Green payback

Okotoks car dealership shows that while geothermal is not cheap, it will pay for itself and help the environment at the same time

Go green-or save money, time and worry?

It's a decision increasingly faced by businesses today as they ponder a choice between the tried and true and the uncharted waters of new or unfamiliar technology. But the recent experience of Keith Pontiac Buick GMC Ltd. of Okotoks, Alta., with a geothermal-based Heating, Ventilation and Air Conditioning (HVAC) system suggests that may in some instances be a bogus dilemma, and that, in fact, the green option can help the bottom line. The total cost of the system, which includes geothermal heating and air conditioning, supplementary insulation, solar panels and water conserving technologies, was about $500,000 and should take about 10 years for payback.

"It lowers our cost of doing business," says Marc Rachiele, the dealership's general manager. "Our utility expenses are reduced by about $15,000 a month." And, he adds, the system lowers the dealership's carbon footprint at the same time.

For set-up and installation of the geothermal system, which provides heat from the ground in winter and cooling in summer, 60 wells were drilled to a depth of about 300 feet for the 60 vertical loops of high-density polyethylene pipe that carry the liquid used for heating and cooling. The ground source heat pump used to move the liquid is similar to the heat pump in a refrigerator or air conditioner except that it can provide either heating or cooling. The system relies on the fact that subsurface ground has a relatively constant year-round temperature. In summer, the ground acts as a heat sink to cool the 36,000-square foot dealership building slab. In the winter months it provides heat.

The 22-service bay shop benefits from in-slab heating.

"There's no cold air at the bottom or floor level," Rachiele says. In winter, the electric-powered heat pumps are run at night, when electricity is often cheaper due to lower demand, to super-heat the slab, says Rachiele, who adds, "I don't understand why more businesses don't do this." Besides better cash flow as a result of lower utility bills, he says the record shows that this kind of system requires less maintenance than conventional roof-top HVAC units.


Although this type of geothermal system has been around for decades, Rachiele admits "there was some nervousness" about the project. The first commercial geothermal/ground source heat pump system in the United States was installed in the Commonwealth Building in Portland, Ore., in 1946.

The type of geothermal system used at Keith Pontiac is often called geo-exchange to avoid confusion with geothermal power, which, as in Iceland for example, uses underground sources of very hot water to power steam turbines for generating electricity. The less costly geo-exchange is used in about 70 countries. Geothermal power, which requires good access to very hot rocks and/or water deep underground for the economics to work, provides some electricity in about 20 countries.

"The total economic activity of the Canadian geo-exchange industry in 2009 was likely in excess of $500 million," according to a 2010 market study from the Canadian GeoExchange Coalition.

Besides the vertical or horizontal underground loops to carry the heat-transfer fluid (often a mixture of water and glycol, methanol or ethanol), the other main components of a geo-exchange system are the heat pump and distribution. Excluding the loop system, the cost of geothermal hardware is about the same as for a conventional system.

"The ground loop then about doubles the cost of the hardware, so the incremental cost is about 100 per cent," says Alex Lewoniuk, in charge of business development at Geothermal Utilities Inc. "Right now, payback is often 11-13 years in Alberta. It depends partly on the price of natural gas."

Although the heat or energy output from geo-exchange is about four times the input, with resulting efficiency gains, payback in Alberta can be slower than in other provinces because of current low natural gas prices and higher electricity costs than elsewhere-in British Columbia, for example, where it is about 30 per cent less. This could change if gas prices rise or if Alberta's electricity prices drop, in which case payback time would shrink.

Geo-exchange can also draw heat from water in lakes or underground water sources. A project of Geothermal Utilities is a case in point. The Happy Valley Estates affordable housing project in Hinton, Alta. has a total of 52 units in five buildings, with about two-thirds of the project site sitting roughly 100 feet above an abandoned coal mine that's filled with water. The Hinton project doesn't use the actual source water. Instead, it has a closed-loop system of three-quarter inch high-density polyethylene pipe that runs to a depth of about 250 feet and passes through the water in the mine. The project was commissioned last fall.

