Geoexchange Archives : VCIB

September 12, 2024, Traditional territory of multiple Indigenous nations, including the Haudenosaunee and the treaty territory of the Mississaugas of the Credit/Toronto, ON – Vancity Community Investment Bank (“VCIB”), Subterra Renewables (“Subterra”) and Forum Asset Management (“Forum”) are pleased to announce the closing of a new credit financing partnership that will support the installation of geo-exchange systems at multiple new residential towers in Ontario. This is the second VCIB credit facility in support of Forum and Subterra’s innovative partnership that works to integrate geo-exchange technology into new buildings.

Subterra, a leading low-carbon energy developer, brings its expertise and its Energy As A Service (EAAS) utility business model. EAAS reduces costs and risk by offering residential property developers the opportunity to partner with an experienced geothermal asset manager—utilizing best practices, dedicated resources, and direct experience to unlock the value of a geothermal exchange system. Subterra’s EAAS offering provides several benefits to residential property developers including reduced upfront capital investment, alignment with green building standards for easier certification, potential access to development charge credits, and enhanced eligibility for CMHC-insured loans.

Typically, new residential buildings would be served by traditional, carbon-intensive HVAC systems. Instead, geo-exchange heating and cooling systems will be installed, avoiding carbon emissions of up to 8,500 tonnes annually. That equates to taking more than 1,800 cars off the road each year or planting more than 141,000 trees.

Installing energy efficient, low-emission geo-exchange heating and cooling systems in new buildings puts long-term sustainability at the forefront. Unlike deep geothermal energy, which uses fracking methods to access heat deep in the earth’s crust to create electricity, geo-exchange employs much shallower and less intrusive drilling methods to use the earth as a thermal battery, storing heat in the summer and extracting it in the winter. This process creates energy-efficient heating and cooling for buildings and eliminates the need for conventional, fossil fuel-based HVAC equipment.

Partnerships like this one demonstrate how collaboration can drive transformative change. “We’re excited to see geo-exchange gain traction in Canada through this financing partnership. Subterra and Forum’s approach will have a significant impact on the urban carbon footprint, advancing our low-carbon, climate-efficient transition,” said Jennifer Hutcheon, VCIB’s Vice President. “Financing energy efficient, low-emission technology is crucial in the fight against climate change and necessary to make homes more resilient.”

Subterra, and every member of its team, is dedicated to combatting climate change. “With this in mind, we expect our business partners to share our vision and values,” noted Lucie Andlauer, CEO of Subterra. “This is why partnering with VCIB was such an easy decision. VCIB has a long history of positively impacting communities and the climate. Their financing allows Subterra to build renewable and sustainable geothermal heating and cooling solutions for new developments and provides significant value to developers, building owners and tenants, supporting our ethos that making the right choice for the environment does not need to cost more than the status quo.”

“Forum is committed to delivering Extraordinary Outcomes™ to its stakeholders. Our partnership with Subterra and financing relationship with VCIB demonstrate our ability to partner with and drive value for Canada’s leading entrepreneurs,” added Rob Kaplan, Partner at Forum Asset Management. “This investment represents Forum’s third in sustainable infrastructure and HVAC services companies. We are proud of our role in setting a new standard for energy efficiency in Canada.”

About Vancity Community Investment Bank (VCIB)

Vancity Community Investment Bank is an Ontario-based bank and a subsidiary of the Vancity Group. VCIB provides specialized financing solutions for impactful projects like social purpose real estate and clean energy projects. For purpose-driven businesses and organizations, VCIB offers banking, investing, and financing solutions tailor-made to increase their growth and impact. VCIB is a Certified B Corporation and a member of the Global Alliance for Banking on Values.

About Subterra Renewables

Subterra Renewables is a geothermal exchange utility company with access to the largest drilling fleet in North America, operating the most energy-efficient and resilient heating and cooling technology in the world. Subterra is a fully vertically integrated company that custom engineers, installs, owns and operates first-of-its-kind geothermal exchange systems. As a leader in the sustainability and decarbonization movement, its best practices align with government ESG initiatives, expedite building approvals, and accelerate a path to net-zero.

About Forum Asset Management

Forum is a North American investor, developer and asset manager. Our core purpose is to deliver Extraordinary Outcomes™ to our stakeholders. Our adaptable, agile, and dynamic team is committed to sustainability and responsible investing, creating value that benefits the communities in which we invest. Our investment focus includes real estate, private equity, and infrastructure. The enterprise value of our assets under management exceeds C$1.7 billion. We’re proud to have delivered top-tier alternative asset returns since 2002, while positively impacting over 10,600 lives.

