3 min read March 2023 — Vicinity Energy runs district energy systems that are becoming the number one option for building decarbonization and fighting climate change. The steam that runs through the pipelines underneath cities like Boston and Cambridge is one of the reasons why Massachusetts is “the front runner when it comes to addressing climate change,” Jaclyn Bliss, chief customer officer of Vicinity Energy, told Invest:
What role does Vicinity Energy play in Greater Boston’s energy ecosystem?
Vicinity plays an integral part in Boston’s energy ecosystem. We own and operate the largest district energy system in the Commonwealth, serving the majority of the buildings you see in the Boston city skyline – over 75 million square feet or the equivalent 60 Prudential towers.
District energy systems are an efficient and reliable way to deliver and distribute energy in densely populated areas like cities and campuses. Here in the greater Boston area, we own a number of facilities around the City where we centrally generate energy. We transport this energy to our customers in the form of steam through miles and miles of underground pipes.
We serve many mission-critical facilities, including the major hospitals and medical research centers, colleges and universities, municipal buildings, biotech laboratories, residential buildings and commercial office space. The energy we provide is used to keep people warm during the winter, cool in the summer, and for many important purposes, like operating room sterilization, humidification for museums, and for life science research.
There are numerous advantages to district energy. It provides building owners freedom from maintaining their own onsite energy systems and equipment; it’s incredibly reliable; and a much greener alternative.
Many people in the greater Boston area don’t realize they have a clean, safe and reliable district energy steam system right under their feet. It’s a huge asset, especially in our collective fight against climate change.
Is Boston a leader in climate change policies now?
Boston has very progressive and aggressive climate change policies. Our City is leading the charge, addressing the dangers of climate change head-on and serving as a role model for the entire country with progressive carbon legislation.
Just recently, Boston announced the Building Energy Regulation and Disclosure Ordinance (BERDO) 2.0, which introduces carbon targets for large buildings and alternative compliance payments for non-achievement. Many other cities are observing Boston as these regulations are finalized and plan to implement similar measures.
Further, Boston has many well-established forward-leaning anchor institutions like hospitals and major universities whose students, customers, and employees demand action to limit climate change. The city attracts national and international businesses, especially biotechnology companies from overseas, that are already implementing sustainability measures. This creates the perfect environment for positive change, serving as a guidepost for many other cities.
In summary, it’s a confluence of factors that make Boston very aggressive in attacking the challenges ahead of us.
What are your company’s major highlights or milestones during the last year?
This past year has been incredibly exciting at Vicinity. In 2020, we announced our commitment to achieving net zero by 2050 or sooner, and, since then, we developed our decarbonization roadmap, the backbone of which is the electrification of our operations. Our three-pronged approach includes the installation of electric boilers, large industrial-scale heat pumps, and thermal storage to leverage the growing availability of renewable power from the grid.
This year, we’ve made major strides in achieving our objective. We procured our first 50MW electric boiler and have begun the installation process. It will be operational in late 2024/early 2025. In April 2022, we launched our brand-new, carbon-free eSteam™ offering, the country’s first commercially available renewable thermal energy product. eSteamTM will make it possible for our customers to eliminate emissions without building-level retrofits or upgrades, saving millions of dollars.
And, even more exciting, in November, we announced our first eSteam partnership with IQHQ, a major developer of lab and mixed-use space in the Fenway area. We’re thrilled to mark this historic moment with them, and there are many more on the heels.
Are there any shifts in what your clients are demanding over the past year?
Our customers have always looked to us to provide reliable, affordable energy solutions for their buildings. But, there has recently been a seismic shift towards low and no carbon energy solutions, and Vicinity is leading the charge in meeting this demand.
As our customers look for new ways to decarbonize and meet Boston’s new carbon reduction regulation, the demand for district energy has increased substantially. Not only is conventional steam greener than most other commercially viable alternatives for large buildings, but we also have a robust roadmap to net zero; and our customers don’t need to lift a finger to benefit. We are going to do all the work for them by making investments in our central plants.
In cities like Boston, we anticipate that corporate and organizational sustainability goals, as well as looming alternative compliance payments (ACP) from BERDO will continue to drive demand for district energy and our carbon-free eSteamTM.
Do you see carbon offsets as a reliable and meaningful way to achieve decarbonization?
Carbon offsets play an important role in achieving decarbonization quickly. They are relatively simple and easy to procure, which makes them attractive in the short run as we build more renewable generation and infrastructure locally.
However, many of our customers are trying to avoid using offsets to achieve their decarbonization targets. They’re looking for additionality, which means procuring energy from new or developing renewable generation sources, as opposed to buying into what is already available and procuring the energy as it comes online.
Because of the debate over offsets and the desire for additionality by the City of Boston and many of the buildings we serve, they’re not part of our overarching strategy. We will use offsets as needed in the short term, but our objective is to transform our operations so that we are not relying on them. We plan to purchase renewable power, predominantly from new offshore wind resources currently under construction, and to generate steam with that power.
Which industries are showing the most demand for services?
With the changing regulatory landscape, we’re seeing an uptick in demand across the board for district energy. Everyone is looking at BERDO and thinking about how they will comply. We’ve seen an increase from commercial buildings, hotels and hospitality, medical centers, and hospitals – all looking to partner with us to support them in their decarbonization efforts.
That said, the industries with the greatest demand for steam are biotechnology and the life sciences. These companies tend to be aggressive when it comes to mitigating their carbon impact, and high-pressure steam is necessary for them to conduct their research, clean and sterilize equipment, support vivariums, and run their processes. By far and away, we’ve seen the greatest demand for district energy and eSteamTM from this industry.
What is the biggest challenge for Vicinity Energy now?
We are so passionate about our commitment to achieving net zero and our carbon-free eSteam product we are putting a lot of effort into educating prospective customers, community and environmental groups, policymakers, and other stakeholders about the power of district energy. Our system and existing assets underneath the streets in Boston can be the answer to effectively decarbonizing the largest carbon contributor in the city – urban buildings. We want to ensure our community is aware and as excited as we are about the power of the district energy to meet sustainability goals and limit climate change.
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