I have a story today in the Toronto Star about a pilot project that would see the city equip up to 20 municipal buildings with solar thermal systems that would provide hot water and space heating. But instead of owning and operating the systems itself, the city would sign a 10-year contract with a “solar utility” — a company that would pay for, install and manage the equipment and then sell the heat that’s produced to the city at a fixed price. The solar heat would offset the use of natural gas or electricity that would have otherwise provided the heat for everything from community swimming pools to hot water in schools. It’s similar to the model adopted by SunEdison for the provision of solar electricity, but instead of power the city would be purchasing heat energy. Toronto city council is expected to approve the pilot project on Monday, and if successful it will likely be deployed across dozens more buildings across the city.

I’m only aware of one company in Toronto that would provide a solar utility service — that would be Mondial Energy Inc., which has already installed systems in a local hospital and two housing projects. But given the potential demand from the city, and the fact this could easily catch on in the private sector and in other cities across Canada, I fully expect a utility — hydro or natural gas company — to give the idea a serious look. Even SunEdison might get into the thermal game and bid for the Toronto business…

I have a story today in the Toronto Star about a pilot project that would see the city equip up to 20 municipal buildings with solar thermal systems that would provide hot water and space heating. But instead of owning and operating the systems itself, the city would sign a 10-year contract with a “solar utility” — a company that would pay for, install and manage the equipment and then sell the heat that’s produced to the city at a fixed price. The solar heat would offset the use of natural gas or electricity that would have otherwise provided the heat for everything from community swimming pools to hot water in schools. It’s similar to the model adopted by SunEdison for the provision of solar electricity, but instead of power the city would be purchasing heat energy. Toronto city council is expected to approve the pilot project on Monday, and if successful it will likely be deployed across dozens more buildings across the city.

I’m only aware of one company in Toronto that would provide a solar utility service — that would be Mondial Energy Inc., which has already installed systems in a local hospital and two housing projects. But given the potential demand from the city, and the fact this could easily catch on in the private sector and in other cities across Canada, I fully expect a utility — hydro or natural gas company — to give the idea a serious look. Even SunEdison might get into the thermal game and bid for the Toronto business…

I had a story in the Toronto Star this week that, while researching it, really got me a bit angry. The piece is about an Ontario-based company called Recovery Technologies that recycles vehicle tires by processing them into tiny bits that can be used as fake dirt on sports fields, mixed with asphalt or blended with other materials to make car parts. Recovery has for years used a proprietary process based on liquid nitrogen, which is used to freeze the rubber so it can be hammered and literally shattered into pieces. Pretty cool, if you’ll excuse the pun.

So what got me angry? I learned that Recovery is having a difficult time getting enough tires because, well, used tire collectors are shipping them to New York State and Michigan where they can be burned as fuel. Turns out that Recovery’s business model understandably depends on getting a tipping fee for taking the tires, but as more and more jurisdictions permit the idea of so-called tire derived fuels, the tipping fee is rapidly shrinking to zero. No surprises there — a cement company would be more than happy to take the tires for free rather than pay for a conventional fuel, such as coal or oil.

Now, there’s an argument that tires are cleaner to burn than coal and oil and provide more energy content than coal, so what’s the harm in burning tires if they replaced fossil fuels that would otherwise be burned? It’s a valid argument, but it doesn’t send a good signal to industries that are encouraged to embrace recycling but at the same time are undermined by the market they aim to be helping. Recovery wants the Ontario government to move forward on promises to establish tire recycling legislation that would make it mandatory for recycling and forbid both the burning of tires as fuel in Ontario and the exporting of tires so they can be used as fuel in other jurisdictions.

It’s a reasonable request, and one that will help companies like Recovery collect a fair tipping fee for the service they’re providing. Ontario in particular, a province that has mandated the phase-out of coal fired generation, should be sensitive to this issue. If we’re going to go down the path of burning tires, then we might as well abandon our plastic recycling programs and burn empty yogurt containers and water bottles as fuel. It’s hard to see how we can justify one but strive to support the other.

Just when you thought Railpower Technologies Corp. was derailing, one of Canada’s largest pension funds has stepped up to inject $35 million into the struggling maker of hybrid locomotives. Ontario Teacher’s Pension Plan said late Friday that it made the investment because of Railpower’s “market potential” and what it sees as increasingly stringent environmental regulations targeted at the rail sector.

It’s been a rough ride for Quebec-based Railpower, which has developed hybrid yard-switching locomotives and is beginning to apply its clean technology to cranes and tugboats. Back in January 2006 the company was trading at a high at $6.60 (Canadian), and from there it’s been a downward spiral to 21 cents. Production delays and expensive recalls spooked investors, and many analysts have since written the company off. This latest private placement, however, is a vote of confidence in Railpower’s technology and earnings potential. It’s also a much-needed lifeline.

Perhaps the Teacher’s pension is betting Railpower will be bought out by a larger company, such as General Electric, at a premium. Perhaps it believes Railpower has legs as a standalone company as it goes after the 6,000 aging switching locomotives in North America and 10,000 crains that are prime candidates for a hybrid retrofit. Rising fuel prices and new regulations are certainly key drivers for making this happen.

Trading at 23 cents on the Toronto Stock Exchange as of Friday’s close, Railpower has a market cap of just $21 million, even though it had revenues of $37 million in its last quarter alone. The problem is that it also had $34 million in losses. But once the company works through the recalls and gets back on track, the upside could become quite significant — assuming Railpower’s existing and potential customers don’t lose the faith.

ADD: First trading day after Railpower announces its funding… well, well, well… an 83 per cent jump. Seems somebody is happy about the announcement.

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.