Reviewing Ontario s Long-Term Energy Plan. Comments by the Canadian GeoExchange Coalition

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1 September

2 The Canadian GeoExchange Coalition The Canadian GeoExchange Coalition (CGC) is Canada s national association for ground source heat pump (GSHP) technology. The CGC acts as the industry catalyst to unite private and public sector stakeholders as well as to expand the market for geothermal heat pump technology in Canada. As the nexus for information, training, certification, standards, and public awareness, we work to build the necessary infrastructure to foster the growth of the Canadian industry. Over the years, the CGC has trained 8,000 industry specialists, including 800 accredited under the CGC Global Quality GeoExchange Program. Since 2007, the CGC has certified more than 18,000 residential GSHP systems in existing as well as in new homes. 2

3 Introduction Over the past several years, staff and members of the Canadian GeoExchange Coalition (CGC) have held a number of meetings with both elected and government officials within the government of Ontario to promote the use of geothermal heat pumps. During those meetings, CGC staff shared industry intelligence and made a number of proposals to consolidate the development of the geothermal heat pump industry in Ontario. The Green Energy Act of 2009 was enacted as a tool to build a green economy in Ontario. After representations from organizations such as the CGC, the following definition for renewable energy source was retained: Renewable energy source means an energy source that is renewed by natural processes and includes wind, water, biomass, biogas, biofuel, solar energy, geothermal energy, tidal forces [ ]. On February 17, 2011, the Ontario Minister of Energy issued a Supply Mix Directive to the Ontario Power Authority (OPA) reminding them that the definition of conservation and demand management should be inclusive of load reduction from initiatives such as geothermal heating and cooling, solar heating and fuel switching and customer-based generation for the purpose of load displacement. Obviously, there is a continuity of thought in the government s intent to recognize the contribution of geothermal energy in the overall energy supply options for Ontario. In this context, when reading the consultation document Making Choices Reviewing Ontario s Long- Term Energy Plan (LTEP), CGC officials were concerned about the fact that there was no reference to geothermal, ground source heat pump (GSHP), or earth energy technology. While ground source heat pumps do not produce electricity to feed-in the grid, they nevertheless contribute to lessen the pressure on overall electricity systems by significantly reducing energy demand; hence, a powerful conservation technology. The following narrative addresses specific questions raised in the LTEP consultation document. Three recommendations are formulated. 3

4 Should Ontario adjust and/or broaden its conservation goals, in light of current demand and supply forecasts? How can Ontario maximize its demand management potential? In 2011, the Supply Mix Directive identified geothermal heating and cooling as a load reduction technology. This position has been supported by the CGC for many years. GSHP technology is a conservation technology, an energy efficiency technology and a renewable energy. To be fully functional and play a meaningful role in market transformation and buy in to the process the supply chain needs clarity on policies and consistency in the actions taken over the years. Every technology s success is only achieved through market transformation. A successful market transformation may only be carried out with sufficient time and resources. Furthermore, success depends on considerations given to the technology s own merit and potential. While our industry has achieved varying levels of success in the recent past, it is still somewhat in its infancy. Despite the latest growing trend, any untimely disruption to this emerging industry could be devastating to its future. In January 1990, Ontario Hydro offered incentives to homeowners to purchase heat pumps (air and ground source) in areas where natural gas was not available. In the years during which the program operated, GSHP system sales in Ontario increased dramatically. Other positive effects of this program included the following: the participation of mainstream heating, ventilation, and air conditioning (HVAC) manufacturers; sales and installations by conventional HVAC dealers; initiation of a loop installer infrastructure; start-up of several Ontario GSHP manufacturers. The program was cancelled in October While it was able to stimulate sales, Ontario Hydro's Heat Pump Program did not create a sustainable industry as private interest attempted to take over control of the entire industry and eliminate their competition. Sales of GSHP systems dropped precipitously once grants were withdrawn. However, while the program ran, the GSHP industry in Ontario looked and felt like what the market would be like if it were to become a mainstream HVAC market. The entry of small HVAC dealers, the start-up of Canadian manufacturers, and the steep increase in sales across many sectors are all mass market signals. The fact that this activity was stimulated by minimal promotion, and a grant that covered less than 20 percent of the capital cost of the system, is of interest. Perhaps the real lesson learned from the program was the catalytic effect of the participation of Ontario Hydro. The utility brought to the table its credibility as well as its affinity with its customer base. The industry responded on the basis of the implied endorsement of the utility to the 4

5 technology. 1 It is vital that the market transformation process not be disrupted or interrupted. Market transformation is a continuous process. The timeline depends, to a large extent, on the nature of the barriers that need to be eliminated. Targets are set for the long term and the retained solutions have to reflect this time horizon. Targeting specific market niches might be a good way to enhance the market transformation strategy. The subsidy experience repeated itself in the years 2007 to 2012 with the ecoenergy Retrofit Homes Program and matching grants from the Government of Ontario. Thousands of industry specialists were trained, hundreds of them were accredited and local manufacturers flourished. Since then, the Ontario GSHP manufacturing capacity has nearly disappeared and the residential market has collapsed. Nevertheless, this later experience was yet again successful in establishing the credentials of the technology. Overall, more than 10,000 residential GSHP systems were certified by the CGC. Surprisingly, 4,000 of them (40 percent) displaced electric baseboards and another 40 percent replaced fuel oil as the main energy source for heating. It should be highlighted that homes heated with electricity or fuel oil represent less than 15 percent of the single-detached housing stock in Ontario. Be that as it may, they accounted for more than 80 percent of the GSHP systems installed through the ecoenergy Retrofit Homes Program. Many of these installations took place in areas where natural gas is not available. On average, every GSHP system contributes to the displacement of 10,000 kwh to 15,000 kwh per year. The CGC estimates that there are over 300,000 homes heating with electric baseboards across Ontario. With savings ranging between 40 percent and 60 percent of the annual heating and cooling loads, GSHPs significantly reduce the amount of energy used in residential and commercial buildings. This reduced energy consumption is useful electricity that does not have to be produced, transported, and distributed to buildings. Recommendation No. 1 A program aimed at replacing electric baseboards with GSHPs certified by the CGC would be costeffective while contributing to the consolidation of the GSHP industry s own market transformation process. 1 Ground Source Heat Pump Market Development Strategy. Final Report, Marbek Resource Consultants, March 31,

