Commercial real estate owners face a tricky balancing act. Amid growing pressure to operate more cost-effectively and meet ambitious carbon-reduction targets, they still need to ensure tenants are comfortable no matter the weather outside.

For some building owners, however, the solution they need might already be under their feet.

District energy, thermal energy distribution with roots in the 19th century, has surprising relevance in a 21st-century world that embraces green energy and net-zero carbon emissions. In several cities across the United States, networks of underground pipelines provide the reliable thermal energy that today’s biotechnology companies, medical centers, research universities and other modern enterprises need to operate.

“District energy has always had many benefits for urban commercial buildings,” said Jaclyn Bliss, chief customer officer at Vicinity Energy. “It provides a reliable energy source for buildings, eliminating the need for individual heating and cooling equipment. The results are significant energy savings and a reduction in greenhouse gas emissions.”

Vicinity rolled out a new energy product, eSteam, in 2022, and Bliss said it represents the most significant change in the evolution of district energy systems yet. Procuring its electricity from renewable, carbon-free energy sources, including wind and solar, Vicinity will employ a system of electric boilers, industrial-scale heat pumps and thermal battery storage at its steam-generation sites to serve customers efficiently and reliably.

Further, Vicinity recently signed a memorandum of understanding with MAN Energy Services to install the largest heat pump complex in the country. Bliss said the team is moving fast and, while eSteam is now commercially available, it will be ready for delivery in some markets by next year.

“We’ve gone through many transformations in our history, but this transition to 100% carbon-free, net-zero energy production is the most dramatic and important change yet,” she said.

Bliss said Vicinity signed its first eSteam customer in Boston in 2022 and expects to sign its first in Philadelphia this year.

Vicinity plans to eventually bring eSteam technology to other cities, including Baltimore, Kansas City, Missouri, and Grand Rapids, Michigan. In total, Vicinity provides steam, hot water and chilled water to more than 230M SF of building space nationwide.

“It is full steam ahead in Boston, Cambridge and Philadelphia,” Bliss said. “And we are proactively evaluating plans for our other locations. Demand is on the rise as more and more cities look for pragmatic, cost-effective solutions to decarbonize.”

Vicinity’s customers include the federal government, which requires its buildings to use energy from 100% carbon-free sources by 2030.

“We're working with those buildings to identify how we can help them meet their sustainability goals,” she said. “We have a solution for them that could make meeting the president’s goals much simpler.”

Complying with these standards can be costly and complicated. But buildings in cities served by district energy infrastructure have a leg up in reaching their goals.

“In cities like Philadelphia, building owners are trying to solve several different challenges simultaneously, as cost-effectively as possible,” Bliss said. “In addition to meeting financial targets, they're trying to serve the energy needs of tenants such as life sciences companies, many of which have aggressive sustainability goals.”

Bliss added that tenants are also trying to prepare for the future, especially as carbon legislation continues to be discussed by policymakers.

“The uncertainty of how this will unfold introduces risk,” she noted. “ESteam helps Vicinity’s customers meet all of those different objectives.”

Life sciences real estate developer IQHQ is an early adopter of eSteam and will use district energy to achieve carbon neutrality at its 305K SF office and laboratory space in Boston’s Fenway-Kenmore neighborhood. All of the building’s carbon emissions will be eliminated by Vicinity’s eSteam, Bliss said.

“We commit to developing Class-A life sciences districts that provide our tenants, visitors and communities at large with healthy, resilient and responsible spaces,” Jenny Whitson, director of sustainability for IQHQ, said in a statement.  “We are excited to partner with Vicinity Energy to decarbonize the steam serving our projects.”

This article was produced in collaboration between Vicinity Energy and Studio B. Bisnow news staff was not involved in the production of this content.

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