TheStar.com - Down to earth
04/24/2006 08:53 AM
Down to earth
The world's most reliable renewable
energy source is beneath our feet. You
can tap it for the price of a car.
The payback: savings. And, maybe,
helping to save the planet
Apr. 24, 2006. 06:47 AM
TYLER HAMILTON
ELMIRA—Dave Hatherton grows frustrated as he talks about the
McGuinty government and its plan, announced last month, to
pay a premium for wind and solar power.
It's not that he doesn't like the idea, which rewards small
producers of clean energy for their modest contribution to the
grid. Ontario needs all the renewable energy it can get.
But Hatherton is disappointed that Queen's Park, with its bold
talk of cleaning up the air and complying with Kyoto, has all but
ignored the potential of geothermal technology as one of the
best ways to wean the province from fossil fuels.
And why, he wonders, are there incentives for those contributing
to the grid but not those taking less from it? After all, a watt not
used is a watt gained.
"I don't understand. I just don't get it," says the founder and
chief executive of Next- Energy Geothermal Solutions, which
sells "earth energy" or "geoexchange" systems that provide
heating and cooling for residential and commercial buildings.
SALVATORE SACCO/TORONTO STAR
Allan Stolaryk, wife Karen and daughter Sydney
check out the Copperfield development where
they’ve bought a geothermal-powered home. “We
thought, let’s go for it,” said Allan, hoping for
savings in the long run. “We are already paying
almost $300 a month this winter, and it was a mild
winter.”
Related Link
How geothermal
energy works (pdf)
Tag and Save
Tag and save this article to your
Del.icio.us favourites.
What is Del.icio.us?
Sitting in his office at the company's new headquarters about 15
minutes north of Waterloo, he points to the parking lot outside his window.
Several metres underneath the lot, where the Earth's temperature is a constant 10 to 15 degrees Celsius, is a
system of ethanol-filled tubing that extracts heat from the ground in the winter and carries it back in the summer.
A device called a "heat pump" in NextEnergy's building manages the balance, making sure the office temperature
remains comfortable throughout the seasons.
The earth, in essence, is a massive storage facility for energy.
No natural gas or oil is required for heating, and there are no energy-sucking air conditioners to power, meaning
less strain on the electricity grid and a dramatic reduction in greenhouse gas emissions. Sure, the system requires
some power to operate, but the net effect speaks for itself.
"We get about 70 per cent of the energy for this building out of the parking lot," says Hatherton, adding that there
is no other technology in the world that will supply cooling, heating and hot water so efficiently. "It's like having a
natural gas well in your own backyard, and you don't have to pipe it in from Alberta."
These benefits are why the University of Ontario Institute of Technology in Oshawa installed a geothermal system to
provide heating and cooling to eight campus buildings, one of the largest projects of its kind in North America.
http://www.thestar.com/NASApp/cs/ContentServer?pagename=thestar/La…rintFriendly&c=Article&cid=1145829009171&call_pageid=971358637177
Page 1 of 5
TheStar.com - Down to earth
04/24/2006 08:53 AM
Geothermal also cools the ice at the new Ontario Speed Skating Oval track in Lakefield, where the excess heat
produced will be used by two local school boards. Exhibition Place, meanwhile, is considering its own geothermal
project to heat and cool one of its historical buildings.
It begs the question. If it's so great, why is geothermal technology the Rodney Dangerfield of the renewable energy
world, getting less respect and attention than solar and wind systems despite more than 25 years on the market?
And if geothermal systems are such an efficient, reliable and clean way of capturing energy, why do 11 million
homes across the country still rely on dirty natural gas, electricity, and even oil and propane for their cooling and
heating?
"Because it's a very expensive technology," says Daniela Pizzuto, spokesperson for the Canadian GeoExchange
Coalition. "For a 2,200-square-foot home, what we consider average, you're looking at pretty significant upfront
costs, anywhere from $18,000 to $25,000, and not everyone has that kind of money to put down."
The lion's share of cost comes not from the heat pumps, but laying ground loops that carry the ethanol fluid. New
homes are easiest, because tubing — whether laid horizontally or vertically — can be put in without having to rip up
lawns. Urban and suburban retrofits on properties with less space are most expensive, requiring costly drilling for
the vertical loops.
