BWL's Hot Water Conversion and Deep Green's Free Heat

LANSING, Mich. -- Deep Green's central promise to Lansing is free waste heat for BWL's downtown heating system. That system does not exist yet. BWL is building it: a $100-125 million conversion from steam to hot water, designed by Ever-Green Energy of Minneapolis, serving 55 downtown buildings over a 15-year transition. The waste heat cannot be delivered until the system is built, and when it arrives, it covers roughly 12% of current heating capacity using equipment that has never lasted 10 years at comparable scale. The conversion requires work inside every connected building whose cost, scope, and responsibility have not been publicly disclosed.

How the conversion connects to Deep Green

BWL's current steam system runs from the REO Cogeneration Plant at 1201 S. Washington Avenue through 9.7 miles of underground piping, some dating to the 1920s, serving nearly 200 customers across 140 buildings. The conversion plan replaces this with a 4.5-mile hot water loop concentrated in the downtown core, where a new converter station (Ottawa SCS) will convert steam to hot water during the 15-year transition while the REO plant remains operational.

After the transition, the REO plant shuts down. The Ever-Green Energy presentation to the BWL Board on September 9, 2025 does not identify a replacement heat source. Commissioner James asked BWL General Manager Dick Peffley about alternatives. Peffley said "electric heat, or natural gas if it was available." (BWL Board minutes, September 23, 2025)

Six weeks later, on November 5, 2025, BWL announced Deep Green. The project's lead selling point: free waste heat donated to BWL's hot water loop. Peffley told WKAR in January 2026 that he had been in talks with Deep Green for "about nine months," placing the start of negotiations at approximately April 2025, five months before the steam conversion was presented to the Board. The words "Deep Green," "data center," "waste heat," and "fuel cell" do not appear in the September presentation.

The buy-sell agreement the council is voting on today does not mention BWL, waste heat, fuel cells, or hot water. The waste heat arrangement is governed by a separate BWL contract under a nondisclosure agreement. Deep Green CEO Mark Lee's February 5, 2026 letter to Council states that the heat and cost calculations were validated by Ever-Green Energy, BWL's own consultant on the steam conversion.

The timeline mismatch

The hot water system that would receive Deep Green's waste heat does not exist yet. Phase 1 construction begins in 2026, with the first buildings converting in early 2027 and the full system taking 15 years to build, per the Ever-Green Energy presentation to the BWL Board. Deep Green itself has not broken ground, and even if the council approves the land sale today, the data center needs permits, financing, and construction before it produces any heat.

The current steam system cannot accept fuel cell waste heat directly because steam operates at 220-240°F under pressure and waste heat from fuel cells feeds into a hot water loop. Until each corridor converts from steam to hot water, Deep Green's heat has nowhere to go.

When Deep Green's waste heat does arrive, it covers a fraction of the system's needs. Deep Green claims 290,000 MMBtu per year, but BWL's new hot water system is designed around three boilers at 15.3 MMBtu/hr each (BWL Board minutes, September 23, 2025), and Deep Green's contribution replaces roughly one of those three, approximately 12% of what the current REO plant provides at peak. BWL needs the other two boilers regardless of whether Deep Green is built.

The equipment that produces the heat has its own lifespan question. BWL would own $112-128 million in Bloom Energy fuel cells under a 20-year contract. Hindenburg Research documented a median lifespan under three years for post-2017 Bloom fuel cell stacks. Bloom's 18 MW installation in Delaware, the closest comparable to the Lansing project in scale, was decommissioned after approximately seven years against an expected lifespan of 15 to 21 years. The service contract that governs who pays for stack replacements over 20 years is under NDA.

BWL's hot water system has a design life of 50+ years, per the Ever-Green Energy presentation. The heat source the system is being built around has never lasted 10.

The temperature problem

Downtown Lansing's steam system delivers heat at 220-240°F. Radiators, heating coils, and air handlers in the connected buildings were sized for those temperatures. Hot water district heating systems operate significantly lower.

Conversion	Supply temperature	Source
Stanford University	125-155°F	Alfa Laval case study
Dartmouth College	140°F	Dartmouth Energy Transition
Cornell University	120-180°F (varies by building age)	Cornell Chronicle, Feb 2025
BWL, Lansing (55 buildings)	Not published	Ever-Green Energy presentation, BWL Board COW, Sep 9, 2025

A steam radiator operating at 215°F emits approximately 240 BTU per hour per square foot of radiation surface. The same radiator receiving 180°F hot water emits approximately 150 BTU per hour per square foot. That is a 37.5% reduction in heating output. Buildings that cannot make up the difference need larger radiators, bigger heating coils, or supplemental heat sources.

Cornell addresses this by varying supply temperature by building age, with older buildings receiving higher-temperature water (up to 180°F) and newer construction designed for lower temperatures (as low as 120°F). Cornell is 20% complete after 15 years of work. BWL has not published a design supply temperature for Lansing's system. The 26-slide Ever-Green Energy presentation contains system maps, customer counts, construction schedules, and a cost comparison table. It does not contain a temperature specification.

The cost inside each building

The conversion requires work on both sides of the building wall. BWL's $100-125 million covers the street side: new insulated pipes, the Ottawa converter station, construction on Grand Avenue, Ottawa Street, Shiawassee Street, and Capital Avenue. What happens inside each building is a separate scope of work.

