Heating plant efficiency upgrade, with sufficient capacity and turndown, will be undertaken first.
The existing domestic hot water heat source is inefficient or uses electricity, which is expensive, as the heat source. The nearby heating plant is equipped (or will be equipped) with much more efficient boilers and has enough extra capacity to satisfy the DHW requirement.
Rather than buying a dedicated high efficiency DHW boiler, the available heating plant capacity can be used. By installing a relatively inexpensive brazed plate heat exchanger and some piping, the cost of a new boiler can be avoided. A digital controller should be used to switch appropriately between reset control on space heating demand and aquastat control on DHW demand, and to cycle pumps off when not needed.
If the boiler is modulating, the DHW load will not cause the boiler to short-cycle.
The sequence of controls will have to be re-designed to include the new summer heating load.
Issues and Concerns
If the heating plant is sized to match the building load, the addition of the DHW load could make the heating plant unable to accommodate peak load conditions.
If the domestic water quality is 'hard' a flat plate heat exchanger with the ability to be disassembled for cleaning should be selected.