6 Looking beyond 2018, what goal should Ontario set to ensure that non-hydro renewable energy continues to play an important role in meeting Ontario s supply needs? What innovative strategies and technologies could Ontario pursue in order to further develop and better integrate renewable energy generation? The prosperity of the market transformation strategy in Ontario will largely depend on the performance of a series of individual technologies relative to their own market transformation processes. The successful completion of the Canadian GSHP (geothermal heating and cooling) market transformation initiative, which has been developed and deployed by the CGC since 2005, is one of them. The biggest challenge to meet the long-term and interim goals of any integration strategy will be to recognize that some solutions will not be cost-effective in the short term, yet highly effective in the medium to long term. In January 2013, the CGC along with CanSIA organized a very successful workshop in Toronto where the concept of a feed-in tariff (FIT) for renewable heat was discussed extensively. The experience of the United Kingdom in deploying this strategy should be explored in cooperation with industry associations such as the CGC and CanSIA. Recommendation No. 2 The CGC believes that the inclusion of a FIT for renewable heat should be considered as an innovative strategy. In practical terms, a FIT for renewable heat would reward homeowners for the electricity they do not consume thanks to their geothermal heat pumps. A FIT for GSHP systems would go hand in hand with a program aimed at replacing electric baseboards. 6

7 What is the best way to assess combined heat and power (CHP) to ensure generation is developed where it is specifically needed, meets system needs and maximizes value to electricity ratepayers and to heat customers? What role should storage play in meeting Ontario s future energy needs and how should it be valued? Thermal energy storage has a tremendous role to play in any energy supply strategy. When the ground is used for such storage, either on a daily or a seasonal basis, GSHPs are used to displace energy. Diurnal storage or medium-term storage of thermal energy is based on the temperature difference between daytime and nighttime. This strategy is especially useful in the shoulder season when the 24-hour heating and cooling loads of a building are quite well matched. Over the years, there are several days where mechanical systems will provide both heating and cooling to the building. Shortterm energy storage would increase system efficiency using rejected energy from cooling to provide heating and vice versa. For a commercial building, the number of days associated with both cooling and heating loads would depend on building configuration and climate. Buildings are made up of thermal zones which may all have different loads. At the same time, one zone could be in cooling mode while another in heating mode. A typical example for these simultaneous loads would be a cooling requirement for an interior zone against a call for heating in a perimeter zone in the winter season. The space function will also have an impact on the heating/cooling requirements of a given zone. Most likely, zones with high heat internal gains, such as computer rooms, would be in cooling mode year-round. Heating and cooling equipment would be tied together in a proper HVAC design to take advantage of the simultaneous loads. For instance, rejected energy from cooling the computer rooms would be used for heating the perimeter zones. The daily variation of the ambient temperature will obviously impact the heating and cooling loads. For example, in a shoulder season, the system would be in heating mode at night and switch to cooling mode during the day. In this situation, rejected energy from the cooling system would be stored during the day to be used for heating at night. On the other hand, seasonal storage or long-term storage of thermal energy is based on seasonal climate changes. This strategy requires a large storage volume that can absorb and release many months worth of energy to heat and cool a building. Seasonal storage is most effective where there is high seasonal variability in thermal resources, such as mid-to-high latitudes where there are long hours of summer sun which can be stored for use in the winter months. A variety of concepts have been explored for long-term thermal energy storage including: borehole thermal energy storage (BTES), aquifer thermal energy storage (ATES), phase-change materials (PCMs), large water tanks, and snow or ice pits. 7

8 Thermal energy may be stored sensibly through the temperature difference of a substance. Latent heat may be used to access the energy available when a substance changes phase. Chemical energy may also be accessed such as in the crystallization of a salt mixture. Heat pumps may be used to augment the capacity and efficiency of sensible thermal energy storage systems. Lowering the temperature at which useful energy can be extracted from the storage increases the sensible energy capacity of thermal storage. This lower temperature also reduces losses to the environment from the periphery of the storage, thereby making it more efficient. A lower storage temperature during charging also increases the efficiency of solar thermal systems. These benefits demonstrate the synergy that exists between solar thermal systems, seasonal thermal storage, and heat pumps. For thermal stores with constant temperature energy storage, heat pumps may be used to charge or discharge the system. Integrating GSHPs and heat pumps in general into thermal storage design considerations and CHP applications would help bypass congested power lines and reduce system losses by satisfying more demand from local sources. There is also a lot of waste heat which could be recovered and recycled into the overall energy system, thus displacing electricity from traditional sources as well as other energy sources such as fossil fuels. Recommendation No. 3 A thermal storage implementation strategy enhancing the use of GSHPs should be developed in cooperation with industry associations such as the CGC, QUEST, and WADE Canada for all commercial and institutional buildings in the province. 8

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