District Energy Conversion Incentive

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The Renewable District Thermal Incentive Program provides funding to transition to zero-emission thermal energy systems. These systems can be ground-source, water-source, or multi-source systems. They will provide space/water heating and cooling in homes, businesses, and communities. Funding is available to support:

  • Scoping studies
  • Detailed design studies
  • Implementation projects
  • A combination of the options above

This program supports Denver’s goal to reach zero greenhouse gas emissions by 2040

Program Background

Denver is working towards a zero-emission future by 2040. Natural gas combustion accounted for nearly 22% of Denver’s greenhouse gas emissions in 2022 and increased 5% since 2018. Zero-emission ground-source, water-source, and multi-source thermal energy systems are needed as sustainable alternatives to fossil-gas based heating systems in Denver. Due to up-front costs, the adoption of such thermal energy systems has proven to be limited.  

The Office of Climate Action, Sustainability and Resiliency (CASR) intends to meet Denver's decarbonization goals by offering a monetary incentive to support scoping studies, detailed design studies, implementation projects, or a combination of these options for eligible thermal energy systems. The eligible thermal energy options included in the program, applicant types, and the levels of incentives offered by will be updated regularly as market conditions change. 

We have determined that the incentive program aligns with the Legislative Declaration establishing the Office of Climate Action, Sustainability, and Resiliency (Sec. 2-404 D.R.M.C.) as well as the Permitted Uses of Revenue in the Climate Protection Fund (Sec. 2-405 of the D.R.M.C.). 

Eligibility

Eligibility determinations will be made at the discretion of CASR to allow for flexibility to advance the intent and objectives of the incentive program. 

Applicant eligibility 

  • Building owners, developers, geothermal installers, contractors, public service utilities, water resource recovery and water management entities, college or university campuses, and others are eligible to apply.
  • Projects must serve more than one building and/or be located in the downtown Denver area to facilitate the future implementation of a connected district thermal energy network.
  • Projects must be located within the City and County of Denver. 

Thermal energy system eligibility

  • Ground-source, water-source, and multi-source thermal energy systems are eligible for this program (subject to program approval).
  • Projects must eliminate or substantially reduce dependence on fossil-fuel based thermal energy systems and strive to minimize capacity constraints on the electric grid vs alternatives. 

Supportive funding and resources

  • If awarded, a financial incentive from the City, Recipient agrees to cooperate with the city to submit applications for supportive funding and/or resources from relevant sources, including but not limited to utility and grant programs.
  • Enacted by the Inflation Reduction Act of 2022, Title 26, USC §48. Investment Tax Credit for Energy Property provides a 6% base credit and potential for a 5x multiplier for “equipment which uses the ground or ground water as a thermal energy source to heat a structure or as a thermal energy sink to cool a structure” (§48(a)(3)(A)(vii)). 
    • Recipient agrees to cooperate with the city to submit an application pursuant to §48E adhering to all applicable guidance and deadlines imposed by the Treasury Department and Internal Revenue Service. 
    • Upon receipt of direct payment or tax credits associated with an eligible thermal energy system, Recipients shall refund the city’s incentive award amount proportional to the approved % credit provided by the Treasury Department (e.g., 30%). Remaining funds will be retained by the Recipient.
    • If an application is not possible, Recipient must receive written confirmation from the city waiving this requirement. 

CASR will prioritize projects in under-resourced and disproportionately impacted communities, as well as projects that would not otherwise occur without incentive funding. 

Submit an Application

Application types and incentive amounts

  • Scoping Study to determine GHG reduction potential and costs.
    • Up to $50,000
  • Technical Design Study to address key project elements and prepare the applicant for subsequent project implementation.
    • Up to $250,000
  • Project Implementation
    • Up to 50% of the first $5 million project cost 

Application steps 

Applications are completed in two steps:  

  • Step 1: Project concept and confirmation of eligibility 
  • Step 2: Application for project support 

Step 1 applications may be submitted on a rolling basis. Step 1 applicants will be notified if they are invited to submit a Step 2 application and will receive a direct link to the submission form. 

