How St. Paul Got Energy

(This article was first published in Currents Magazine, Spring 2006).

Back in 1979 -- during the second oil crisis – the state of Minnesota sent a delegation to Europe in search of a way to break its oil dependency. They found it in Uppsala, just northwest of Stockholm. “What made us unique was that we could use many different types of fuel,” says Anders Rydåker, president of District Energy in St. Paul, which runs a huge state-of-the-art system for remote heating/cooling.

District heating means that you warm up buildings by circulating hot water or steam through underground pipes, instead of relying on heaters in each individual factory, office or apartment building. The basic idea goes back to the aqueducts of the Roman Empire, but one of the oldest written reports is a complaint in France about two citizens, who didn’t pay their heating bills. The year was 1332.
“The modern technology for district heating was invented in the U.S. about 120 years ago, but Sweden has developed the technology to a point where we can help other countries. Our system knowledge is quite unique,” says Sven Werner, professor at Chalmers University of Technology, and a leading expert on district heating systems.

When the Minnesota delegation arrived in Uppsala, Anders Rydåker worked for Hans Nyman at Uppsala Industriverk (the local energy authority,) who had pioneered an advanced district heating system. It produced and distributed heat generated by a wide variety of methods, from burning household garbage, waste products from forestry, to tapping energy from fields of solar panels, and extracting heat from sewage water with heat pumps. “Today, half of all heating in Sweden is district heat,” Sven Werner says.

The energy department of Minnesota was so convinced by the Uppsala demonstration that they called Hans Nyman and asked him to come over and evaluate the prospects for introducing the technology there. It took four years to investigate and prepare for a new system, but eventually they could start converting the old obsolete district heating system in St. Paul to the new Swedish model. However, Hans Nyman called Anders Rydåker in 1983. “You have to come over. I need you here,” he said. Nyman felt that it was hard to get the Americans to understand the new model, which used hot water in contrast to older steam-based systems.

“The project in St. Paul was seen as a pilot project for the entire state. It took two years to build it, but just as we had finished it, the oil and natural gas prices dropped, which made it economically hard for us to compete,” Anders Rydåker says. He was offered the job as head of St. Paul’s energy company after Hans Nyman died from cancer in 1993. District Energy Inc. today serves close to 475 commercial, industrial and residential buildings in and around St. Paul. President George W. Bush toured the company before he gave his first major speech on his energy policy in May of 2001. In it he described the company as a model of energy efficiency, diversity and affordability.

The system in St. Paul relies on biomass in the form of wood chips, but can also use oil, natural gas, or coal. Over time it eliminated 75 percent of the oil and coal usage, delivering heat at stable prices for two decades while providing this city of 400,000 with an environmentally friendly energy system.

However successful the district heating system was in St. Paul, it lost much of its steam when oil and gas prices dropped drastically, forcing Anders Rydåker and his colleges to rethink their mission. They now started to design systems that circulate cold water instead of hot.
”Property owners realized in the 1960’s that a more centralized system could save money by reducing the size of the maintenance staff for heaters and air-conditioning units. We investigated the technology and by 1993 we had figured out how to do it,” says Anders Rydåker, who had moved back to Sweden in 1989 and convinced Stockholm’s public energy utility to build a seawater-based system that keeps all of downtown Stockholm cool during the summer. “It is one of the world’s largest district cooling system,” Sven Werner says.

One reason for why Sweden became so strong in district energy and other alternative energy technologies was the country’s energy taxes, especially on oil and gas.
”They forced its engineers to be more inventive when it came to diminish the dependence on oil and natural gas. This helped Sweden to move ahead in this field,” says Anders Rydåker.

The hardest part when it comes to promoting district energy is that it takes large investments, which may seen from a strictly economical point of view only yield marginal benefits. The interest in district energy has been much stronger in Europe, Russia and the former Eastern Europe, and Canada, but the interest is growing in the U.S. as well.

The rising oil- and natural gas prices, and the growing awareness of the global warming has opened up new opportunities for District Energy, both when it comes to heating and cooling. Honolulu Seawater Air Conditioning, a subsidiary of District Energy’s affiliate Market Street Energy, is currently developing a 120 million dollar system for cooling downtown Honolulu with deep-seawater. One of Anders Rydåker’s colleges, Ingvar Larsson, is chief engineer for the project.

“I am very optimistic and believe that we are in the beginning of an expansion phase. Our customers are very happy, and we will expand our systems. We are right now evaluating different expansion scenarios dependent on various price levels for oil and gas. We don’t need to search for new customers. They are knocking on our doors,” he says.

Hans Sandberg