Ontario geothermal industry optimistic

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By Bruce Nagy

In the movie Groundhog Day, Bill Murray’s character re-lives the same day over and over. Which might seem a little like what has been happening for years in the Ontario geothermal industry. But the movie might be coming to an end.

Discussions at the Ontario Geothermal Association (OGA) conference, held Feb. 27-28 at the Westin Toronto Airport Hotel, suggest that after a prolonged period of hope for a breakout, the industry might finally be poised to make up some ground. The event included some big news from provincial and federal government representatives and from gas and power utilities.

Green Ontario grants

One of the hottest topics was the recently announced GreenOn program established by the Ministry of the Environment and Climate Change and administered by the Independent Electricity System Operator (IESO). It offers rebates for new horizontal and vertical closed ground loop and pond loop geothermal systems. The vertical systems receive $3000 per ton and the others receive $2000 per ton. All systems earn $750 for de-superheaters, $1500 for domestic hot water, and $1500 for enhanced performance (COP of 4.0+). The maximum rebate for vertical systems is $20,000, and for the others $15,000.

The rebates are aimed at existing homes fueled by gas, electricity, oil, or propane and new custom homes. The ministry says it is working on a model for production builders, to be announced later this year.

There are also rebates to update existing geothermal systems. Repair or replace rebates of $750 per ton can be had for the ground loop or the heat pump, up to $4500 each if they are at least 20 years old.

The program is only available through certified participating contractors, who can sign up quickly on the website, but then have 180 days to take HRAI training to confirm they are certified. “The 180-day allowance was designed to keep industry from screeching to a halt,” said Evelyn Lundhild, senior manager, GreenON Fund at Ontario’s Independent Electricity System Operator (IESO). “We have already registered more than 70 ground source contractors,” she added.

Enbridge geo infrastructure

Enbridge, one of the country’s largest gas utilities, announced that it is moving into the geothermal infrastructure business in Ontario. Just over a year ago the OGA successfully lobbied against a proposal to expand the natural gas infrastructure in Northern Ontario at the Ontario Energy Board (OEB), questioning, among other things, public support for gas infrastructure and the absence of equivalent support for neighborhood geothermal infrastructure.

Enbridge president Jim Sanders attended the conference in person to deliver the announcement and extend assurances of a friendly market entry.

Training and quality assurance

The conference opened with OGA Chair Jim Bolger mentioning Enbridge and GreenOn and a training arrangement with the Heating, Refrigeration and Air Conditioning Institute of Canada (HRAI). “We want to be taken seriously as an HVAC solution, so we are building relationships,” he said.

“Our HRAI relationship has helped us a lot…The GreenON grants are a temporary windfall, but our job has just begun…Resting on our laurels is not an option. We need to step up our game on quality assurance.” He talked about training installers and inspectors, standards, communicating successes, and attacking the geothermal cost equation.
Glen Murray, former Ontario minister of the environment and a longtime supporter of the geothermal industry, is now heading Pembina, an energy policy consulting firm. He talked about some of the experiences with cap and trade and carbon taxes in Western Canada.

Steve Smith, from the U.S. Geothermal Exchange Organization, described the struggle to maintain inclusion in tax credits. He suggested that strong marketing, quality positioning, and cost cutting were critical during the good times, because government support is always temporary. (And may be short-lived in Ontario if the Conservatives win the Ontario election June 7 – ed.)

Third party financing

Another development at the event might also signal better times ahead. In attendance were a couple of financial companies that provided detailed models for innovative ways to underwrite the initial costs of geothermal. Almost everyone in the industry agrees that up-front costs are a key barrier to widespread adoption.

Debbie Scharf from Natural Resources Canada (NRCan) made a presentation on a Local Improvement Charges model for financing, net-zero targets, heat pump labelling, training supports, and market and technology research.

Parham Eslami Nejad, Ph.D., a research scientist at the federal CanmetENERGY lab, hinted at a potential double whammy of better performance and reduced capital cost. His team is targeting a system payback of five years through a handful of advancements now under study. Drilling costs may be reduced by using a more precise virtual borehole test. Heat pump prototypes improve performance and protect the environment by using C02 refrigerant in a direct exchange system.

Geo infrastructure, significant government support, quality assurance, training, standards, advocacy – it might be time for the groundhog to climb out of his hole, sniff the air and decide that spring has sprung.

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