Steamboat Springs A quarter century ago, downtown St. Paul, Minn., formed an energy district that would provide heat and power through hot water. Today, District Energy St. Paul's customers pay less in real dollars than they did when the system was launched in 1983.
"We've had a below-inflation increase. No one else in the country can say that," said Bill Mahlum, executive vice president and general counsel of Ever-Green Energy, the for-profit affiliate of District Energy St. Paul.
And they built their district energy system when energy was "cheap," Mahlum said.
In South Routt County, where propane is the primary source of heat for businesses and residences, preliminary plans for converting to an alternative energy source are in the works as propane costs continue to rise.
After hovering at about $1 per gallon for most of the 1990s, the average price per gallon of propane for residential customers jumped to more than $2.60 by the end of the 2007-08 winter, according to the U.S. Department of Energy. And costs for the petroleum-derived fuel only are increasing.
The town of Oak Creek looked into the feasibility of bringing piped natural gas to town, which was both cleaner and cheaper, in 2000. However, the town's small size made such a project cost-prohibitive. Now, the town is in the early stages of looking into a biomass system similar to that which has been heralded as a grandiose success in Minnesota.
Despite being the "sustainable solution" to rising energy costs, biomass still is being examined only "very gingerly," said Leonard Phillips, director of business development for the Massachusetts-based International District Energy Association.
District energy systems, delivering heat power through steam or water heated by a variety of fuels, long have been popular overseas and are found in the United States at universities and on commercial and industrial campuses. Downtown St. Paul, which has had a district energy system for 25 years and has relied primarily on wood chips as fuel since 2003, is the largest hot water district energy system in the country.
District Energy St. Paul reaches 3 million people in St. Paul, heating and powering the state Capitol, three hospitals, public housing projects, condominiums and office space totaling 32 million square feet.
The Oak Creek Town Board quietly began exploring energy options in recent months, and is poised to embark on a feasibility study for generating biomass energy as a source of heat and electricity for the town's residences and businesses.
The Soroco schools campus in Oak Creek is in the midst of its own green energy transition, with the installation of a biomass boiler and geothermal heating system pegged for completion before school starts next month. The $4.1 million energy overhaul will eliminate coal boilers at all school district facilities, with geothermal pipes also being installed at South Routt Elementary School in Yampa.
In discussions with the Oak Creek Town Board earlier this month, Confluence Energy President Mark Mathis estimated the installation cost to the town would be between $6 and $7 million. A 500-square-foot boiler house would cost between $1.2 and $1.5 million, and a closed-loop piping system where heat is pulled out of hot water by individual homes and businesses would cost in the neighborhood of $5 million.
With the cost savings compared with propane - the current heat source for most of Oak Creek - a biomass district heating system would completely recover its construction costs in less than four years, according to Mathis.
However, some additional costs would be borne by townspeople tapping into the system - and gaining the necessary widespread support requires a lot of public education and is a significant hurdle for any district energy system, Mahlum said.
Installing heat exchangers in a building could cost anywhere from several hundred to several thousand dollars, depending on the building's square footage and what type of heat it currently receives.
One possible funding avenue is a cash rebate system. Should the town finance the actual construction, it could acquire bonds above and beyond the actual cost of municipal installation and use the additional funds to assist residents when they tap in, Mathis said.
Although additional bond funds extend the payback time for the energy conversion, efficiency gains coupled with skyrocketing propane and other fuel costs still give the project an extremely positive economic outlook, he said.
Ultimately, it is the economics that sold the naysayers in St. Paul, Mahlum said.
"We designed it so it would be economical - we wanted to attract people with energy efficiency," Mahlum said.