Opinion
Ground source heat pumps (GSHP) represent a promising approach to keep us warm in Manitoba as we try to reduce greenhouse gas (GHG) emissions.
Yet, they remain expensive and still relatively uncommon, especially compared to natural gas. Much needs to be done to make them a practical and widespread reality. This was the conclusion from a recent evaluation by MBA students Elliot Codispodi, Laura Effinger and Robin Oliver, that also included discussions with local GSHP expert Ed Lohrenz.
A clarification is important first; not all heat pumps are equal. There are also air source heat pumps (ASHP), but with big differences. Efficiency in all cases is quantified using the coefficient of performance (COP), namely heat energy delivered by the heat pump, divided by electrical energy input. These numbers count, larger being better. ASHP cost much less to buy, but struggle in the Prairie cold, with Manitoba Hydro citing COP values of 1.2 to 1.5. They only reduce electricity somewhat compared to electric heating, and annually cost more than natural gas.
GSHP show better COP values, with Manitoba Hydro citing conservatively as 2.5. The annual heating cost is less than natural gas, but not much. They are, though, much more expensive. GSHP draw heat from ground sources, including subsurface water, requiring underground loop networks. Individually, home by home, these are costly, $30,000 to $40,000. Using reasonable assumptions, present value lifespan savings compared to natural gas are no more than $4,000, even with high carbon tax, also badly impacted by high interest rates. GSHP thus cannot pay for themselves based on savings, requiring incentives. This confirms the need for a $26,000 incentive by the provincial government. Given these high costs, though, rollout to all fossil fuel homes would be an unaffordable $10 billion.
The way forward is to focus on reducing GSHP costs using community-based loops. These link multiple residences and businesses through a circulated heating-fluid system, supplying individual home units to allow them to draw heat. In this case, costs per household range from $10,000 to possibly $20,000. Further, there is realistic potential to significantly increase COP values. Operational common-loop systems can exceed 5.0 or more. At this level of performance, present value lifespan savings compared to natural gas amount to well over $10,000, meaning systems could largely pay for themselves through cumulative savings.
There is a second, separate GSHP opportunity, but one simultaneously needed to support natural gas. Canada and Manitoba face serious future electricity constraints; no, not electrical energy (kWh), but rather electrical capacity (kW). This concern was emphasized by former Manitoba Hydro CEO Jay Grewal, noting risks of brownouts, seen in Alberta, possible even here before 2030.
The need for low-cost, rapid implementation of capacity resources is one reason for selective use of natural gas turbines. Given dire impacts of future risks, this is hardly misguided (Energy is important — but subtle, the Free Press, Oct. 31, 2023). Curt Hull and Ed Lohrenz took some exception, recommending an alternative to gain extra capacity, namely selective conversion of electric-heated households to GSHP to reduce loads (A better power choice, Free Press, Feb. 29). This option was investigated by MBA students, and found worthwhile, but subject to limitations.
First, the latter conversions don’t reduce GHG, although they free up clean electricity here, better than solar. Second is tricky implementation control. Converting an electric-heated home to GSHP reduces load by 7 kW, such that provincewide use could free up over 900 MW. But, converting a natural gas-heated home to GSHP increases the load by about 3 kW, provincewide representing 700 MW to 800 MW. Capacity gains from one roughly match the needs for the other, necessitating conversion limits, (i.e., only two natural-gas permitted for each electric).
Last, upfront individual costs of $30,000 to $40,000, or $6 to $8 billion provincially, are too dear for homeowners or Manitoba Hydro to assume full financial burden. Co-ordinated incremental financing arrangements are needed. A start involves confirming eligibility under the Clean Electricity Investment Tax Credit, with refundable tax credits up to 15 per cent, including for Crown corporations. This could mean $4,500 to $6,000 per site. Next, electric-heated homeowners need an incentive to participate yet contribute toward the system, possibly via long-term guaranteed savings, say 30 to 40 percent. This could contribute $6,000 to $9,000 present value per site. Remaining costs for Manitoba Hydro translate to $2,800 to $3,500 per kW freed up, lower than the Point Du Bois project, approaching low-cost natural gas turbines and with comparable implementation speed.
This approach shows potential. An initial prove-out trial should involve 1,000 homes. Total costs, well under $26 million, are manageable for Manitoba Hydro, and would simultaneously free loads of 2.3 MW, require new loads of only 2.0 MW, reduce emissions by 2,300 tonnes, and provide affordable solutions. Manitoba Hydro acting as provincial heat energy-utility makes operational sense, reducing regulatory complexity. Further investigation and optimization are warranted for common-loop GSHP systems combined with electric-heated home conversions to GSHP to reduce loads.
Robert Parsons teaches sustainability economics, mathematics, logistics and supply chain management at the I.H. Asper School of Business, University of Manitoba.
