Balancing our legacy of the past with the bright future of innovation.
As we round out this year of growth and transition we want to express our gratitude to you, our customers and community. District Energy is a community energy system that started in Saint Paul and has reached communities far beyond. The values and principles that were instilled in District Energy’s foundation still ring true today and have served as an inspiration in the district energy industry for exceptional technical knowledge, organizational governance and management, service delivery, and our focus on customer service. As we grow and share knowledge, the benefits cycle back into the system through our affiliate organization Ever-Green Energy. This enables District Energy to draw on the team’s experience with other systems to design and implement solutions that best serve our customers and community. As we embarked on our third leadership transition in October 2024, our goal remained to balance District Energy’s legacy of the past with the bright future of innovation ahead. In this year’s report we want to highlight the projects that defined our year and frame the exciting work in store for District Energy as we look ahead together.
In addition to reliable and cost-effective rates, our customers are seeking low-carbon energy solutions to heat and cool their buildings. While we currently provide 100% carbon-neutral cooling and up to 50% carbon-neutral heating, we continue to evaluate the best opportunities to fully decarbonize our energy systems. This year we completed a wastewater heat recovery study in collaboration with the Metropolitan Council and the City of Saint Paul, continued our partnership with Caterpillar to host a hydrogen CHP pilot project at the Kellogg plant, and further developed creative ways to talk about the complex topic of managing emerald ash borer tree waste. In addition, our longstanding commitment to renewable energy has been a driving force behind our involvement in the development of The Heights Community Energy project, in partnership with the Saint Paul Port Authority. This aquifer thermal energy storage project is one of the first of its kind in North America and will showcase Saint Paul’s continued commitment to energy leadership. We look forward to sharing these projects with Saint Paul customers and encourage you to explore some of this work in greater detail in this year’s report.
I am proud to have led District Energy for fourteen years. It has been rewarding to integrate new technologies, end the use of coal, and continue to reduce our carbon emissions during my tenure,” said Ken. “Building efficiency is central to decarbonization, and it has been great to collaborate with customers to optimize their District Energy connection.”
KEN SMITH
Senior Advisor to the board at
District Energy St. Paul
District Energy St. Paul has long been a leader in the energy sector, and I am honored to move the system forward with initiatives focused on innovative solutions to meet the needs of our customers and the energy demands of the future.”
Luke Gaalswyk
President & CEO at District Energy St. Paul
District Energy has a tradition of growth and innovation, and our dedication is ultimately measured by the quality of the services we provide to our customers. District Energy was founded on a commitment to providing reliability, efficiency, rate-stability, and exceptional customer service. That remains our commitment today. As we welcome exciting changes, we continue to ground ourselves in our commitment to the customers and community. In 2024, we lost our original champion of District Energy, former Mayor George Latimer. As we move through this season of change, we find ourselves reflecting on Mayor Latimer’s legacy of community and connection. His belief that local leaders can come together to inspire change remains as relevant as ever, guiding us into a new chapter of leadership and preserving our dedication to our customers and core values. Achieving progress requires the combined efforts of many, and we look forward to working alongside you into the future.
Decades of Renewable Energy Solutions
And Ideas For The Future
As communities and organizations consider decarbonization, heating for buildings and industrial processes remains a complex challenge. There is not a one-size-fits-all solution, but a range of options to consider for each situation depending on heating needs, economic feasibility, local resources, and project partners. At District Energy, we have integrated renewable assets that are delivering energy to our Saint Paul customers reliably and economically since 2003.
A key to Saint Paul’s success is having a district energy system as an alternative to on-site energy production (typically boilers and chillers). As we reduce carbon, it benefits every customer connected to the system. We can integrate solutions that would not be economically or technically scalable for individual buildings. Up to 50% of the current annual heat production comes from renewable, urban tree waste and solar thermal. Tree waste sources in the Twin Cities metro area includes storm and disease damaged trees such as EAB, tree trimmings, and habitat restoration. In 2021, we began purchasing renewable energy credits (RECs), which allows us to provide all of our chilled water customers with carbon-neutral cooling.
