ST. LOUIS • What’s one thing the finalist cities for Amazon’s new campus have in common?
Besides a certain level of dynamism, some in St. Louis are pointing out another, more specific commonality: They have shared networks called district energy systems, used for heating, and sometimes cooling, buildings in their downtown cores — a condition Amazon required of its suitors and already employs at its Seattle facilities.
St. Louis, which didn’t make Amazon’s short list for its second headquarters search, has a district energy system, too, although it faces some challenges. Often called the “steam loop,” the system encompasses more than 15 miles of pipes that provide heat to downtown buildings. Customers ranging from government buildings to Busch Stadium, hotels and apartment complexes are able to buy the steam without spending hundreds of thousands — or even millions — of dollars on their own, individual boiler systems.
Though nearly a century old, the steam loop’s operators say it’s holding up well enough, physically. Where it’s running into problems, though, is in maintaining a robust base of customers — altering rates and jeopardizing the system’s viability and leading policymakers at City Hall to seek ways to promote its use.
The system currently delivers steam to about 70 buildings. Ten years ago, its customer base encompassed about 100 users and, a decade before that, it served around 130 buildings.
Alderman Jack Coatar blames defection from the steam loop on the city’s tendency to give financial incentives to downtown developers that would essentially cover the costs of separate, individual boiler systems. Questioning that practice, Coatar introduced a recent bill that looks to reverse the trend by requiring use of the steam loop by downtown development projects that seek financial incentives from the city.
“If you’re going to come ask the city for something, this might be one of the concessions, is that you have to be on the steam loop,” Coatar said.
With the system supplying heat to 15 government buildings, he says that both downtown tenants and the city as a whole have lots of money tied to the fate of the system.
“If this system were to not be viable, as its biggest customer, the city would be in a tough spot,” said Coatar, discussing the bill in a meeting of the aldermanic Housing, Urban Development and Zoning committee Wednesday. “When people leave the steam loop, that impacts the system’s viability and also the city’s rate.”
Scottrade Center is a “recent, perfect example” of a major defector, according to Dan Dennis, vice president and chief operating officer for Ashley Energy, the company that operates the steam loop and spoke in favor of Coatar’s bill in committee. During recent renovations subsidized by $64 million from the city, the arena installed its own heating equipment.
“It’s not like someone did something wrong,” Dennis says of Scottrade Center. “There was a lack of marketing and communication. We’re trying to make sure that doesn’t happen again.”
Ashley has operated the system for only about six months, after buying it from Trigen for an undisclosed price last year. The company inked a 20-year deal to run the steam loop, and plans at least $2 million in efficiency and capacity upgrades at its cogeneration plant north of downtown — which produces both heat and electricity from natural gas.
They’re ultimately hoping to attract new clients. Touting the system’s efficiency, Ashley officials see strong potential for enabling customer savings, as long as the steam loop can preserve a “critical mass” of users.
“Having an adequate economy of scale is vital, because otherwise you’re trying to spread fixed costs over too few users,” explained Dennis.
“You get this sort of downward spiral,” added Mason Miller, Ashley Energy’s president and CEO. He said a “lack of partnership” between the city and the steam loop’s previous operator failed to draw new users to the system, and ultimately raised rates for those that remain.
Coatar and proponents of his bill say there’s not yet desperation to keep the steam loop viable. Instead, they say they aim to proactively start a discussion about how the city can bolster support for it.
“It’s not forcing developers to do anything,” said Miller. “If they don’t want to be on steam and want to do their own boilers, they can do it. They just can’t receive tax incentives.”
“We’re looking for a level playing field,” adds Dennis. “The city is tied into the district energy system. ... They have recognized it’s in their interest to make sure there’s enough people on it.”
Though discussed in committee, Coatar’s bill was not voted on, and will be reintroduced in April with certain changes that he says are still being determined.
In discussion last week, Alderman Heather Navarro expressed concern about whether the bill could complicate the city’s recently announced commitments to renewable energy and energy efficiency.
“My concern would be if we have a building owner who would want to move toward solar, for example, that they would then be locked out of these incentives potentially, because they’re not tying into the steam loop,” said Navarro.
Miller, though, said that there are “multiple ways to integrate solar into a steam system,” or help offset peak energy usage. Moreover, he suggests that energy savings enabled by the steam loop dovetail with the city’s energy goals.
Although St. Louis couldn’t land Amazon, the steam loop’s proponents see additional opportunities for the system to spur future growth in the city. As Miller explains, the attention-grabbing development that happens above ground can often hinge on the unseen infrastructure below, that helps support it.
“You need to have buildings, stadiums, hotels, apartments, condos, grocery stores. All of the things that developers in St. Louis are building above the ground is necessary,” said Miller.
“(But) you have to make sure what is underground, the energy infrastructure, can keep pace with it,” he adds.