How the Town of West Union Built a Transformational Geothermal Project

By Jeff Geerts

Jeff Geerts is a special Projects Manager with the Iowa Economic Development Authority. He is a regular guest lecturer in the Drake University College of Business and Public Administration and has programmed an international comparative policy course in sustainable community best practices for graduate public administration students for the last 20 years.

Oct 31, 2018 | Smart Cities | 0 comments

West Union is a progressive county seat community of 2,486 people in far northeast Iowa filled with community pride. In 2013, West Union completed a 5-year downtown transformation including the following holistic, integrated components of sustainability and resilience.

  • District ground source distributed loop heating and cooling (geothermal) system stubbed into 60 downtown buildings
  • Energy audits for downtown buildings
  • LED street lights
  • Electric vehicle charging station
  • 6 blocks porous paver streets and sidewalks
  • 36,000 square feet of rain gardens
  • Civic plaza
  • Dozens of building storefronts restored
  • 12 upper-story housing units

 

 

Why West Union

West Union is a Main Street Iowa community following the National Trust for Historic Preservation’s Four Point Approach® to Main Street development. This historic preservation-based approach to economic developed is based on the four points of Economic Vitality, Design, Promotion and Organization. In late 2007, the Iowa Economic Development Authority (IEDA) became aware that West Union was in the early stages of conceptual design for a downtown street and streetscape improvement project. Concurrently, the Iowa Economic Development Authority was embarking on a journey to integrate green, sustainable practices into its programs and services.

IEDA approached the city of West Union, Main Street West Union and local organizations to become a pilot demonstration community. IEDA was interested in seeing the transformative impact coordinated investments by multiple government programs could have versus the common approach of spreading government investment across multiple locations resulting in watered down impact.

The Vision

In June 2008, with Iowa experiencing historic flooding, a two and a half day visioning workshop was held.

IEDA hired Conservation Design Forum, a firm specializing in ecological restoration practices, to facilitate the visioning workshop. To demonstrate the power of partnerships and the transformative impact potential of local, state and federal agencies working together, IEDA involved resource people from the following sectors.

  • Natural Resources
  • Public Health
  • Agriculture
  • Arts
  • Transportation
  • Academia

Having these resources available helped the community envision what is possible by sharing state of the art practices happening around the world. Having this basis of “the possible” helped the community establish the project vision and these First Principles.

  1. Collaborative Process
  2. Sustainable Community Investment
  3. Great Setting for Local Business
  4. Healthy Natural Environment
  5. Beauty Crafted into West Union
  6. Vibrant Economy for Northeast Iowa
  7. West Union’s Unique Context
  8. Inspiration through Education

The visioning workshop concluded with the state and federal partners identifying 50 potential funding opportunities to transform vision to reality.

Background

Downtown West Union is listed on the National Register of Historic Places. The building stock dates from the late 1800s to 1910 and remains relatively intact. Having a downtown full of historic buildings can be a wonderful asset. Perhaps not the same can be said for 100+ year old underground infrastructure when seeking to serve 21st century business. Much of the downtown water and sewer systems had served their anticipated useful life and no stormwater management system existed. Sidewalks were crumbling, the last major road resurfacing was in the mid-1980s.

West Union’s natural gas service is provided by investor-owned Black Hills Energy while electrical service is provided by another large regional investor-owned utility, Alliant Energy. At the time the project was first envisioned, most businesses used natural gas for heating and electricity for cooling, if air conditioning was installed at all.

The Process

Fortunately, the International District Energy Association (IDEA) provides a step-by-step process to establish community district energy. The process includes the following stages.

  1. Objectives setting
  2. Data gathering
  3. Project definition
  4. Options appraisal
  5. Feasibility study
  6. Financial modeling
  7. Marketing and business development
  8. Project procurement
  9. Delivery

Unfortunately, our project team didn’t discover IDEA and its resources until three years into the project. Turns out much of the model process was followed, but not always necessarily in the best order. With the help of IDEA members, the project advanced more quickly and confidently.

Objectives Setting

The West Union district geothermal system directly supported three Community First Principles.

  • Sustainable community investment
  • Great setting for local business
  • Vibrant economy for northeast Iowa

The following were objectives of the district geothermal system:

  • Stabilize building energy costs
  • Increase building comfort
  • Serve as a business retention and attraction tool
  • Provide a community asset

Data Gathering

Initial data gathering focused on downtown building energy audits conducted by Black Hills Energy. In Iowa, investor-owned utilities responsible for delivering heating fuel to a customer provide energy audit services.

By minimizing the amount of each building’s potential system use initial retrofit costs could be lowered and the geothermal system could be designed smaller or its capacity maximized to serve more buildings. Data was also gathered on building uses, number of occupants, and current heating and cooling system.

IEDA provided matching grants and utility providers provided rebates to encourage implementation of energy efficiency recommendations.

Options Appraisal

Various approaches to district heating and cooling with a ground source hybrid distribution system were analyzed, including a potential snow and ice melt system using the district infrastructure system augmented with an additional heat source either from local renewable biomass or natural gas.

Concerns about the annual and long-term cost of the supplemental heating needs for snow and ice melt eliminated that option early in the decision-making process.

