Geothermal: flourishing under the shadow of solar
Solar technologies get way too much attention when, in reality, the benefits today of geothermal energy and putting “geoexchange” systems in homes and businesses are much more compelling. The payback is shorter, and avoidance of greenhouse gas emissions is greater. That said, I kind of know the reason why geothermal gets less respect. For one, investors love patent-protected technologies, and the different approaches to making solar cells and the variety of materials used creates a lot of opportunity in a booming market. Geothermal system are more expensive upfront, and the installation itself is labour-intensive and complex. Most of the cost, in fact, comes with drilling and laying tubes in the ground. The heat pump systems at their core are simple devices — easy to mass-produce but little in terms of intellectual property worth protecting. That said, I think investors are going to wake up and begin seeing an opportunity in this market, similar to what we’re seeing in the area of solar thermal systems (i.e. Ausra, EnerWorks, et al.)
One driver will be a large-scale embrace of the technology by mainstream home developers, extending geothermal out of the arena of retrofits and custom builds to a much larger market. A sign of things to come? I have a story in the Toronto Star today about plans to build a community north of Toronto composed of 150 homes, each with geoexchange systems to provide cooling and heating. The systems are expected to reduce energy consumption in each home by 65 per cent compared to your typical HVAC system. It’s not the government pushing this project. It’s not a community co-op led by some treehugging architect. It’s one of the largest home developers in Ontario — Reid’s Heritage Homes. I’ll let you read my story, but basically the company did focus groups and found that potential homebuyers were willing to pay a premium to get the environmental and long-term financial benefits of having geothermal heating and cooling in their home.
Reid’s Heritage is working with Clean Energy Developments (CED), an Ontario-based startup that was created to help major home developers embrace renewable technologies such as geothermal and solar. CED is composed of engineers, architects, project managers, etc… that will work with home developers, basically hold their hands, as they walk this normally conservative group through what’s necessary to do large-scale installation of geothermal and other renewables. So far, developers have been receptive to CEDs advances. Reid’s Heritage is also considering geothermal for a 1,000-home community north of Toronto and apparently a number of other developers are thinking of making similar moves. Suddenly, after decades of operating in niche territory, geothermal is gaining some mass-market respect.
Want more proof? WFI Industries Ltd. (known at Waterfurnace) is a leading maker of geothermal heat pump systems in North America. The company released its third-quarter 2007 financial results this week, and had this to say: “Sales and profitability continued to increase despite the decline in residential construction in the USA. Year to date sales for the company are up 17.3 per cent and sales for the trailing 12 months were $102 million, exceeding $100 million for the first time.” Profits were up 10 per cent, and the company’s share price this year has jumped 50 per cent — beating out the overall Cleantech Index.
Again, this is amid a declining home construction market in the United States.
Another boost that we could see, at least in Canada? Peter Love, chief energy conservation officer for Ontario, recommended today that the provincial government work with the federal government to introduce a voluntary labelling system for buildings (homes and business) that would rate energy efficiency. This would make it easier for homebuyers to know the long-term operating costs of the properties they’re looking at. Eventually, the idea is that this voluntary system would morph into a mandatory system (like Energy Star for appliances). Real estate search engines (like the MLS system) would be forced to adapt by including energy ratings on all their listed homes.
I’m all for that.
Tyler Hamilton is senior energy reporter and columnist for the Toronto Star, Canada's largest daily newspaper. In addition to this Clean Break blog, Tyler writes a weekly column of the same name that discusses trends, happenings and innovators in the cleantech market. This blog is a personal project started in April 2005. It is not an official blog of the newspaper. Tyler can be reached at tyler@cleanbreak.ca
November 7th, 2007 at 11:18 pm
We just have to be careful about the policy structure we set in place. I don’t think we should be rewarding certain technologies with rebates to their purchasers while others are left without. If it is all about conservation and efficiency then let those two be the deciding factors, not the type of tech we support. For example; in one atlantic province, ground-source heat pumps are granted a higher rebate than air-source heat pumps. What incentive is there for air-source manufacturers to increase their efficiency levels now? And what of inventors of altogether new concepts -since they aren’t included in the government’s list; they are left high and dry. One manufacturer in Maine, Hollowell, makes an air-source pump that is as efficient as the ground source variety, without the digging or trenching -but only receives the air-source rebates, so is hampered by this technology-focused approach. Government should instead hold out the conservation and efficiency bar, and request industry jump over it. Whoever can do so gets the rebates, the higher you can jump the more you get. This way government is not having to be always knowledgeable of what is the best tech out there; they just need a peripheral understanding and leave it to the industries to sort it out and brainstorm their way to the prizes, in whatever way they can. This is what they do best and the proper roles of both industry and government. In the case of Hallowell, they manufacture in Maine, so are right next door, and this kind of performance should also be included in the calculations, but again, the regulators are focusing on other issues. They said they will address this in their next round of talks, so I hope there has been some movement on it. All provinces and the feds should consider not using the stick to divide the industries into winners and losers, instead holding it out to see who jumps highest.