In addition to the renewable production assets, fuels, and RECs, we improved efficiency and reduced carbon emissions by enhancing controls and monitoring technology, adjusting operational procedures, and optimizing customer building performance. Coupled with our team’s data monitoring, the Customer Portal helps customers monitor their energy use and analyze their trends. When customers invest in energy efficiency projects, our team can provide engineering and financial support. Our goal is to continue to reduce carbon while maintaining reliability and delivering cost-effective energy solutions to our customers and community. All of these combined efforts have reduced the system’s carbon emissions by 77% between 2000 – 2023.
Carbon Emissions Comparison to On-Site Production
To compare the advantage of being a District Energy customer, our team developed a sample carbon emissions profile for building heating and cooling. We aggregated the energy use data from the office buildings connected to our system. We then calculated emissions savings by correlating actual energy consumption data from a twelve-month period to building square footage through a regression analysis. Being a District Energy customer provides a reduction in carbon emissions ranging between 45% – 54% depending on building size.
ANNUAL EMISSIONS: OFFICE BUILDING
Waste Heat Potential
This year, we completed a feasibility study considering the integration of heat from the Metropolitan Council’s Metropolitan Water Resource Recovery Facility in Saint Paul. The facility is the largest in Minnesota and one of the largest in the US serving 1.8 million people. Together with the Metropolitan Council and City of Saint Paul, we applied for an EPA grant to implement the project. While the application was not successful, the partners are continuing to look for funding sources.
As proposed, the system would be designed to capture the heat from the effluent of the water treatment process. This means that the wastewater from our sinks, showers, kitchens, laundries, toilets, and more would go through the treatment process, and we would capture the heat from the treated water to heat water for District Energy customers. The effluent heat is consistently 45°F – 50°F, which can then be increased in temperature with a heat pump to meet the temperature requirements of the District Energy system. There is enough heat in the wastewater that it could decarbonize the system and displace natural gas as a primary fuel at District Energy.
PROPOSED SYSTEM DESIGN*
In addition to our team of experts who worked on this project, we also welcomed a master’s student from Germany as an intern through Climate Smart Municipalities to provide additional support. Waste heat can come from many sources, so there may be new opportunities that arise in our community. District Energy continues to work toward our goal to decarbonize by 2050, keeping our customer’s priorities of reliability and cost-effectiveness as our top priorities.
A Groundbreaking
and Energy Innovations for Minnesota
This year District Energy helped to celebrate the groundbreaking of The Heights Community Energy, joined by honored guests Saint Paul Mayor Melvin Carter, Councilmembers Nelsie Yang and Cheniqua Johnson, the Saint Paul Port Authority, Unidos Saint Paul, Steamfitters Pipefitters Local 455, Laborers Union Local 563, Sherman Associates, JO Companies, project partners, and community members.
The Heights project marks two exciting firsts for the energy sector in Minnesota. The project was the first to receive funding from Minnesota’s “green bank” in the form of a $4.7 million dollar loan from MnCIFA. The Heights will also be home to one of the first aquifer thermal energy storage systems in North America.
Located on Saint Paul’s East Side, The Heights is a 112-acre mixed-use redevelopment that will bring 1000 new housing units and 1,000 living wages jobs to the community. The energy system will deliver heating and cooling to 6 multi-family housing units and 4 light industrial buildings, making it one of the largest networked geothermal energy systems in the state. Buildings will be 50% beyond-code for building efficiency. These 10 buildings will eliminate natural gas and maximize rooftop solar to eliminate operational building emissions.
The Heights development is a step towards decreasing the energy burden on the East Side by combining energy efficient buildings with local and sustainable energy sources, providing stable rates, and lowering the cost of energy. Luke Gaalswyk, CEO, summarized this innovative first by saying, “This project is a testament to our shared values as a community, and how committed we are to making progress toward our city and state climate goals.”