Media Relations
Vancity Group
mediarelations@vancity.com
778-837-0394

Subterra Renewables
Victoria Hunt
victoria@subterrarenewables.com

Besides transportation and electricity supply, one of the main challenges of decarbonizing a city is the heating and cooling of buildings. Outside of a manufacturing facility, heating and cooling systems are the top contributor to a building’s carbon footprint. In Canada alone, buildings take up nearly 30% of all energy consumed and are responsible for 26% of greenhouse gas (GHG) emissions.

Fortunately, the way buildings are being constructed in Canada is changing for the better. With the strengthening of Municipal building codes, real estate/condo developers have increased their focus on energy efficiency. If a developer is looking to meet (or exceed) city or building energy code requirements, implementing a geoexchange system is one of the best ways to do it.

What is the difference between geothermal and geoexchange?

The term “geothermal energy” points to a wide range of technologies. For example, when people talk about conventional geothermal technology they’re often referring to deep-drilled geothermal systems that extract high-temperature heat from kilometers below the earth’s surface – usually seen in industrial geothermal power plants.

Conversely, geoexchange is a form of shallow geothermal technology typically used to heat and cool commercial and residential buildings and houses.

How does a geoexchange system work?

Geoexchange systems use ground-source heat pumps to tap into temperature differentials just below the earth’s surface, typically at a depth between 45 to 120 meters (150 to 600 feet). During the winter, heat (energy) travels through a series of fluid-circulating pipes in contact with the ground.

The pipes use fluids (like water or glycerol) to carry heat from the Earth to the building, providing warmth through a duct system. In the summer, the heat of the building is transferred to the ground and then dissipated through the system’s loops, generating cool air in the process.

What are the benefits of a geoexchange system?

Geoexchange systems use the earth’s temperature to distribute heating and cooling, therefore they don’t require the burning of fossil fuels or any materials to operate. Once installed, the piping doesn’t need maintenance and the above-ground portions of the system require less maintenance than traditional systems.

These systems offer not only environmental benefits but also ensure safety with their odorless, flameless, and carbon dioxide-free operation, eliminating any fire hazards. The comfort of tenants is also enhanced since they provide a well-balanced distribution of heating and cooling, eliminating the common issue of uneven temperatures experienced with conventional systems.

What’s more, a geoexchange system can decrease a building’s energy use by 33%, greenhouse gas (GHG) emissions by 47%, and are as much as 400% more efficient than conventional HVAC systems – which translates into lower electric bills every month.

Breaking the cost barrier

One of the main reasons why geoexchange systems aren’t more commonly implemented is traditional HVAC systems are cheaper to install. Or at least they are initially; given the energy savings, geoexchange systems pay for themselves over time with demonstrated paybacks of between 5 to 7 years.

Targeted financing from the government and government agencies in Canada can also help pay for geoexchange projects. In Toronto, for example, the Toronto Green Standard Development Charge Rebate is available to projects that achieve higher levels of energy and carbon performance. For developers that want to own and finance their system, the Government of Canada provides business income tax incentives under Classes 43.1 and 43.2 in Schedule II of the Income Tax Regulations.

If developers wish to avoid the cost of installing the system altogether, they can engage clean energy utilities or third-party providers like Subterra Renewables, a leading low-carbon district energy developer, to be the owner/operator of the system.

Partnerships to unlock geoexchange potential

Through a construction financing partnership with Forum Equity Partners and Vancity Community Investment Bank (VCIB), Subterra Renewables has supported multiple geoexchange systems in the Greater Toronto Area.

“Despite the clear benefits, residential-scale geoexchange projects are usually too small to attract infrastructure financing from banks or pension funds who are searching for deals of $20 million or more,” explained Alfred Lee, Manager of Climate Finance at VCIB.

“Specialized suppliers of geothermal energy are essential, and we’re stepping up with the financing to help them succeed.”

After financing a half-dozen geoexchange projects, VCIB is a leading Canadian financier for a maturing market that’s ready to take the spotlight.

Financing for every stage of the geoexchange life cycle

VCIB’s financing covers geoexchange projects across a range of asset classes, types, and geographies — from new builds to refinancing successful projects as they move into the next operational life cycle, and from single-family homes and subdivisions to large condo complexes.

Trish Nixon, Managing Director of Climate Finance at VCIB, comments; “We’re seeing a large growth in interest for residential geoexchange as a way to improve residents’ homes. To reduce construction costs, many developers opt for a third-party financing model where a geo utility owns and operates the system.”

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For more information about geoexchange systems, including common barriers and misconceptions, read this recent study by Urban Equation for Sustainable Buildings Canada. If you’re a real estate developer or clean energy utility looking to finance a geoexchange project, get in touch.

Tag: Geoexchange

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