A total of 60 buildings, approximately 330,000 square feet, were targeted for possible district system use. Pro formas were run, approaches studied, energy assumptions made, and energy use and costs predicted with the following approach selected for implementation.

Geo System Components

  • 132 vertical wells ~300’ deep (22 circuits) on courthouse square – 264 tons
  • 252 potential expansion wells at Lions Park – 504 tons
  • 8” dia. supply and return lines under center of streets
  • 2”-6” dia. service lines stubbed into buildings
  • Circulation pump/controls in courthouse basement and future for Lions Park
  • 60 buildings in project district stubbed to system
  • Each building required to install internal heat pump(s) to access system

Feasibility and Financial Modeling

West Union contracted with FVB Energy to answer the community’s many questions.

  • Who should own the district system?
  • Who should operate and maintain the district system?
  • What will it cost annually to maintain and operate the system?
  • Who will administer the service?
  • What should the system fee structure be per property?
  • Should we meter system use or base fees on system capacity in each building?
  • Should only certain heat pumps and installers be allowed?

The city chose to sign a 5-year lease with a user group comprised of building representatives choosing to use the system. The user group contracted with a third-party, Tri-County Refrigeration, to provide system operations, maintenance and administrative services.

District system users pay a flat administrative fee plus a monthly amount based on heat pump capacity installed within their building.

Marketing and Business Development

The city wasn’t the only entity with many questions and a need for additional information.

Many West Union property owners expressed interest in the district geothermal system but needed information to make an informed decision. Like many situations in community planning and development, there was a classic catch-22. How do we design and pay for a district geothermal system when we don’t know how many buildings will use the system or the size and energy loads of those buildings? How do I commit to a geothermal system when I don’t know when it will be built, what I will have to do to connect to the system, or what it will cost me or save me?

The city of West Union’s partnership with FVB Energy helped answer many of the system-wide questions, but not the individual building related questions? These issues caused a significant delay in property owner commitments. The city was interested in a district system. Property owners were interested as well, but no one had the expertise or time to devote to answering the pertinent questions until the Iowa Economic Development Authority and Main Street West Union were able to tap into a USDA Renewable Energy Development Assistance (REDA) grant.

The USDA REDA grant afforded West Union the opportunity to hire mechanical and electrical engineering firm KCL Engineering to develop an individual business case for more than 20 property owners interested in the district geothermal system. Each business case included the following.

  • Energy load analysis
  • Sizing and location of heat pumps
  • Opinion of probable cost
  • Life cycle cost analysis comparing district system use versus an alternative gas heating and DX cooling system
  • Estimate of potential rebates and other available incentives

With this information in hand, property owners could make an informed decision. Ten businesses committed soon thereafter to using the district system.

Procurement and Delivery

The public infrastructure portion of the geothermal system (wellfield and distribution system) was approximately $2.3 million. The project was timed perfectly with national and state efforts to jump start the economy and address climate change. The result was that the entire public portion of the district geothermal system was paid for by a combination of HUD Community Development Block Grant, EPA Climate Showcase, and DOE funding.

Property owner investment was supported by a special low-interest loan program from the two local banks, utility rebates and in at least one case USDA Rural Energy for America Program funding.

For quality control purposes, a minimum standard was established for heat pumps connected to the district geothermal system along with a permitting process for heat pump installation. Most heat pump installations were completed by the user group’s third-party system operator.

 

Successes and Challenges

Interest in the system continues with the two largest downtown buildings, including the county courthouse, connecting to the system in the last year bringing to 12 the total number of businesses using the system.

The district system has operated nearly flawless since coming online December 2013. System efficiency has been fantastic. It appears the system has much greater capacity than originally estimated based on system performance and the loads of current participating buildings. While overall system performance has been as good or better than expected, some challenges remain.

When the initial project pro forma and life cycle cost analysis was completed in 2008-2009 an annual increase in gas costs was expected based on historical performance. However, gas prices today are approximately 40 percent LESS than they were when the community visioning process took place in 2008 while electric rates have gone up.

Evaluating system impact on building utility costs is difficult. Some buildings were previously unoccupied, some changed uses, some are cooling spaces that were not air conditioned before and collecting individual building energy use data is time consuming.

While operating for nearly five years, no formal city policies exist to consistently incentivize additional buildings to utilize the system. An established policy and incentive program would facilitate efforts to connect more buildings to the district system resulting in a lower monthly user fee for all parties.

With all of that said, it is important to keep in mind that what West Union has accomplished is no small feat and worthy of accolades. The community has established a unique downtown district geothermal system with very few United States peers. The connection of 12 businesses, 10 privately owned, within 4.5 years of system establishment is impressive and one of the fastest uptakes of a district system of this nature anywhere in the Unites States.

As more buildings connect, it becomes easier for the community to view the system as a community asset. Going forth the community will grow system use by delivering additional community education and information, establishing a formal supporting policy and incentive program, and analyzing the potential for solar energy to lower individual building heat pump operating costs.

For more information, view these West Union videos or contact Jeff Geerts at jeff.geerts@iowaeda.com.

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