The Heights Community Energy will own and operate the geothermal system under the direction of District Energy, a long-standing nonprofit utility partner to the City of Saint Paul, and the Saint Paul Port Authority, owner and master developer of The Heights.
Renewable Heating Production
Extended Through 2028
In October, we renewed the power purchase agreement with Xcel Energy through 2028. The agreement extends the production of biomass-fueled, renewable hot water services for District Energy customers, which accounts for up to 50% of annual heating services delivered to Saint Paul buildings. Local leaders and stakeholders played a role in this success.
BY THE NUMBERS
260k
Tons of woody biomass processed annually
200+
Number of private vendors across ~20 counties
151,068
MWh OF RENEWABLE ELECTRICITY PRODUCED ANNUALLY
580,599
MMBtus OF RENEWABLE HEAT PRODUCED ANNUALLY
*some natural gas is injected into the biomass boiler to enhance combustion
District Energy has been helping to manage urban tree waste in the Twin Cities for more than twenty years. Our facilities manage 67% of the metro-area tree waste, totaling 260,000 tons each year. Developed in response to Dutch elm disease, the biomass processing operations process tree waste into chips to be used as biomass fuel for the combined heat and power operations, producing renewable electricity for Xcel Energy and renewable heating for District Energy customers.
Currently ash trees damaged by emerald ash borer account for a significant portion of urban tree waste in the Twin Cities, and experts assess that ash tree removal has not yet reached its peak in the area. For two years, the Minnesota Pollution Control Agency has convened stakeholders including representatives from cities, counties, waste managers, tree professionals, and a variety of experts to discuss the complex issues of managing the wood waste stream. A study conducted by Cambium Carbon for Hennepin, Ramsey and Washington Counties’ Partnership on Waste and Energy reflected the value stakeholders find in the bioenergy solution provided by District Energy.
Nearly 50% of the heat we supply to downtown SAINT Paul comes from renewable energy
Our organizations sought financial support, so that we can continue to process wood waste into bioenergy in light of inflationary pressures on operating costs and in order to compete with other sources of power – including wind and solar. The State of Minnesota provided grant funding ensuring our facility can continue to operate and help address the region’s burgeoning wood waste stream while a longer-term funding source can be identified.
We are grateful to our partners and the local experts that have contributed to finding solutions for our communities and customers. You can read more about our role in tree waste management with these resources:
Officials Address Regional Tree Waste Used as Renewable Fuel for St. Paul Cogeneration
District Energy St. Paul
January 2020
Twin Cities Metro Area Emerald Ash Borer Tree Waste Study
Cambium Carbon
October 2022
Luke Gaalswyk
US Air Force veteran and drill-status member of the Minnesota National Air Guard
Chris Peterson
US Navy Veteran
Celebrating
Our Veterans
District Energy is proud of our dedicated workforce, many of whom are veterans. On Veterans Day 2024, we highlighted employees who have served our country on what being a veteran means to them, and their advice to fellow vets reentering the workforce.
Luke Gaalswyk, CEO, credits his time in the Air Force Academy for developing his leadership skills. “The Academy’s mission is to develop leaders of character. I’ve been able to apply the skills I honed in the Air Force in different ways in my civilian career. Problem solving and stress management are two strengths and benefits that I see working alongside other veterans – resilience gained through experience and training while serving on active duty or in the guard or reserve.”
“While there are millions of veterans it still seems to be a relatively small community, and when sharing experiences and stories with fellow veterans, it never ceases to amaze me the commonality we find”, shares Chris Peterson, Director – Regional Operations and a Navy veteran. “While the technical skills I developed in the Navy certainly helped me get into the civilian workforce and advance my career, I find myself leaning on experiences from my time in the Navy more than anything.”