Sites and designs vary, but Pizzuto says the trick is to come up with ways to finance the installations so
homeowners don't have to swallow the investment in one painful gulp. "Once that financing is available, it becomes
very enticing."
Slowly, some industry players are moving to fill that market need, hoping to spark a trend that will see geothermal
technology become a mainstream competitor to conventional heating and cooling systems.
In January, NextEnergy and electric utility Waterloo North Hydro announced the launch of a joint venture called
Lifetime Energy, which will visit customer homes in the area, do an estimate for a geothermal system, oversee
installations, and handle lifetime maintenance of the system.
But instead of just selling the system, NextEnergy essentially rents it out over 20 years, charging a fixed fee on the
customer's monthly energy bill that comes from Waterloo North Hydro.
Hatherton says if a geothermal system is replacing heating based on electricity, oil or propane, homeowners can
often see enough energy savings each month to more than cover the monthly fee on their bill. For natural gas
homes, it's closer to a break-even proposition.
In return, homeowners are no longer at the mercy of volatile fossil fuel markets and are more sheltered against
rising electricity prices, which on May 1 will be 3 per cent to 19 per cent higher depending on where you live in the
province.
Homeowners also have the satisfaction of slashing their greenhouse gas emissions while becoming less of a burden
on the grid, particularly during summer peaks when air conditioners across the province are working overtime.
Hatherton hopes to expand the program by striking similar joint ventures with other utilities across the province
and country. He says partnering with utilities is crucial because they bring credibility and long-term stability to the
business, not to mention a way of billing customers monthly — something the banks like to see when NextEnergy
approaches for financing.
In the meantime, the company is also making it easier for customers to arrange their own financing. Earlier this
year Next Energy struck a deal with Vancouver-based Homeworks Services Inc., which has agreed to provide
financing of up to $35,000 over 10 years at an attractive 6.5 to 7 per cent interest rate. Vancity, the country's
largest credit union, will underwrite the deals.
"It's one of the best programs I've seen for this kind of thing," says Hatherton, adding that until November 2007
customers get a rebate on the provincial sales tax they pay on geothermal ground loops and heat pumps. At roughly
half the cost of a system, that can amount to nearly $1,000.
http://www.thestar.com/NASApp/cs/ContentServer?pagename=thestar/La…rintFriendly&c=Article&cid=1145829009171&call_pageid=971358637177
Page 2 of 5
TheStar.com - Down to earth
04/24/2006 08:53 AM
Offering affordable financing for geothermal systems has worked well in Manitoba. Back in May 2002 the province
launched a program that provides up to $15,000 in financing at a 6.5 per cent interest rate over 15 years.
Along with the financing, an educational and marketing program was launched, including free workshops, to raise
the public's awareness of the technology as an attractive energy alternative.
"Demand is extremely high in our market right now," says Domenic Marinelli, marketing analyst with Manitoba
Hydro's "earth power" program. "If you talk with a lot of the key contractors in Manitoba they'll tell you they're
completely booked up for the rest of the year. As energy prices continue to rise the demand builds upon itself,
because consumers start to look at other options."
He says provincial sales of geothermal systems have jumped from 270 in 2001, before the program was introduced,
to 745 systems in 2005 (see "Incentives" top right). "I think there's a lot of lessons we've learned that we can pass
along to other provinces," says Marinelli.
Geothermal technology needs a track record in
use, accessible financing and
a skilled support industry
In the absence of a similar program in Ontario, home developer Marshall Homes is taking its own lead. The
company announced in February that any new home being sold in its Copperfield community in Oshawa can be
equipped with a combined geothermal and solar thermal system — dubbed the STREAM system — as an optional
upgrade.
Supplied by Toronto-based Clean Energy Developments, it's being touted as a first of its kind in the province.
The cost: $22,000.
But like NextEnergy, Marshall Homes is helping prospective customers overcome the sticker shock. As an upgrade
the cost is rolled into the mortgage, no different than buying a new home that comes with a high-efficiency furnace
and central air.
The system, which is enhanced by rooftop solar thermal panels, promises energy savings of about $2,200 a year
compared to a home using natural gas, meaning a payback on the principle investment in about 10 years — less if
you subtract how much you'd otherwise pay for that conventional furnace and central air conditioner.
"Your house becomes an energy producer. It starts to pay for itself, and it becomes a business in itself," says Craig
Marshall, the 46-year-old founder of Marshall Homes.