Since it was launched in 2003, Geothermal Utilities has done work in the commercial, residential and institutional sectors for a total of more than 200 projects, Lewoniuk says.


The efficiency gains with geothermal are ubiquitous but the environmental benefits can vary, depending on how electricity is generated in a region. Greenhouse gas reductions are significant in hydroelectric regions such as Quebec and British Columbia, but rather less where coal-fired generation is used, as in Alberta. With geo-exchange and electrically powered heat pumps, one can expect about 25 per cent higher electricity bills, with savings coming from reduced natural gas/oil consumption for heat, lower maintenance costs and better input/output ratios.

In some cases, the geothermal option can even entail reduced capital costs-especially if you're a developer faced with a price tag of $550,000-plus for a gas line to your new subdivision.

"And that's before hookups to individual houses," says Ben Wemhof, a partner in Tanglewood Ridge Inc., which is working with Landrex Developments on a new subdivision near the Town of Athabasca and adjacent to the river.

With no alternative natural gas retailer in the region, Wemhof took a hard look at the geothermal alternative for the multi-phase project, which could have up to 273 houses.

"Each lot can use [a] horizontal or vertical loop [system]," he says. "Each home will have its own system."

Unlike some provinces, Alberta has no specific incentives for geothermal, but Tanglewood Ridge homeowners could access up to $10,000 under the Alberta government's EnerGuide 86 rebate plan for homes. "With good insulation and geothermal, it should be achievable," Wemhof says.

Despite the sector's growth across Canada and some significant projects around the province, Alberta has been slow to embrace the technology, observers say.

"Out of all the provinces, we are the weakest," says Chris Mitchell, an industrial engineering technologist and veteran geothermal specialist at CleanEnergy Developments, which has done geo-exchange projects across the country, including schools, colleges in Ontario and a retail store in Whitehorse. "Some oil and gas executives are using geothermal systems for their houses, but, with others, well, it can be a tougher sell."

Last summer, CleanEnergy received a GeoExchange Excellence award from the Canadian GeoExchange Coalition for its engineered geothermal heating system at the Upper Banff Hot Springs spa. The spring's flow has been intermittent in recent years, drying up in winter. The geothermal solution involves an open-loop system in which heat is recovered from the site's natural geothermal source and pool water discharge.

"The system was designed to provide approximately 90 per cent of the required pool heating under peak heating conditions with the existing natural gas boilers as backup," according to the Canadian GeoExchange Coalition. "After several years of operation, the natural gas boilers have yet to be used for pool heating even during the extremes of Banff winters."

One of Alberta's biggest geothermal projects is still in design but will be part of a huge expansion at the Calgary International Airport. The new international terminal will almost double the size of the airport with a total of about 1.4 million square feet of floor space on four or five levels including mezzanines. Some 600 boreholes will accommodate 600 loops to a depth of about 400 feet as part of a geothermal HVAC system for the new terminal. With other energy-saving features included in the design of the terminal, "it's difficult to quantify the energy savings from geothermal," says Chris Himsl, manager of the mechanical engineering department at Aecom Canada Ltd. Pending a detailed analysis later, he estimates energy savings will be in the range of 25-30 per cent.

A five-year. $3.5-million research project into geothermal energy at the University of Alberta could eventually involve much bigger savings.

As part of the Helmholtz Alberta Initiative, a Canadian-German collaboration, a team of researchers is investigating using geothermal sources about five kilometres below the oilsands as a replacement for natural gas, currently the main source of heat for bitumen production and processing.

"Both previous studies and current ones suggest it could be feasible," says Martyn Unsworth, a professor of geophysics at the University of Alberta and lead researcher on the project.

While it is likely to be some time before geothermal's potential in the oilsands is fully understood, you can be sure the technology will continue to make inroads in oil and gas-rich Alberta.

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