Vail’s Thermal Energy Network

Project Overview

The Town of Vail is in phase 1 of building a Thermal Energy Network (TEN) that distributes heat between buildings, facilities, and geothermal sources to improve heating and cooling efficiency, reduce energy consumption and greenhouse gas emissions, and benefit the local economy.

Vail’s 2023 Stewardship Roadmap aims to reduce greenhouse gas emissions 25% by 2025, 50% by 2030, and 80% by 2050. A large portion of Vail’s emissions come from melting snow to keep walkways clear of ice, a process that consumes a large amount of energy. To reduce emissions from snow melting, building heating and cooling, and other activities, Vail is constructing a TEN. A standalone phase 1 project already underway will create a “geothermal district,” defined as at least two thermally connected buildings and a bore field (an area where wells are drilled to access underground geothermal heat). Once complete, the project as a whole has the potential to reduce Vail’s emissions by 1,180 to 1,295 metric tons annually.

Distinct from a geothermal power plant, a TEN is a network of pipes that captures waste heat and distributes it between interconnected buildings, which become nodes in the network, drawing additional heat from geothermal sources as well. In Vail’s case, the system will capture waste heat generated by the Eagle River Water and Sanitation District wastewater treatment plant or the Dobson Ice Arena, then balance other buildings in the network, including the Vail Public Library. The TEN might also provide grid stability benefits for Holy Cross Energy (HCE), Vail’s utility, by reducing power usage for heating and cooling at peak times.

The Town of Vail contracted McKinstry, an Energy Services Company (ESCO), to design the TEN, with The Grey Edge Group handling initial engineering work in parallel. Vail opted to pay for the project up-front rather than use a typical Energy Service Contract model, allowing the town to recoup the savings itself instead of an ESCO. The project is supported by $4.2M of external funding, including a $1.78M “GETCO” (Geothermal Energy Tax Credit Offering) grant from the Colorado Energy Office, $2.2M from Inflation Reduction Act incentives, and rebates from the federal Investment Tax Credit. It also eliminates the need to spend $1.5M on maintenance for the Vail Public Library’s failing HVAC system, and Holy Cross Energy is pledging $150-200k in support.

A total of $9.1M in funding is available for an energy performance contract that includes LED lighting, controls, building envelope improvements, and node one of the TEN. The $5.9M initial geothermal district node comes at a net cost to the town of only $1.3M, with a long-term projected $2.1M positive cashflow, and a payback period of 14 years. Once the initial thermal district is constructed, additional buildings can be added to the network more easily, building toward Vail’s larger decarbonization vision.

Lessons Learned

Energy Performance Contract Model

An Energy Performance Contract model can be useful for less wealthy communities. These contracts involve partnering with an ESCO, a design-and-build firm hired through competitive procurement, and use the savings from renewable energy projects to pay off the loans taken out to finance up-front capital costs. These savings are guaranteed by the ESCO: if the project fails to save money, the ESCO fixes it and pays the difference.

Engineering Challenges

Complex energy projects need skilled engineers and designers. Vail’s project encountered setbacks, including unforeseen challenges crossing bodies of water and difficulties fitting equipment in small spaces; a similar project in Aspen hit unexpected pockets of methane in the ground. High-quality engineering, design, and technical work are critical for success in geothermal projects, and finding trustworthy, high-quality technical experts can mean the difference between success and failure.

Care in Writing an RFP

RFPs need to be carefully worded to convey the type of work and expertise needed. Early in Vail’s process, a lack of awareness of grid stabilization benefits meant that this kind of benefit was not included in the initial RFP. More clarity on grid stabilization benefits early on might have led to better support from Holy Cross Energy, for whom this is an important piece of the project.

Program Contacts

Beth Markham, Environmental Sustainability Manager, Town of Vail
Cameron Millard, Clean Energy Specialist, Town of Vail