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.

My friend Tom Rand has a short but no less interesting video filmed during a presentation he gave recently in Toronto. Rand helped build a “green hotel” that emits a quarter of the emissions of a comparable hotel. The workhouse behind this approach is geothermal, and Rand said it can be done in a way where energy savings exceed the monthly payments on a long-term low-interest loan. Now, the key is to get that cheap loan. Rand said it’s up to the federal and provincial governments to backstop such loans and mandate the banks to lend the money. It would help, he added, if use of this technology was mandated where it was appropriate. This, as Rand says, is low-hanging fruit that we’re simply not picking. Instead, with each new building or home we build we’re letting this ripe-for-picking fruit fall on the ground. Rand, it should be pointed out, is behind another move to have the government sell green bonds that would help fund these kinds of projects, or backstop the low-interest loans required to do them. It’s all perfectly logical, but I guess politics is never as logical as it could be.

Click here to watch the short video.

Plasma gasification company Alter NRG Corp. of Calgary has acquired Mississauga-based Clean Energy Developments Corp. (CED) for $18.4 million. It’s an odd deal, when you consider Alter NRG’s main business is to build systems that gasify coal and biomass to produce a number of outputs, including ethanol, syngas and electricity. Clean Energy, on the other hand, is a geoexchange project developer that got its start working with residential and commercial builders.

But Alter NRG decided it was a nice opportunity to diversify its business, considering the plasma gasification market still requires some time to mature. Company president and CEO Mark Montemurro said Alter NRG has the balance sheet and executive team that will help CED or “CleanEnergy” grow its business, which today sits at $6 million in revenues. “From a cash position, the acquisition provides for more stable and near-term revenue and cashflow from geoexchange installations which will be enhanced by the larger but less predictable plasma gasification equipment sales,” the company said.

I wrote about CleanEnergy a few years ago, when the company was just getting started. Back then, its primary focus was to work with homebuilders that wanted to include geoexchange systems as an option for new homebuyers. One of its first projects was in 2006 with Ontario-based Marshall Homes, which offered geothermal and solar thermal as an option in one of its subdivisions. These days, CleanEnergy is busy installing geoexchange systems for hotels, schools, commercial office buildings, and high-end homes. It still works with builders, but will also work directly with large customers.

Alter NRG knew it had to come up with some way of generating cash flow. Selling gasification systems is a risky business and has long sales cycles, while selling geoexchange systems can take place in a rapidly maturing market that is currently supported with generous government subsidies. Sales cycles are shorter, allowing for cash flow. So while it might seem like an odd fit for NRG, it could turn out to be a wise acquisition.

It’s unfortunate that AltaRock is having such a tough time with its enhanced geothermal systems (EGS) project in northern California. The company has suspended drilling on its first well, citing “geological anomolies,” and it plans to regroup and figure out next steps. Nobody said EGS projects would be easy, and all of this is a learning experience for AltaRock.

Meanwhile, I’m encouraged to see interest in tapping geothermal energy as a byproduct of oil and gas production in the Canadian west. A British Columbia-based company called Free Energy International has signed a deal with an undisclosed oil and gas exploration and production company in Alberta, in an area known as Swan Hills. Free Energy will build two 1-megawatt geothermal plants that take hot water — a co-product of oil and natural gas during the pumping process —  and extract the heat from it to generate electricity. The $7 million project will tap wells that are around 9,000 feet deep, and temperatures of the fluids can easily reach 170 degrees F in high volumes. After the heat is extracted from the water using heat exchangers, it is used to run an Organic Rankine Cycle (ORC) power plant. The water is later pumped back into the ground. Free Energy will build, own and operate this binary cycle plant and the oil company has agreed to buy all the electricity produced for the same rate it was paying to a previous supplier.

I’m hoping this new approach will catch on in Canada’s oil patch, the same way it’s being tried out in Texas. Indeed, a new Calgary-based company has recently been formed called Borealis Geopower, which was recently awarded $2.6 million from the Alberta Energy Research Institute to develop a similar project in the province. “Hot water resource is readily available through the existence of numerous deep, end-of-life oil and gas wells in the Canadian Foothills and the use of hot water resource for electricity production has the potential to increase energy efficiency and offer carbon offsets for the oil and gas companies,” Borealis states on its Web site.

These are the kinds of geothermal projects that could really take off, particularly if companies such as Borealis and Free Energy can prove them to be economical for oil companies trying desperately to reduce their carbon footprints as cap-and-trade approaches. If they can demonstrate this works, it will also capture the attention of the Alberta and Canadian governments. Having 100MW-plus geothermal plants built in Canada would be nice, too, but this kind of distributed geothermal energy generation makes oodles of sense and should be pursued with vigour.

Been crazy busy this past week but there’s been no shortage of interesting news in the cleantech and green energy space, so I’ll summarize a few of them here instead of doing individual posts. BTW: Hope everyone is enjoying their summer.

Click to the next page to read about General Fusion’s new infusion of cash, new fluids that can make enhanced geothermal more efficient, a McKinsey report that details the incredible payback of investments in energy efficency, and a University of Calgary report that says Alberta would benefit tremendously by plugging into electric transportation.

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