municipal codes require operating
engineers to be on site when high-pressure boilers are in operation.
Some older systems require trained operating personnel to be in the
boiler/mechanical room at all times. When thermal energy is
brought into the building as a utility, depending on the sophistication
of the building HVAC controls, there may be opportunity to
reduce or eliminate operating personnel.
Insurance. Both property and liability insurance costs are significantly
reduced with the elimination of a boiler in the mechanical
room since risk of a fire or accident is reduced.
Usable Space. Usable space in the building increases when a
boiler and/or chiller and related equipment are no longer necessary.
The noise associated with such in-building equipment is also eliminated.
Although this space usually cannot be converted into prime
office space, it does provide the opportunity for increased storage or
other use.
Equipment Maintenance. With less mechanical equipment,
there is proportionately less equipment maintenance, resulting in
less expense and a reduced maintenance staff.
Higher Thermal Efficiency. A larger central plant can achieve
higher thermal and emission efficiencies than can several smaller
units. When strict regulationsmust bemet, additional pollution control
equipment is also more economical for larger plants. Cogeneration
of heat and electric power results in much higher overall
efficiencies than is possible from separate heat and power plants.
Partial load performance of central plants may be more efficient
than that of many isolated small systems because the larger plant
can operate one or more capacity modules as the combined load
requires and can modulate output. Central plants generally have
efficient base-load units and less costly peaking equipment for use
in extreme loads or emergencies.
Available Fuels. Smaller heating plants are usually designed for
one type of fuel, which is generally gas or oil. Central DHC plants
can operate on less expensive coal or refuse. Larger facilities can
often be designed for more than one fuel (e.g., coal and oil).
Energy Source Economics. If an existing facility is the energy
source, the available temperature and pressure of the thermal fluid
is predetermined. If exhaust steam from an existing electrical generating
turbine is used to provide thermal energy, the conditions of
the bypass determine the maximum operating pressure and temperature
of the DHC system. A trade-off analysis must be conducted to
determine what percentage of the energy will be diverted for thermal
generation and what percentage will be used for electrical generation.
Based on the marginal value of energy, it is critical to

determine the operating conditions in the economic analysis.
If a new central plant is being considered, a decision of whether
to cogenerate electrical and thermal energy or to generate thermal
energy only must be made. An example of cogeneration is a diesel
or natural gas engine-driven generator with heat recovery equipment.
The engine drives a generator to produce electricity, and heat
is recovered from the exhaust, cooling, and lubrication systems.
Other systems may use one of several available steam turbine
designs for cogeneration. These turbine systems combine the thermal
and electrical output to obtain the maximum amount of available
energy. Chapter 7 has further information on cogeneration.
The selection of temperature and pressure is crucial because it
can dramatically affect the economic feasibility of a DHC system
design. If the temperature and/or pressure level chosen is too low, a
potential customer base might be eliminated. On the other hand, if
there is no demand for absorption chillers or high-temperature
industrial processes, a low-temperature system usually provides the
lowest delivered energy cost.
The availability and location of fuel sources must also be considered
in optimizing the economic design of a DHC system. For
example, a natural gas boiler might not be feasible where abundant
sources of natural gas are not available.
Initial Capital Investment
The initial capital investment for a DHC system is usually the
major economic driving force. Normally, the initial capital investment
includes the four components of (1) concept planning, (2)
design, (3) construction, and (4) consumer interconnections.
Concept Planning. In concept planning, three areas are generally
reviewed. First, the technical feasibility of a DHC systemmust
be considered. Conversion of an existing heat source, for example,
usually requires the services of an experienced power plant or DHC
engineering firm.
Financial feasibility is the second consideration. For example, a
municipal or governmental body must consider availability of bond
financing. Alternative energy choices for potential customers must
be reviewed because consumers are often asked to sign long-term
contracts in order to justify a DHC system.
Design. The distribution system accounts for a significant portion
of the initial investment. Distribution design depends on the
heat transfer medium chosen, its operating temperature and pressure,
and the routing. Failure to consider these key variables results
in higher-than-planned installation costs. An analysis must be done
to optimize insulating properties. The section on Economical Thickness
for Pipe Insulation discusses determining insulation values.
Construction. The construction costs of the central plant and
distribution system depend on the quality of the concept planning
and design. Although the construction cost usually accounts for
most of the initial capital investment, neglect in any of the other
three areas could mean the difference between economic success
and failure. Field changes usually increase the final cost and delay
start-up. Even a small delay in start-up can adversely affect both
economics and consumer confidence.
Lead time needed to obtain equipment generally determines the
time required to build a DHC system. In some cases, lead time on
major components in the central plant can be over a year.
Installation time of the distribution system depends in part on the
routing interference with existing utilities. A distribution system in
a new industrial park is simpler and requires less time to install than
a system being installed in an established business district.
Consumer Interconnection. These costs are usually borne by
the consumer. High interconnection costs may favor an in-building
plant instead of a DHC system. For example, if an existing building
is equipped for steam service, interconnection to a hot water DHC
system may be too costly, even though the cost of energy is lower.