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Digging into the coming geothermal boom

Industry lays out myths and truths behind a renewable energy source
Tuesday, March 23, 2021
By Rebecca Melnyk

A crop of condos in Canada already feature geoexchange systems, a type of electric heating and cooling that draws heat stored inside the Earth and uses it for warming or cooling buildings above ground. Often referred to as geothermal, it replaces conventional systems that run on exhaustible resources, from fossil-fuel powered boilers to cooling towers that reject heat into the atmosphere to make summer more bearable.

But while the relevance of this clean technology has been percolating for years, the current buzz is that more multi-residential developers are tuning in. As geothermal collides with carbon-free mandates and new third-party utility models, it’s expected to make strides, bringing along developers that will try to stay competitive.

“Two major hurdles with this technology in the past were the up-front capital cost and the long-term management of the system,” says Roya Khaleeli, director, sustainability and innovation at Minto Communities. “The new business models offered by geoexchange companies over the past five years address both of these challenges.”

North Oak condo, the fourth phase in the master-planned community of Oakvillage, in Oakville, Ontario, marks Minto’s debut into geoexchange technology. The developer is evaluating the system for other projects wherever appropriate—anticipating the stepped trajectory Canada is taking to higher-performing buildings.

Governments are ramping up low-carbon efforts over the next decade. As Toronto phases in its Green Standard (currently in Version 3) and requires all new buildings to produce near-zero greenhouse gas emissions by 2030, it will eventually become impossible to design with gas heat, states non-profit Ontario Geothermal Association. Ottawa is working on a Green Standard, too, while British Columbia introduced its BC Energy Step Code to make all new buildings net-zero energy ready by 2032. Also on the horizon— updates with the federal government’s carbon tax.

Tapping into geoexchange could mean changing condo life for the better. As Khaleeli states, owners will be sheltered from expected annual increases in utility costs.

“The condo owner shouldn’t see condo fees that are any higher than the market,” she says. “Condo owners will not operate their heating and cooling any differently from a typical condo, making it easy to live a low-carbon lifestyle. Geoexchange systems also allow for year-round heating and cooling—meaning there is no more system switchover required, much improving resident comfort on those days with unseasonal temperatures.”

Contrary to the belief that geoexchange systems work forever once installed, managing them is crucial.

“Expertise is needed to ensure that the heat extracted and inputted over the course of the year is balanced; otherwise there is a risk that the system no longer works,” advises Khaleeli. “ With the business model around geoexchange, the system is professionally managed and maintained, ultimately reducing equipment maintenance and replacement costs.”

A group of experts gathered recently to distill other myths and truths as industry considers the technology more readily. Last month, Wilkinson Construction held a webinar exploring the potential for geothermal in condo buildings.

“We’ve always thought about energy efficiency, and more recently, we’re thinking about operational or even embodied carbon,” said Bram Atlin, principal at Smith + Anderson, a consulting engineering firm. “The truth is that the implementation of certain technologies really doesn’t pick up steam until it’s no longer leading edge, and mandated by some kind of legislation or code or standards. And that day has come.”

Early implementors of geothermal did so to get ahead of a “learning curve,” ahead of future mandates, Atlin explained. “There’ve been successful projects and you look to your peers and see that it’s happening.”

Tim Weber, co-founder and CEO of Diverso Energy, a geothermal utility company, says developers have also recognized that being both environmentally sustainable and profitable are no longer mutually exclusive. In the past couple months, he’s witnessed serious interest. The conversation is morphing from “why geothermal” to finding the right application and partner. “What that tells us is they are actively pursuing this technology. They are looking at it, doing it, treating it like any other technology.”

Leona Savoie, senior vice-president of development at Hullmark and panel moderator, concurs. She sees this “geothermal attraction” picking up over the next five years. More institutional players with ESG mandates will be looking to elevate buildings from a sustainability standpoint, looping in other developers.

Typically regarded as a static industry, one that has always favoured a go-to proforma, multi-res developers are now recognizing a broken formula and are trying to adapt, said Weber. “They see changes coming. Larger developers don’t want to be caught flat-footed.”

Costs have traditionally hindered geothermal applications. The capital cost is high, development charges have more than doubled in the last four years and land is becoming rarer—hence more expensive, Weber pointed out. Third-party utility models, such as Diverso’s, were created to remove upfront construction costs of geothermal, turning it from a capital to a long-term operating expense that is off-flowed to occupants.

The added benefit of displacing boilers and cooling towers brings annual capital reserve savings, including less water, maintenance and repairs. It also opens up creative solutions. “If we can free up roof space, that’s an additional amenity space that could help with sales and marketing,” said Weber. “Or, [developers] can differentiate themselves from the other projects in the area.”

“The impact of eliminating the mechanical penthouse is probably greater than anyone would intuitively estimate,” added Jeff Wilkinson, president of Wilkinson Construction. As a builder of mainly mid-rise residential buildings set in quieter neighbourhoods, he points out the various design issues related to less passive solutions—one being noise that spills onto adjacent homes.

“Also the noise from the inside. These cooling towers are at the penthouse levels, so your most expensive suites are beside the noisiest equipment.” Ultimately, all walls and floors must be treated acoustically, and the vibration addressed.

Geothermal is less complicated these days. Drillers have upped their skills and are faster at what they do, keeping development on schedule. According to Weber, depending on site conditions, what used to take several months now takes a few weeks. “They’ve become more sophisticated; they understand the importance of integration and sequencing and, if the site permits, in many cases, they are able to drill at the same time as shoring and excavating.”

“Geothermal is incredibly simple,” said Wilkinson. But he cautions anyone considering it not to underestimate the importance of pre-planning.

Ushering in geothermal takes time, as Khaleeli echoed in a separate correspondence with CondoBusiness. Her team integrated the technology for North Oak over the past 18 to 20 months.

“As you can imagine, there are a number of teams that need to be involved, from the architect to the construction team to the financing team,” she says. “My suggestion is to start early and be prepared to spend on the analysis (think of it like R&D). Also, really get to know the companies on the market offering the system and how they will manage it.”

Note: The term geothermal used within this article is not to be confused with geothermal power generation.



2 thoughts on “Digging into the coming geothermal boom

  1. Drillers have not ” upped their skills” as Tim puts it, the only differences are new financial, construction management, and traditional methods.
    If anything the requirements for drilling “skills” has gone down.
    Traditionally drillers have been, and to some extent still are selected by the lowest ( read less financially capable) bidder.
    Being able to buy more expensive and consumable equipment and tooling, and grow a business rather than be starved to extinction is the only thing new.
    Alberta has great opportunities for geoexchange and has legislation to encourage skilled professional drillers, we’ll welcome the investment.

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