He says he was motivated to launch such an option because of his own interest in the technology, energy efficiency
and the environment.
"If I'm ever going to do it now is the time," says Marshall, adding that he didn't want to be an old man before
seeing some of these technologies break into the mainstream. "We've got the land. We've got a good operation up
and going, and I think it's time to push the envelope a little more and improve on what we're doing."
Allan Stolaryk, 47, was sold almost instantly. The Oshawa resident saw a sign for the Copperfield community and
decided to check it out, even though he wasn't in the market for a new home.
After learning about the STREAM upgrade, he talked it over with his wife, Karen, and decided it was time to move.
"We thought, let's go for it," says Stolaryk, who became the first — and so far the only — buyer to purchase a home
with that option. "We just had a baby, and we live in a townhouse and are already paying almost $300 a month this
winter, and it was a mild winter. So the motivation was there."
He also wanted to set a good example environmentally for his daughter, who celebrates her first birthday when
they move into the house this October. "I don't see this as taking a chance. I see it as a win-win," he says. "I'm
hoping other home developers follow, and that the general public puts a squeeze on them."
http://www.thestar.com/NASApp/cs/ContentServer?pagename=thestar/La…rintFriendly&c=Article&cid=1145829009171&call_pageid=971358637177
Page 3 of 5
TheStar.com - Down to earth
04/24/2006 08:53 AM
Michael Lewkowitz, CEO of Clean Energy Developments, says the key to getting homebuilders interested is to
design turnkey systems that are simple, reliable and profitable from the outset.
"To see Craig launching it as an optional upgrade, that is the biggest testament that these things are production
grade," he says.
"We're seeing significant interest from all range of builders. It's quite fascinating to watch. The community seems
to move as a group with early adopters leading the way. Once people see it happening with Marshall, others start to
do it."
To broaden the appeal of the technology, Marshall — similar again to NextEnergy — is exploring the idea of leasing
the systems by partnering with a utility, such as Enbridge, Toronto Hydro or Bullfrog Power.
"I think the marketing opportunities are going to be too large for them to ignore," says Marshall.
But cost isn't the only barrier to mainstream acceptance of this technology.
Homeowners won't plunk down $20,000 on a system, utilities won't take responsibility for a 20-year lease, and
private investors won't finance such capital-intensive projects if they perceive there's any room for error.
Once a system is in the ground, they want to leave it in the ground for decades. Nobody wants to go through the
cost of digging up a system that suddenly stops working or doesn't deliver the expected energy savings.
For this reason, there's still nervousness in the market. "The industry has been very much in flux for a long time,"
says Pizzuto, of the geo-exchange coalition. "There hasn't been an organized, centralized body that consumers or
homebuilders can go to for reference. There's no regulation. No courses to pass. No minimum basic training."
It's the main reason the coalition was created in 2003, through funding from Natural Resources Canada. The
organization's mandate is to develop a training program, to be launched this fall, which the provinces and federal
government can recognize as a national standard.
The idea is that a homeowner or business, if it wanted to benefit from a government or private financing program,
could only qualify for funding if they used a trained geothermal contractor or distributor.
"Clients want to know who is reliable, and this training program will add to the credibility of the industry. It will give
consumers more comfort," says Pizzuto, adding that the goal is to maintain a high level of system quality.
Hatherton says such a program, if it can be properly enforced, is important for keeping fly-by-night geothermal
contractors from doing sloppy work that can tar the whole industry just at it begins to flourish.
He says there's already a shortage of skilled labour, so new people seeking opportunity in the industry as it grows
need to be trained and tracked properly.
In addition to training, however, he says it's just as important for the government to raise awareness of geothermal
as an option, by both encouraging adoption and supporting the kind of funding programs that have proven a hit in
Manitoba.
Perhaps then the utilities, traditionally averse to risk and hostile to change, will stop viewing geothermal as a threat
and begin to embrace it as a viable, sustainable and profitable way of selling energy.
"This is a huge opportunity," says Hatherton. "I just can't believe they haven't grabbed and run with it."
Clean Break reports on energy
technologies. Reach Tyler Hamilton at [email protected]
Additional articles by Tyler Hamilton
http://www.thestar.com/NASApp/cs/ContentServer?pagename=thestar/La…rintFriendly&c=Article&cid=1145829009171&call_pageid=971358637177
Page 4 of 5