Alter NRG sees strategic collaboration as key to growth in geoexchange market

I’ve written before about Calgary-based Alter NRG, a provider of plasma gasification systems that in recent months has started to become a serious player in the geoexchange system design and installation market. It began back in October 2009, when it acquired Mississauga-based geoexchange developer Clean Energy Developments Corp. for $18.4 million.  It’s an odd fit — gasification and geoexchange — but whatever works. What I like about Alter NRG’s move into geoexchange is that the company is beginning to consolidate the market, with a particularly focus on Ontario. Today, for example, it announced that it had acquired 35 per cent of Groundheat International Inc. for $2.3 million. Groundheat and Clean Energy are competitors in one sense, but Alter NRG’s minority stake in Groundheat will promote more collaboration between to the two companies. It’s well known that the bottleneck in the geoexchange market is drilling — i.e. there simply aren’t enough drill rigs to keep the pipeline moving fast enough. Groundheat has six drill rigs versus Clean Energy’s one rig. “CleanEnergy will use Groundheat drilling services in the Ontario market to expand its ability to offer a turnkey product for larger commercial installations and under the terms of the acquisition agreement will jointly schedule the usage of the installation assets,” according to Alter NRG. On the flip side, Clean Energy will be the preferred supplier of equipment for all Groundheat installations.

Of interesting is that the Remington Group, a leading commercial developer in Ontario, owns 50 per cent of Groundheat and has used the company to install geoexchange systems for the condominiums and other large buildings it develops. Remington alone is planning a number of geoexchange projects totalling about $15 million over the next two years. “The geoexchange market has only a few large scale competitors and Clean Energy’s strategy is alignment and collaboration with key service providers in the industry,” according to Alter NRG. “The market potential is so large, that collaboration will improve quality, lower the cost structure and provide our customers the maximum financial value which will potentially increase adoption of geoexchange technology.”

This might sound like boring stuff, and, well, it is. But it’s significant to see the geoexchange industry grow from a bunch of ma and pa operations to being larger, smarter and more aggressive in the way they tackle the market. Now, it doesn’t help that major federal incentives are no longer available through the EcoEnergy retrofit program, but Alter NRG is going after commercial-scale projects so is mostly not affected.