Energy use: From the ground up - MoneySense

Energy use: From the ground up

Using the earth’s own energy to heat and cool your home saves the environment. It may save you money, too.


Stuart Holbrook would have killed for air conditioning in the fall of 2006. The 28-year-old investment adviser, his wife and their young son had just moved into their first house when a heat wave struck their Winnipeg suburb. As their upper floor baked in the searing heat of the late afternoon sun, “we were crying,” recalls Holbrook.

He knew other ordeals lay in store. Come winter, he and his family would have to depend on two old and worn-out furnaces to warm their 30-year-old house. If Holbrook and his family wanted to live in comfort, he figured he would soon have to install new furnaces as well as an air conditioning system.

But Holbrook was aware of a tempting alternative. His father had installed two closed-loop geothermal systems when he built a 5,200-sq.-ft. house in 2004. The systems used the earth’s heat to warm the home in winter and cool it in summer. Holbrook knew the units had been a great success at his father’s sprawling new residence — but still he had to swallow hard when he learned about the hefty installation costs. “Why would I want to spend 15 to 20 thousand bucks [to install a geothermal system]?” he asked his father. The elder Holbrook confidently explained that it would save him money in the long run.

Holbrook took his father’s advice and joined the thousands of Canadian homeowners who have made the switch from gas and electrical heating to geothermal systems. A geothermal unit can cut energy bills by half or more, according to Natural Resources Canada. The systems can also reduce harmful carbon emissions and greenhouse gases.

A geothermal system works like a refrigerator, says Ed Lohrenz, founder of Manitoba’s Geo-Xergy Systems and an industry veteran since 1981. “You put milk in the fridge. The fridge removes the heat from the milk and cools it, while the heat comes out the back of the fridge. With geothermal, we’re pulling heat from the ground to warm the house.”

If that sounds odd, it’s because few of us are aware that the earth acts as a natural heat reservoir. A few metres below the surface, soil remains at a relatively constant temperature all year round. In Toronto, for instance, underground temperatures hover around 10°C on the hottest days of the summer as well as on the coldest days of the winter.

Geothermal systems gather and concentrate this heat. By pumping a special fluid through pipes buried in the ground, the system sucks heat from the earth and uses it to warm air using a heat exchanger and compressor. The warm air is sufficient to heat your house and warm your water even on sub-zero days. In summer, the process works in reverse. The system draws heat from the house and distributes it into the cooler ground.

Geothermal systems are clean, odorless and non-polluting. They can also save money. If Holbrook had gone the conventional route, he would have had to spend $8,000 for a central air conditioner plus $4,000 to replace his electric furnaces. Instead he paid $24,400 for a geothermal system, which took a contractor two weeks to install. It costs him $800 a year to operate, compared to the $2,100 that he estimates he would have had to pay to operate traditional hearing and cooling systems. He expects to pay off the additional cost of his geothermal system within seven years—in part because he took advantage of generous subsidies. Natural Resources Canada kicked in $3,500 and Manitoba Hydro extended a low-interest five-year loan.

Your own numbers will vary, of course. In general, geothermal systems cost $15,000 to $25,000 to install, but they then operate for peanuts — just the opposite of a conventional system. Because of the big upfront cost that is involved, geothermals don’t make sense in all cases. If your current heating and air conditioning systems still have years of life left in them, or if you live in a region where air conditioning is rarely needed, your payback period could be 15 years or more. Brian Waters, a professor of heating and air conditioning at George Brown College in Toronto, says installing a geothermal system in an existing single-family home “will save energy, but I’m not sure if it saves money because of the cost of the installation.”

On the other hand, if you’re already planning to replace your antiquated heated and cooling systems, or if, like Holbrook’s father, you’re building a new house, the payback from geothermal heating and cooling can be relatively speedy. Geothermals can be an especially good deal if a developer installs them throughout a new community, thereby spreading the cost. The Sun Rivers Golf Resort of Kamloops, B.C., was the first community in Canada to include geothermal climate control as a standard building feature when it opened in 1999. Residents save 30% to 50% on their heating and cooling costs compared to conventional sources, says a spokeswoman.

You should crunch the numbers before making a decision. Natural Resources Canada offers a good overview of the basics on its website (click on, select “English,” then go to “Publications and software” and select “Earth energy”). In addition, the Canadian GeoExchange Coalition website provides a list of contractors who install geothermal systems.

Before handing over any money, ask how long the contractor has been in business and how many geothermal systems he’s installed. Always demand references and check them out, because making a repair to buried pipes can be expensive. Inquire about sound issues (some compressors can be noisy). Also, ask your installer if your existing duct workwill need to be replaced. In older homes, small ducts may not be up to the demands of a new system. “A geothermal moves more air than an electrical or gas system,” says Mike Millard of Southern Comfort Mechanical of Niverville, Man. “If you put air through old ductwork it creates too much noise and stresses the geothermal unit.”

Perhaps the biggest reason to install a geothermal system is peace of mind. You protect the environment, and you protect yourself from increases in oil and gas prices. If that sounds attractive, check out what geothermal systems have to offer.