Pipe length between supply and demand side?

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The question has little to do with compliance modelling according to ASHRAE 90.1, this came up during a discussion with a mechanical engineer colleague exactly for the purpose of modelling pipe losses, as energy certification calculations in my country do account for pipe losses. Although in most cases these calculations are being simplified to a large extent, we would like to understand it more in depth to include pipe losses in our dynamic models.

So the total length of L1 and L2 should be equal to L, or one of the pipes can be adiabatic and the whole length can be on one side. Thanks!

It really depends on where the losses will be experienced in your building. What is the length of the pipe between the plant and the demand equipment? What is the quality of the insulation on that side? Between the plant and the demand equipment, there will be a larger temperature difference (in most buildings) between the fluid and the space temperature. Less dT on the return side.

The reason to model both L1 and L2 as Pipe:Indoor would be if there were different insulation characteristics, or if the pipes were exposed to different zones.