The Future of Canada’s Green Energy Movement
For years, Canadian businesses have been striving to find creative ways to reduce carbon emissions while fulfilling customer needs. For a number of these customers, geothermal energy has proven to be an innovative solution that is expected to continue to grow. The cost-effective, renewable resource uses the energy of the earth below the surface to heat or cool homes and buildings, and to provide hot water.
GeoSource Energy is one company that is leading the Canadian geothermal movement. It was founded in Caledonia, Ontario in 2004 by Dr. Stan Reitsma, P.Eng., PhD.
Dr. Reitsma worked as an Assistant Professor and Canada Research Chair at the University of Windsor after completing his PhD in Civil Engineering. The academic-turned-CEO decided to transition into the business world when he saw a great opportunity for innovation at a time of rising natural gas prices. While prices of natural gas have again come down after 2008 due to arrival of shale gas production, other market drivers continue to increase the business proposition for geothermal systems.
“We are a low carbon emission solution for buildings. At our heart, we need to get emissions down and we are working at it. From a green or climate change perspective, we are acting to reduce emissions,” Dr. Reitsma says of his company’s purpose.
The contracting business strives to provide high quality installations for its clients, which promotes the burgeoning industry as it moves into the mainstream. Clients of GeoSource Energy can expect high quality installations, on time and on budget. This has led to GeoSource growing in the industry due to repeat business and referrals. What started with one partner and one drill rig in 2004 has grown into a high-tech, seven-machine business that has drilled over 5,000 geothermal boreholes.
The technology saves costs in both energy and maintenance. It works by installing heat exchangers to depths now exceeding 800 feet. At a depth of 10 feet and greater below the surface of the earth, there is a constant temperature of approximately 10 to 11oC year-round. During the summer months, heat from a home or institution can be ejected into the ground, and in cooler seasons or climates, the heat can be retrieved. The efficiency is high, because the temperatures are always in the right range for heat pumps to operate.
“The difference between the air source heat pumps and the ground source heat pumps is that air pumps see a full variation in outside temperature, from -30 to +35 degrees Celsius, whereas ground pumps barely move regardless of time of year. You have a constant heat source that you can pull out of or pump back in. It can run on electricity, and has low emissions if that electricity is clean like Ontario’s,” Dr. Reitsma explains. “From a cost standpoint, there are good economics for multi-residential or institutional buildings. That’s why we are starting to see the market grow. We are getting that message out and are able to deliver for people. Results of the effort are clearly evident.”
Compared to a conventional system, which uses a cooling tower and chiller, a geothermal system with a heat pump is much easier to maintain once it has been installed.
“A cooling tower is expensive to operate. It uses water and chemicals, is opened and shut down every year, and requires ongoing maintenance and eventual replacement. It doesn’t have a huge lifespan and will start to deteriorate in terms of performance,” adds Dr. Reitsma.
Interestingly, geosystems may still utilize chillers, but rather than cooling only, reversable chillers are used to provide both heating and cooling. Using geothermal energy (also called geoexchange), the need for cooling towers and boilers can be eliminated and replaced with a geoexchange system. “As long as you don’t dig through the pipes, the geoexchange system lasts for the life of the building, possibly hundreds of years,” says Dr. Reitsma.
There is room, however, for further improvement within the geothermal movement itself. Through experience, GeoSource Energy has come up with a new method of drilling holes into the ground from the surface to construct vertical closed-loop geothermal systems prior to a building’s construction. By drilling from the surface prior to shoring, excavation, blasting or rock breaking, drill rigs are never present in the excavation at a time when many trades are anxious to begin construction of the building’s footing and walls and installation of utilities.
Developed and pioneered by GeoSource Energy, the patent-pending process has been tested on many job sites and developed over time to improve ease of use, dependability, and range of application. One of the more recent examples is The Plant Condos on 41 Dovercourt Road in downtown Toronto, where in 2017 50 holes were drilled from street level to a depth of 650 feet. The 120,000 square-foot, mixed-use condominium in Liberty Village is a Windmill Developments project.
GeoSource is completing the project with Diverso Energy, a business that uses a utility-style geothermal model where a third party commits to providing heating and cooling to the building for a multiyear contract period. The geothermal assets are paid for by the third-party utility, and the building owner or condo pays the third party for heating/cooling capacity over the timeframe of the contract (e.g. 30 years). This economic model has proven to be successful for developers, because they do not have to bear the upfront costs of the geothermal system in order to realize the long-term fiscal and energy-saving benefits. Over the long term, building owners benefit from a lower cost solution with reduced cost volatility since fees are fixed.
The next generation of this technology will be angled drilling underneath existing buildings, as is being done on Toronto’s Lillian Street. A 500,000 square-foot multi-family residential and assisted living facility will soon be retrofitted with geothermal technology for the client, CollecDev. This project is also being done with Diverso Energy.
Dr. Reitsma believes that retrofitting by drilling from the sides of buildings will be a profitable niche, as the current federal government has a mandate to reduce emissions of all buildings it owns or leases to meet Paris Agreement numbers. Being able to deliver in a different way opens up a whole new market for the green business.
“We are continuing to improve or diversify our drilling options, to get more capacity out of smaller areas, and to get into areas where we couldn’t before,” says Dr. Reitsma. “We are making it a more broad application.”
Geothermal technology hasn’t yet reached its full potential. In the future, GeoSource Energy may take on a wider variety of project types in tougher geological conditions, using its unique rigs.
Indeed, this is a time of transition for GeoSource, which began as an owner-operator business and now employs 25 people. The business has three times the work volume that it had just two years ago. Dr. Reitsma has had to hire additional engineers, mechanics, and project managers. He is also looking to hire CFOs as the company moves from being a small business to a larger corporation.
Storage of inventory is also at a pinch point, and soon, GeoSource will need to expand into a bigger office. “It’s a good problem to have,” Dr. Reitsma remarks.
This business success story can be attributed to a few different factors: a market that was ready for change, an economic model that worked for the clients, good financial partners (such as the leading Canadian business advisory firm Grant Thornton LLP), and keeping clients satisfied. Building lasting relationships with clients has allowed GeoSource to thrive.
“Once you’re in with them, as long as everything is working, you’re in. But it’s hard to get in – the developer community is surprisingly small in that we all know each other,” Dr. Reitsma shares. “Reputation is key. Keeping people happy and providing a good product seems to be the best marketing technique.”
Dr. Reitsma believes the future of geothermal technology will be mainstream. The Ontario-based company is starting to see a greater potential to complete work nationwide. Expansion into other parts of Canada, with a focus on large and challenging projects, is a part of the five-year plan GeoSource Energy is now developing. The company’s goal is to have a handful of drillers who are able to address large projects anywhere.
In fact, such a mobile crew wouldn’t even be limited solely to Canada.
“It’s a little bit daunting for me to think that far out, at this point. But when I look back at where we were 10 years ago, I can imagine that another 10 years from now, things could look a lot different,” Dr. Reitsma concludes.