November 8th, 2007 at 8:16 am
Yes, but this case is not about incentives. Federal and provincial incentives for geothermal are for retrofits. I don’t believe Reid’s Heritage or the buyers of its homes benefits from incentives, other than the energy savings that result. Obviously a home developer can’t embrace every technology. I think the fact that it’s embracing one is terrific.
November 8th, 2007 at 9:39 am
Unfortunately, the numbers in your article don’t add up. A cost premium of $10,000 to $12,000 for geothermal systems with a 4.7-year payback implies annual energy savings of $2100 to $2600. Total energy cost for my typical 80’s-style detached home is only $1700/year! Of that, space heating and cooling account for about $900. An “average” house with less energy-aware occupants would still use less than double the amount. So real savings from geothermal is probably less than a third of the claim.
Further, as I understand it the “real” problem holding back the geothermal industry is not so much the cost factor, it’s continuing poor design and reliability.
While the technology is promising, a more critical viewpoint would be much more valuable to the industry (and the environment) than extravagant claims by salespeople.
November 8th, 2007 at 10:21 am
I understand your point, and while I am only guessing here, I’m thinking the “payback” is on the difference between the cost of a typical HVAC installation/system and the cost of the geothermal. The question is whether the $10,000 to $12,000 premium I mention takes this into account, or is the cost of just the geothermal installation.
That said, even if the payback is 10 to 15 years, it’s still way more favourable than solar PV, which — as my posting points out — seems to get much more attention and investment. Your point about poor design and reliability is a good one, based on the industry’s track record in the 1980s and 1990s. But the goal of companies such as Clean Energy Developments is to address quality and reliability issues, emphasize proper training, and bring standards and consistency to the business. On top of that, The Canadian GeoExchange Coalition has introduced a certification program to address quality control. So I think your comment about “continuing poor design” may be a tad exaggerated, at least within the context of all renewables. The fact that Reid’s Heritage is taking this route shows that it is satisfied that reliable issues have been addressed.
November 8th, 2007 at 2:14 pm
As a energy engineer that works on designing “whole-building solations” for ultra-efficient houses, I’ve never been able to justify a ground source Heat-Pump (GSHP) in a residential application.
Given the same $15,000, I can make a house 90% more efficient that code using passive solutions (insulation, windows, passive solar methods, etc). After addressing the quickest payback improvements, and lower the energy profile by 10 times, a GSHP typically has a payback period in the hundreds of years.
Another nail in the coffin is the development of air source heat pumps suitable for cold climates that get a COP values of approx 3. GSHP typically only achieve a COP of 3-4, negligibly better at a $10k premium – which is not good payback.
And, unless your buying renewable sourced electricity for your system, lets not forget that a heat pump with COP of 3 sourced from fossil fuel electricity (which is only 30% efficient by the type it reaches your house), is no better than a standard high efficiency furnace running off of natural gas – cost wise or carbon wise.
November 8th, 2007 at 2:26 pm
That’s a very good point, thanks for raising it. Does your scenario include conventional HVAC under that $15,000? Just wondering, because you’d have to subtract the HVAC costs from the geothermal costs and work with that figure. There is also a comfort premium — I hear, anyway — with the geothermal stuff. But I agree, if you can achieve 90 per cent with the same money it’s definitely a better way to go. That said, can you back up that figure? I mean, I’ve been looking at doing some retrofits for my house and $15,000 gets you nothing…
November 8th, 2007 at 5:30 pm
Retrofit is a bit more difficult than new construction. But we do it in new construction every day. With retrofit it takes more creativity. But, yes we’ve done retrofit projects for close to that.
In new construction we try to offset efficiency costs by reducing HVAC requirements. I’m not usually not too choosy about HVAC efficiency, and usually go with a low cost solution, because going from 85% to 95% efficient furnace with a house that only needs 10% of the heat, is not usually worth it.
It all take looking at the house as a system, to determine what makes sense.
November 11th, 2007 at 9:31 pm
This is very interesting point you are making. I am considering building a home. Is there a good reference you can point me to that can show me how to reduce my heating and cooling requirements by 90%. Can that reduction be achieved versus a recently built home or is it versus a home built in the 1950s?
Thanks
January 20th, 2008 at 6:50 pm
CMHC has a series that looks at different types of Canadian Homes, and how they typically waste heat energy, and what are the most important things that can be done to reduce these losses. I found them through a design firm in Nova Scotia, abridesign.com, Publications, found here:
http://abridesign.com/pubs.htm
There is also a book published by Fine Homebuilding that is a collection of their articles, some on retrofits, some on new construction, that seems very good. I have found very few books on retrofitting to high efficiency standards, and even of these found, most are in the Build Your Green Dream Home and not the Fix Your Seive category.
CMHC also has a book Tech Guide for Renovators, I think its called, that has Healthy Home tips throughout.
There is now also a Greening-Up A Home (not the correct title) series put together by the Holmes on Homes tv-show crew, but it is a house in the US, so is likely wooden not brick, as most homes in Canada are brick. I believe this series is beginning this season.