Every connected building needs at least a new heat exchanger where the district system meets the building's internal heating loop. Beyond that, the work depends on the building. Two-pipe steam systems can sometimes adapt existing piping for hot water, though return lines may need upsizing. Single-pipe steam systems, common in older downtown structures, have essentially no reusable hot water infrastructure. Buildings that use steam for secondary purposes (humidity control, absorption chillers, domestic hot water, de-icing) must find separate alternatives for each.

BWL has not disclosed who is responsible for building-side conversion costs, or what those costs are. The Ever-Green Energy presentation's "Customer Benefits" slide lists system redundancy, resource efficiency, simplified operations, space savings, and cost savings, but does not address building-side costs or identify who bears them.

What comparable conversions cost

Source	Building-side cost	Notes
U.S. Department of Energy / District Energy St. Paul (1980, inflation-adjusted)	$40 per kilowatt of thermal demand (1980 dollars), approximately $140/kW adjusted for inflation	A 500 kW commercial building: approximately $70,000 in 2026 dollars. DOE/OSTI report.
Netherlands Energy Transition Model	Approximately EUR 7,563 fixed + EUR 152 per kW peak demand (approximately $8,200 + $165 at current exchange rates)	A 500 kW commercial building: approximately $91,000. ETM documentation.
Duluth Energy Systems (Ever-Green Energy)	Utility financed building-side conversions; customers repaid over a decade	27 buildings converted. Four older buildings could not be converted. Duluth News Tribune; Ever-Green Energy project page.
Wesleyan University Phase 1	Approximately $830,000 per building (all-in, includes shared piping)	7 buildings at $5.8 million total. Wesleyan Argus, Nov 2020.

The District Energy St. Paul benchmark is directly relevant because Ever-Green Energy, the firm BWL hired, was established by the leaders of District Energy St. Paul in 1998 to expand district energy work beyond Minnesota. District Energy St. Paul published the original DOE cost data, and Ever-Green Energy later designed and managed the Duluth conversion.

In Duluth, four older buildings could not be converted at all. Steve LaFlamme, President and CEO of Oneida Real Estate Services, which managed several buildings on the system, told the Duluth News Tribune: "The radiation systems in some of our older buildings are meant for steam, and you just can't put hot water through them." Downtown Lansing's building stock includes structures dating to the early 1900s.

Who was not consulted

Phase 1 of BWL's conversion covers 16 buildings, 11 of which belong to Lansing Community College. LCC represents 45.5 MMBtu/hr of thermal demand, 21% of the projected system total, and 69% of Phase 1 buildings. Construction on Grand Avenue is scheduled for 2026, with LCC's Shiawassee Street buildings scheduled to convert in early 2027.

A review of every LCC Board of Trustees meeting from October 2025 through March 2026 found zero agenda items, zero minutes entries, and zero public comments referencing BWL, steam, hot water, or the conversion. (LCC Board of Trustees meeting materials, all available packets reviewed.) At comparable per-building conversion costs, the building-side work across LCC's 11 buildings could run from several hundred thousand dollars to several million. LCC's elected board has not been told what the number is, or whether LCC or BWL is responsible for it.

The State of Michigan owns multiple downtown buildings on the steam system, including the Hall of Justice, Romney Building, and Michigan State Police headquarters. The Department of Technology, Management, and Budget manages state facilities. No public record of DTMB planning or budgeting for building-side conversion costs has been found. The State Capitol, historically a BWL steam customer, installed its own geothermal heating and cooling system, operational since approximately 2021. Whether other state buildings pursue independent solutions could further reduce BWL's downtown customer base.

What the presentation left out

The Ever-Green Energy presentation to the BWL Board is 26 slides. It covers system design, construction phasing, customer counts, and a cost comparison between steam replacement ($260 million) and hot water conversion ($100 million). It does not contain:

• A design supply temperature for the hot water system
• An estimate of building-side conversion costs for any customer
• A disclosure of who pays for building-side work
• An analysis of which buildings may not be convertible
• Any mention of secondary steam uses (cooling, humidity, de-icing) or what replaces them
• Any mention of Deep Green, data centers, waste heat, or fuel cells

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Sources

Ever-Green Energy presentation to BWL Board of Commissioners, Committee of the Whole, September 9, 2025 (slides 20-26: system design, customer buildings, comparison, Phase 1 schedule). BWL Board minutes, September 23, 2025 (Todd Russell testimony, Commissioner James and Worthy Q&A). LCC Board of Trustees meeting materials (October 2025 through March 2026, all available packets reviewed). Michigan DTMB State Facilities. MSU Spartan Newsroom, Sep 2020 (Capitol geothermal). Comparable conversion data: Alfa Laval/Stanford; Dartmouth Energy Transition; Cornell Chronicle, Feb 2025; DOE/OSTI, District Energy St. Paul building conversion costs; Netherlands Energy Transition Model; Duluth News Tribune; Ever-Green Energy, Duluth project; Wesleyan Argus, Nov 2020. Ever-Green Energy founding: Ever-Green Energy About page; District Energy St. Paul financials: ProPublica Nonprofit Explorer, EIN 41-1358662. Radiator output calculations based on standard ASHRAE heat transfer coefficients for cast-iron radiators at specified supply temperatures, assuming 70°F room temperature (ASHRAE Handbook of Fundamentals, Chapter 6, heat emission from radiators). Deep Green CEO Mark Lee letter, Feb 5, 2026, CivicClerk, Feb 9 hearing packet. BWL press release, Nov 5, 2025. WKAR, Jan 29, 2026. Prior Rhinoceros coverage: Did BWL's Board Know About Deep Green When It Approved a $100M Steam Conversion?, The Document the Council Is Voting On.