Detroit’s downtown energy system, Detroit Thermal LLC, is tying seven downtown Detroit Wayne County buildings deep underground with an innovative approach and a new three-year contract estimated at $8 million, continuing major growth of the underground steam energy system serving Detroit from the riverfront to the New Center area.
Additionally, recently completed new service connections to the Rehabilitation Institute of Michigan, part of the Detroit Medical Center, and the planned investment of $850 million in DMC by Vanguard Health Systems offer major continuing growth momentum.
Detroit Thermal was awarded nearly $100 million in new business last year from customers including the DMC, Superior Ambulance and others.
Blue Cross Blue Shield of Michigan has also signed a 10-year contract for its landmark three-building downtown Detroit campus at 500 and 600 East Lafayette. Detroit Thermal president Victor Koppang said an analysis found that connecting to Detroit Thermal would save the Blues money in both construction and operating costs, and would reduce the insurer’s carbon footprint. The deal is particularly significant, Koppang said, because the Blues had operated their own steam system since the early 1970s.
Similarly, Koppang said, Wayne County decided to connect to Detroit Thermal rather than rebuild its own aging boiler plant: “Their studies showed that the advantage of connecting to and growing with our existing system produced major savings in avoiding huge construction and capital costs, combined with true, holistic operating savings and environment benefits; all combined to the advantage of the county and its taxpayers.”
And, Koppang added: “We have also completed the underground connections for our new contract with the DMC’s Rehabilitation Institute of Michigan. That new connection alone provides about $5.5 million in new revenue over the next nine years as part of our ten-year DMC contract, announced last year.”
Detroit Medical Center, including the DMC Detroit Receiving Hospital, the DMC Children’s Hospital of Michigan and the DMC Rehabilitation Institute of Michigan, signed an $80 million, 10-year contract in 2009 to purchase all of its steam needs from Detroit Thermal.
“District Energy makes great business sense,” said David Manardo, corporate vice president of facility engineering and construction at the DMC. “This provides the DMC with an updated and efficient way to heat and cool our buildings.”
Detroit’s second-century-of-service steam system got a new life with more than $35 million in capital investments to upgrade the system when it was purchased in 2003 from Detroit Edison by Youngstown, Ohio-based Thermal Ventures II, LP. TV II also owns and operates the Youngstown system and operates private industrial steam plants at three General Motors plants.
The Detroit district energy steam system was started in 1903 and serves 145 buildings with more than 30 million square feet along its 39 miles of distribution system, including 35 miles of buried steam pipes and four miles of tunnels below downtown streets, some as deep as an eight story building is high.
District energy is experiencing a surge in interest from cities and businesses seeking to shrink their carbon footprint, avoid construction costs, increase their energy reliability and lower fuel and operating costs
“District energy is not a new concept, but we’re seeing renewed interest as people recognize it’s a clean and cost-efficient way to heat and cool their buildings,” Koppang said. “We’ve invested significantly in Detroit, and it’s paid off. We have a 21st century system and nearly $120 million in new customer commitments, and the interest in our service keeps growing. The future looks great to us.”