The following is an article published in Crain's Cleveland Business magazine on May 15, 2023.
This isn't the steam many Akronites remember. And thank the gods of fire and water for that.
Because Akron's steam plant — now a steam and chilled-water operation known to most as Akron Energy Systems (AES), the contractor that runs the city-owned plant — is no longer the explosive embarrassment and foggy threat to hospitals and downtown buildings it once was.
It has become a real and vital asset, according to city officials, its operators and users, and a point of pride and example of collaboration held out by them all.
"One of the great things I've found in Akron is the ability to get things done," said AES founder and CEO Marc Divis.
He came to Akron after running Cleveland Thermal to help Akron plan and design the new plant in 2011. "Collaboration was the differentiator. That's why things happened," Divis said.
That collaboration primarily involved AES, which before the $35 million plant opened in 2020 already had improved the city's old system to the extent that it could and improved its performance, as well as the city of Akron and downtown hospitals.
Mayor Dan Horrigan said work on the project actually spans several administrations, but things didn't really get done until Divis arrived and the hospitals got on board.
Horrigan said he was always on the bus.
"It's such a critical piece in terms of what the hospitals needed," he said. "To me there wasn't a good alternative plan going forward. ... It has provided a really great investment return for the city of Akron."
Former Akron Children's Hospital CEO Bill Considine said he remembered well when the old steam plant had an explosion that rattled windows, including the one in his hospital office, across the city back in the 1980s. That was followed by years of other problems at the city's subsequent steam facility, which had cobbled-together operations that kept him up at night under previous operators.
"It became a real challenge," Considine said. "They weren't able to pay the water bill to the city, and FirstEnergy was threatening to shut off their power. ... it got to a crisis state."
If you're wondering why hospitals come up so frequently, it's because for hospitals, steam is not an option. They use steam for heat and chilled water from AES to heat and cool their facilities, but they could use other systems for that. Where steam plays its critical role in health care is in its use to sterilize instruments, which is why every hospital that performs surgeries is either connected to a centralized steam system such as AES or builds its steam generation facility on site.
Considine resisted calls for Akron Children's to build its own plant. Not only would that have cost millions of dollars, but it would have meant Akron likely could not rebuild its plant, since the hospital was one of its biggest customers. In effect, he would have been committing the hospital to a perpetual future of inefficiency, in addition to the huge upfront costs.
Instead, Akron Children's and the Cleveland Clinic in Akron agreed to sign long-term contracts — 40 years in the case of Children's — enabling the plant to be financed with 30-year bonds paid off by its revenues.
"They could have easily, with Cleveland Clinic money, built their own plant," Considine said. "But we said, 'We at Children's are in,' and they said, 'We're in, too.'"
Today, Considine considers the effort one of Akron's most important recent achievements.
"It's just night and day. We went from being a 1950 sort of system to 2040," he said, noting that it saved Akron Children's from spending at least $11 million on a new plant of its own that it would have had to operate.
"That wasn't our core competency," Considine said.
Since opening in 2020, the plant has become profitable and has been expanding, Divis said. It provides heat and cooling not only to the hospitals but to a range of downtown buildings that include the city's Bounce Innovation Hub business incubator, its big, mixed-use Bowery District, and other buildings.
"This year we added Akron Summit Library Main Branch, we added the Ocasek Building, and we added the new Goodrich apartments," Divis said.
The system would be bigger, but Divis said he consolidated it when Akron did its big Main Street construction project between 2018 and 2020. While most people are aware of that project's impact on the street at the surface, fewer realize that the city used the opportunity to modernize much of its underground infrastructure, including its steam lines.
That's why, Divis said, you won't see steam coming from manholes or vents in the streets of downtown Akron, even in the winter.
"That's the mark of an inefficient system and Akron doesn't have one," he said.
Because of that efficiency the plant, which was losing $8.5 millon a year in 2010, is now earning money, and its profits are growing, Divis said. Last year, the plant made $1.9 million, he said.
Divis has plans to expand, too, both geographically and in scope. AES is building a service business that will help its customers to use their steam and chilled water more efficiently, he said.
The system is essentially a closed loop, he explained, so the more efficient his customers are, the more efficiently he can run the plant. He's essentially trying to pump hot water and cold water around downtown, losing temperature only when his customers put demand on the system.
Service is something Divis is very good at, said Doug Weintraub, who until last year ran the Bounce Innovation Hub and put it on the new AES system.
Weintraub said the old system was about like what some folks might remember from their first apartment if it was in an old building — providing either no heat or so much that he had to open his office windows in the dead of winter.
No more, he said. Now Bounce and its tenants get cheap, reliable heating and cooling without having to give it much thought. And along the way, Divis not only got Bounce's heating and cooling systems running efficiently, he fixed an elevator shaft and got the solar array on the roof working and up to code.
"I'm a huge fan," Weintraub said. "I've become fast friends with Marc through working with him. What he has done for the city is unbelievable. ... He's saved us a ton of money."
The next step might be to expand the system again geographically, Divis said. He previously eliminated some lines, which meant that the University of Akron and some other locations were no longer in is service area, but that could change soon, he said.
He's also planning to add an electricity generation system to the plant, which will enable it to run completely on power it generates along with its steam and not buy any from the grid, Divis said.
In the meantime, though, he and his team are tweaking the system for improvements, either at the plant or at customer locations.
And Akron gets to save money on many of its downtown buildings and city facilities, while pointing to its new steam plant as something businesses can count on to save them money rather than rattle their windows and leave them cold.
"It's just allowed us to do so many more things," Horrigan said of the new plant. "It's no longer a headache. It's now a shining star."