We’re big fans of green buildings for many reasons. They’re more comfortable, they save money and energy. They’re good for people and planet.
So one of the questions we’ve been working to answer at CoPower is how do we make the green choice the easy choice for building owners and real estate developers? Because despite the benefits, carbon-intensive developments are still the norm. Our latest project investment is one of the answers to that question.
With the support of more than six-hundred CoPower Green Bond investors, we’ve now provided $847,000 in financing for a geothermal project in a new Toronto townhouse complex.
An investment in accessible geothermal
This is CoPower’s third loan to operational residential geothermal projects and our first in Ontario. As we’ve said before, when it comes to cutting energy use and carbon emissions, geothermal is one of the most effective green building solutions around.
One key reason it isn’t more commonly used: high upfront costs. Natural gas-powered HVAC systems are still cheaper to install, at least initially. So despite long-term (and often short-term) savings, few building owners or real estate developers opt for geothermal.
By allowing the townhouse condo corporation to finance the purchase of the geothermal system over a seven-year term, our loan makes this once expensive technology cost-effective.
"Limited access to affordable capital for clean energy projects is hindering the transition to low-carbon green buildings"
~ Brent Gilmour, Chief Commercial Officer, Canada Green Building Council
These systems generate monthly energy and cost savings for the homeowners over time. In place of a monthly gas bill, homeowners repay the CoPower loan over time through their monthly condo fees. Once the loan is paid off, the community has essentially established its own utility and greater control over its heating and cooling expenses.
Incredibly, according to Natural Resources Canada, geothermal systems operate at 250-380% efficiency--meaning that for every unit of electricity the system uses, it provides 2 to 3 units of heating energy. The project is expected to avoid 82 tonnes of CO2e annually in comparison to if the complex had installed a typical natural gas-powered HVAC system.
Beyond the direct benefits of this one project, there are system-wide benefits. The loan differs from those we’ve made previously in one main way: we’re lending directly to the condo corporation rather than through a clean energy project developer. It doesn’t sound like much of a difference, but from an impact perspective, it’s an interesting one.
CoPower is providing the financial tools the real estate industry needs in order to make green building methods and clean energy sources the easy option for developers.
When we lend to a clean energy project developer, part of our positive impact is in helping them grow and offer their services to more customers. But by lending directly to a condo corporation (or a real estate project) we’re providing the financial tools the real estate industry needs in order to make green building methods and clean energy sources the easy option for developers.
“Limited access to affordable capital for clean energy projects is hindering the transition to low-carbon green buildings,” says Brent Gilmour, Chief Commercial Officer at the Canada Green Building Council (CaGBC). “Innovative financing options, such as green bonds, greatly reduce the financial hurdles that are keeping owners and real-estate developers from adopting the new technologies and energy efficiency improvements needed to advance low-carbon buildings.”
Green power from the earth, for the earth
These projects use a particular type of geothermal technology called geoexchange. Here’s a quick primer.
Depending on where you live in Canada the temperature outside may range from thirty degrees above zero during a summer heatwave to thirty below in winter cold snap. All the while the temperature just a few feet below the earth’s surface stays a relatively consistent 6-12°C year round. Geoexchange technology captures that free energy and brings it inside.
It starts with drilling holes and inserting pipes in the ground that contain an eco-friendly heat transfer fluid. As the fluid circulates slowly through the ground loops it absorbs the heat from the ground and pumps it back up into the home using a ground source heat pump. In summer, when the air outside is hotter than the ground is cool, it works in reverse.
In this case, fifty-five individual ground loops were drilled under the communal underground parking garage, and each of the fifty-five units has its own heat circulation pump.
If you’re familiar with CoPower’s Green Bond investment philosophy, “boring is better,” and the technological components and financing structure found in this project are standard in the industry.
As with all loans backing CoPower Green Bonds, bondholder returns come directly from fixed loan repayments and aren’t tied to the performance of the installations. Regardless, we always do our homework to ensure the projects we finance are of high quality. In this case, our due diligence review included two independent engineering reports: one commissioned by the condo corporation and one by CoPower. Members of CoPower’s projects team also conducted a site visit. Other due diligence items included ensuring appropriate insurance and warranties are in place.
Good for your portfolio, good for the planet.
Despite the clear financial, social and environmental benefits, residential-scale geothermal projects are typically too small to attract infrastructure financing from banks and pension funds who are looking for deals of $20 million+. At the same time, these projects offer strong impact potential and steady, predictable revenues so that’s where we focus our efforts.
An investment in CoPower’s 6-year, 5% and 4-year, 4% Green Bonds is an investment in small-to-midsize climate change fighting projects like these and more than 1100 others across Canada.
We pool hundreds of impactful project loans together into a diversified portfolio that backs your CoPower Green Bonds. In addition to this residential geothermal project, we have financed others in Québec and British Columbia. We’ve also made loans to LED retrofits in condo buildings across Ontario, BC and Alberta, as well as community solar projects in Ontario.
Buildings can, of course, be retrofitted later, but why not make the right choice today?
All projects sell or save energy, supporting the steady, fixed loan repayments that flow through to Green Bond investors as interest payments. It’s a win-win proposition. CoPower’s model, supported by the solid economics of clean energy and energy efficiency, allows our investors to earn attractive returns while providing the financing needed to help buildings generate and save energy profitably.
The choices we make about how we build today will stay with us for decades. Buildings can, of course, be retrofitted later, but why not make the right choice today? We have the technology, and now the finance, to make it an easy one.
Learn more about CoPower Green Bonds: www.copower.me