Thermal Energy Networks: Identifying opportunities

Across the United States, regulators and legislators are looking to Thermal Energy Network (TEN) projects as a tool to help slow the increasing demand on the electrical grid. As the first projects are being piloted, with the hopes of encouraging wider adoption, one important question remains unanswered: “What are the characteristics of a good TEN opportunity?” Energy industry professionals should be searching for basic metrics, or at least rules-of-thumb, that help to identify conditions that merit a deeper dive into the viability of a TEN.

In collaboration with Ecosystem, one of New York’s biggest utilities, Con Edison, is developing UTEN (Utility Thermal Energy Network) pilot projects in Manhattan, in Rockefeller Center and in Chelsea. While we await the regulators’ review of proposals, it’s an opportunity to consider what can be learned from these projects that will assist in the future development of TENs. At the top of that list is a set of criteria for identifying opportunities for future viable TENs. With that in mind, let’s look at some of the more important elements.  

Criteria for viable TENs can be broken down into three main categories:

• Thermal Load Density
• Thermal Load Diversity
• Stakeholder Economics

Thermal Load Density                                                                                                                      

Obviously, a certain amount of thermal load is required to justify the expense of developing a new TEN. Installation costs of the piping, pumping, and other thermal equipment must be offset by the benefits of the system.

Thermal Load Density criteria may be expressed as thermal energy per area such as BTU/acre. However, since the cost of installing a new thermal energy network is more closely related to the amount of piping, and not to the area that it serves, a more useful criteria might be thermal energy per length of network piping such as BTU/ft.  

It is important to consider the type of TEN when quantifying the thermal load. Is this network heating-only, cooling-only, four-pipe, variable temperature, or possibly a tempered network paired with heat pumps to provide both heating and cooling?

Thermal Load Diversity

In the latest generation of TENs, the thermal energy network is paired with heat pumps in each building that are used to move heat into and out of a network loop for building heating and cooling needs. For these networks, a metric that describes the diversity of the connected customers’ energy use is critical to assessing the viability of a TEN – supplies and resources need to meet demand.

A useful Thermal Load Diversity metric will describe the relationship across the network between several thermal loads:

• Simultaneous heating and cooling loads
• Heating loads in excess of simultaneous loads
• Cooling loads in excess of simultaneous loads
• Matching thermal sources to thermal demands

Stakeholder Economics

For a UTEN to be successful, it must be financially attractive to its customers, owners, and other stakeholders.

One foundational metric must be the total cumulative value added across all stakeholders. If a project does not deliver net positive value in aggregate, it should not proceed.

For the customers, it is important to recognize that their financial analysis will include not only energy costs, but other costs such as O&M and cost of capital. End-users may weigh other benefits and costs that don’t show up in a financial analysis, such as convenience, environmental benefits, or the reliance on an outside party for thermal energy.

The owner of the thermal energy network must also have a return on their investment if they are to install, maintain, and operate the network.

Local Realities

Ultimately, any metrics that aim to assess the viability of a TEN will be related to the economic realities of its location. Construction costs, costs of energy alternatives, and current utility rates can vary broadly from place to place and should be considered in any TEN analysis.

Opportunities

Interest in exploring the benefits of TENs continues to grow. As of June 2025, at least 15 states have passed or are currently considering UTEN legislation in the hope that UTENs can contribute to reducing the strain on electric grid capacities. If they are to be widely deployed, the energy industry will need simplified ways of identifying locations for TENs where further analysis would be beneficial.