We just got a review with the comment: >> If DESv2 is NOT used, and the project is receiving district heating, the district heating must be modeled in accordance with ASHRAE Appendix G requirements for modeling district thermal energy. In this case, the heating energy must be modeled using purchased energy rates in both the Baseline and Proposed Case.
The method is the same in Appendix G but there is no cap like Option 1.
Looks like a loophole!