“Being in the service helps you recognize the importance of accomplishing your duties to the best of your abilities because people – co-workers, vendors, customers – rely on it just as your country relied on your ability to do your job correctly to protect them,” Terry Wesley, an Office Administrative Assistant based in Saint Paul, reflects. She was a member of the Minnesota Air National Guard and active reserves, also working in federal employee service.
Luke Gaalswyk sums up the importance of recognizing veterans in the workplace with: “I am proud of our workforce, and of the veterans we are working alongside. We can all learn from each other.”
The Phil Memorial
Charity Golf Tournament
In September this year District Energy employees, friends, and family spent a sunny September afternoon celebrating the life and legacy of a dear colleague, Phil Lahde, who passed away suddenly in early 2024.
The Phil Memorial Charity Golf Tournament took place on Monday, September 23 in Stillwater, Minnesota. The tournament was an incredible opportunity to celebrate Phil’s love for golf and passion for community and social events. The event garnered 107 participants as well as multiple vendors and volunteers who sponsored or supported the event, which was a testament to Phil’s character and infectious personality. Participants played golf, shared stories, and spent time outside together celebrating Phil and his life. All donations received from the event went to the American Heart Association and LifeSource Organ & Tissue Donation.
Phil’s legacy lives on through all of his family, friends, and colleagues. His infectious laugh and spirt are forever embedded into the community he fostered at District Energy since he started in 2005. Phil will be greatly missed as a colleague and friend, and he will continue to be celebrated and remembered.
Annual Report 2024
Financials
REVENUES & EXPENSES
HEATING SERVICES
| YEAR-END 9/30 | FY2024 | FY2023 |
|---|---|---|
| Demand rate ($/kW/mo) | $6.28 | $6.03 |
| Energy charge ($$/MWh) | $26.70 | $33.73 |
| Overall rate ($/MMBtu, 1700 Util hrs) | $20.81 | $22.35 |
| Demand (kW) | 185,358 | 186,383 |
| Energy sales (MWh) | 292,731 | 340,721 |
COOLING SERVICES
| YEAR-END 9/30 | FY2024 | FY2023 |
|---|---|---|
| Demand rate ($/ton/mo) | $33.36 | $32.08 |
| Energy charge ($/ton-hour) | $0.102 | $0.110 |
| Overall rate ($/ton-hour, 1200 Util hrs) | $0.435 | $0.431 |
| Demand (tons) | 26,045 | 26,408 |
| Energy sales (ton-hours) | 36,110,382 | 37,864,246 |
RATES & UNIT SALES
OPERATING REVENUES
| YEAR-END 9/30 | FY2024 | FY2023 |
|---|---|---|
| Operating Revenues | $36,727,682 | $39,875,590 |
OPERATING EXPENSES
| YEAR-END 9/30 | FY2024 | FY2023 |
|---|---|---|
| Fuel and energy | $11,132,005 | $15,423,719 |
| Non-fuel operating expenses | $15,277,476 | $14,124,078 |
| Total operating expenses | $26,409,481 | $29,547,797 |
| Operating Income Before Depreciation | $10,318,201 | $10,327,793 |
Board of Directors
Heidi Conrad, Chairperson
Chief Financial Officer, University of Wisconsin-Madison’s School of Medicine & Public Health
Ken Peterson, Vice Chairperson
Attorney and former Commissioner, Minnesota Department of Labor and Industry
Beverly Jones Heydinger
Retired Chair, Minnesota Public Utilities Commission
Heide Kempf-Schwarze
Senior Property Manager, Unilev Management Corporation
Eric Krause
Director of Facilities, Allina Health, large-sized customer representative
Kelly Lange
Enterprise Procurement Director, Securian Financial, medium-sized customer representative
Pat Wolf
President, Commercial Real Estate Services, small-sized customer representative
Tony Poole
Business Manager, Steamfitters Pipefitters Local 455
Luke Gaalswyk, Ex Officio
President & CEO, District Energy St. Paul