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Geothermal a Wellspring of Operational Savings Retrofits Reposition Winnipeg Rental Housing Portfolio
November, 2008
By Barbara Carss
Recent geothermal installations in B & M Land's Winnipeg rental housing portfolio are too early to take advantage of the Manitoba government's new incentive program for commercial and multi-residential buildings, which kicks in on January 1, 2009, but the economic payback alone has already convinced company owner, Andrew Marquess, that the investment was worthwhile. Following a successful retrofit of a 25-storey, 254-unit apartment tower, the company is getting ready to commission the city's first district geothermal system to serve 332 units within 20 buildings on a nine-acre site.
"We tried geothermal and we really liked what we saw on the cost saving side of it and it was as simple as that," recalls Marquess, in reference to the company's first project at 33 Hargrave Street in downtown Winnipeg. "Our gas bill dropped from $1,100 per suite per year to $100 so we've reduced one of our major costs down to very little."
Both geothermal installations are part of comprehensive redevelopment projects to reposition the buildings in Winnipeg's housing market. Units in the Hargrave Street tower were vacated, gutted and refurbished over a 15-month period beginning in 2006. The geothermal system replaces a natural gas fired boiler and individual through-the-wall air conditioners in each unit.
The geothermal well was drilled at the back of the 1.5-acre site causing relatively little disruption in the surrounding densely developed area. Within the building, a heat exchanger and new piping connections were required in the mechanical room, while the existing vertical piping was reinsulated so that it could effectively carry both warm and chilled water. This connects to individual heat pumps in each unit.
"It's sort of like a miniature furnace and air conditioner in each suite so in one suite the air temperature could be set at 65(F and next door it could be 72( F," Marquess observes. "That is a side benefit of the system."
Retrofit work also included other energy efficiency upgrades such as new insulation, windows and heat recovery equipment. Electricity costs have increased from pre-retrofit levels - up from approximately $400 per suite per year to $500 annually - but would have been higher still without the associated retrofit measures. Even so, the total operational savings still translate to approximately $900 per suite per year when accounting for much greater saving in gas costs.
A recent dip in gas prices may have temporarily extended the payback period for geothermal investment, but Marquess expects that to be insignificant over the 25-year life cycle of the system. "You don't have to be particularly visionary to foresee that gas prices will be going up again," he quips.
An open loop system with supply wells and return wells serves the larger nine-acre site where a major redevelopment is nearing completion. Two 23-unit low-rise buildings and 286 stacked townhouse units were stripped to the frames and then rebuilt.
"We kept the shell, but all the infrastructure is new so the line is very, very grey on what we call retrofit versus new," Marquess says. "The geothermal is installed and we are just finishing the suites, which will be ready for rent in April 2009."
INCENTIVES
In August, the Manitoba government made the formal announcement of its new geothermal incentive program from B & M Land's redevelopment site. Commercial building owners will be eligible for rebates of up to 10% of the value of single-purpose geothermal systems or up to $150,000 for district geothermal systems. Residential homeowners are also eligible for grants and/or tax credits for geothermal conversions or installations in new construction.
The Manitoba Geothermal Energy Alliance (MGEA) will administer the program and building owners must employ an MGEA member to install their systems in order to qualify for the incentive. That should be easy to do in most areas of the province since 98% of Manitoba's known installers are MGEA members, who have met industry training and certification standards.
"Manitoba is the leader on a per capita basis for the number of geothermal installations in North America," says Inez Miller, the MGEA's Executive Director.
The new incentive complements a slate of existing incentives for energy efficiency and renewable energy that Manitoba Hydro offers for residential, commercial, institutional and industrial consumers. Although the majority of programs are geared to other retrofit measures, commercial customers can receive grants of up to $10,000 to help cover the costs of geothermal feasibility studies, as well as a geothermal installation incentive equating to $1.25 per square foot heated by the geothermal heat pump. Geothermal projects could also qualify for Manitoba Hydro's low-interest (4.9%) 20-year loans for retrofit work.
Geothermal installations are additionally eligible for federal ecoENERGY Retrofit grants. This provides up to $10 per gigajoule saved to a maximum of $50,000 or 25% of the cost of the system in commercial buildings no larger than 215,000 square feet. Individuals or companies with portfolios of buildings can receive funding for multiple projects up to a maximum of $250,000. Residential grant recipients are eligible for up to $3,500.
Industry proponents see Manitoba's new geothermal incentive as an encouragement for residential consumers in particular. Rebates and tax credits of up to $3,000 for installation in new homes or $2,100 for retrofits in existing homes helps to balance out the capital cost of systems that typically range from $21,000 to $26,000 - well above the price of conventional high-efficiency residential HVAC systems.
"For owners who were kind of undecided, having this incentive might give them an extra reason to install geothermal," Miller suggests.
"The extra benefit is more geared toward the single-family home," Marquess concurs. "I think it's a step in the right direction, but more could be done with district systems where there are a number of buildings and suites served from one system. Each separate suite is really the equivalent of a single-family home."
The business case still makes even in the absence of incentives, however. When asked if he'd opt for geothermal in future developments, Marquess does not hesitate. "Absolutely," he says.
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