Step 1 Application Required Document Uploads:  

Please upload a concept paper including the following information: 

  • Cover Page (1 page maximum). Include the project title, the project category being pursued, both the technical and business points of contact, names of all team member organizations.
  • Concept Description (5 pages maximum). Succinctly describe the project concept; the anticipated funding request and why CASR support is needed; technical description and performance objectives of the proposed thermal energy system; anticipated challenges or barriers to implementation; and how the proposed project and project team will advance Denver’s zero-emission objectives.
  • Appendix (1 page maximum). Succinctly describe the qualifications, experience, and capabilities of the proposed project team. 

If a Step 1 application is approved to move to Step 2, the applicant can choose any of the following Step 2 application deadlines to submit to:  

  • February 7
  • May 7
  • August 7
  • November 7  

CASR reserves the right to review and issue awards for Step 2 project applications as they are received on a rolling basis.

Step 2 Application Required Document Uploads:  

  • Application for CASR Funding Support (details will be provided to accepted applicants)
  • Letters of Commitment and Support 
  • Budget Justification (narrative and vendor quotes if available)
  • Diversity and Inclusiveness in city Solicitations Request Form
  • W-9 
  • Current Certificate of Good Standing from the Colorado Secretary of State   

All required forms and supporting documentation must be included at the time the application is submitted. Please review the Sample Agreement with the city’s standard language and insurance requirements before submitting your application. 

 

Application Evaluation

Applications will be evaluated according to the criteria described below, with the weights allocated to each criterion.  

  • Greenhouse Gas Reduction Assessment (30 points) – Potential to reduce greenhouse gas emissions vs alternative thermal options.
  • Feasibility (25 points) – Technical feasibility of the proposed project and qualifications of the proposed project team. Capability of achieving the proposed project milestones and outcomes over a practical project timeline.
  • Energy System Impacts (20 points) – Potential to integrate the project into a larger utility district thermal energy network. Potential to reduce Energy Use Intensity and minimize electric demand and energy distribution infrastructure reinforcements vs alternatives.
  • CASR Impact (20 points) – Project represents a cost-effective opportunity to meet thermal energy needs when paired with Climate Protection Fund support. How CASR funding, relative to prior, current, or anticipated funding from other public and private sources, is necessary to achieve the project objectives.
  • Teaming Plan and Workforce Standards (5 points) – Applicants must describe their team and qualifications, as well as any woman- and minority-owned businesses that are part of their team. Applicants should also demonstrate with measurable goals, as applicable, how they utilize high road labor standards such as providing on-the-job training opportunities, wrap-around services, and a workforce from certification or apprenticeship programs; provide benefits such as health care, retirement, and wage standards; use best value/responsible contracting; and have regional targeted and local hire requirements.   

The city may request an interview as part of the evaluation process. Any such interviews will take place after CASR has conducted an initial review of submitted applications.   

The city reserves the right to negotiate the total contract amount and award all, some, or none of the requested award. The city is not liable for any costs or expenses arising out of preparation of this application and selected applicants may not include any of these costs or expenses as part of their fee, rate, or charge for performing work under the contract.   

CASR encourages applicants to utilize small-, minority-, and woman-owned businesses on their project team and, where independent contractors are needed, consider utilizing individuals who identify as people of color, Indigenous peoples, LGBTQ+ people, disabled people, and people whose household income is below the area median.  

Award Notification

CASR will make award determinations by the end of each quarter. CASR reserves the right to not award any applications during a quarterly award period.   

Selected applicants will receive an award notice via email and should be prepared to collaborate with the city to establish a formal written agreement using the form of the Sample Agreement linked in the Submit an Application section. The agreement will not be effective or binding on the city until it has been fully executed by all required signatories of the City and County of Denver. Note that contracts more than $500,000 require City Council approval and will take longer to process. Contracts will contain reporting and milestone requirements that must be satisfied before the city will reimburse project costs.  

Maximum annual incentive award expenditure is $5 million.