Good afternoon, Mr. Chair and committee members. Thanks for the opportunity to speak with you today.
As you will have been told, commercial and residential buildings account collectively for 18% of greenhouse gas emissions in our country. There are many important ways in which the heating, ventilation and air conditioning and refrigeration industry can and will aid in meeting emission reduction targets. Some of them are obvious, others less so.
In principle, we support the notion of investing in energy efficiency as infrastructure, as submitted by our friend at Efficiency Canada. Indeed, our industry's contribution to reducing energy use is primarily through building-by-building upgrades in technologies or processes that reduce carbon emissions and energy demand at point of use, thus freeing supply capacity for other uses.
Some technologies, however, create very specific benefits to the larger energy system, and specifically to Canada's electricity infrastructure. They should be considered as a form of infrastructure investment because of these benefits.
Today I would like to direct your attention to one such example, just to make the point. The technology in question is ground-source heat pumps or geo-exchange systems.
As you will know, a key tactic for decarbonizing space heating in homes and buildings is to convert carbon-based heating systems to electric heat pumps, while at the same time transitioning electricity production to clean sources. As an end-use technology, heat pumps of all types present a remarkable technology that, instead of burning fuel to create thermal energy, uses a bit of electricity to move or pump thermal energy from one place to another.
The thermal energy in question might be available in the air, water, ground, or even in municipal waste systems. Because of the wonders of the refrigeration cycle and the laws of thermodynamics, these systems can deliver energy efficiencies far greater, even 3.5 to 5 times greater, than the 100% efficiency of traditional baseboard electric resistance heaters.
There is, however, a challenge to this. Like other jurisdictions, Canada's electricity grid and power supply capacity is not designed to meet average demand over the span of a day or a year; it must be capable of meeting peak demand on any given day, and in Canada, energy demand for home heating will of course peak on the coldest days of winter.
Currently, the most readily available and affordable type of heat pump is an air-source heat pump. These have legitimately become popular in many parts of the country. They are super-efficient and able to cool and heat when and as needed. What's not to like?
However, because they rely on the thermal energy available in outdoor air, even the best cold-climate air-source heat pumps drop in energy performance on the coldest days of the year—exactly when they are most needed—to just a little better than electric resistance heat. This means that potentially large spikes in demand for electricity across vast areas of the country will occur during these periods.
For grid planners, the idea of replacing carbon-based fuels with electric modes of heating has created legitimate worries about the system capacity needed to meet those short-term but substantial demand spikes in winter. Some studies have suggested that because of these spikes, the transition to all-electric heating forms will be very costly, requiring investments of up to $1.4 trillion in new power generation and distribution infrastructure over the next 30 years. These studies do not make any distinction among the different heat pump technologies available on the market and the ways their performance varies under extreme conditions.
A recent study commissioned by HRAI highlights the unique advantages of ground-source heat pumps or geo-exhange systems for managing the electricity system. The study found that if the heating of homes and buildings across Canada were electrified using ground-source rather than air-source heat pumps, Canada would save up to $495 billion in grid development costs over the next 30 years. This amounts to a net savings to the grid of more than $40,000 for every Canadian household. That's after allowing for the cost of installing these relatively more expensive systems.
The study highlights a unique and under-appreciated benefit of ground-source systems, namely their ability to perform at consistently high energy efficiencies regardless of outdoor air temperatures, thanks to their reliance on more stable thermal energy stored in the ground. Even on the coldest days of winter, these systems perform at efficiencies of 350% or higher. Rolled out at scale, geo-exchange systems could be used to substantially reduce those winter peaks in demand that would otherwise stress the system.
Our study quantifies the system-wide infrastructure benefits of this technology, demonstrating that avoided electricity system development costs will more than pay for the investment in these heating systems by users.
In classic tragedy of the commons fashion, however, Canadians acting in their own short-term interests will be disinclined to shoulder the higher upfront costs of these systems, despite the fact that societal system-wide benefits would significantly exceed their individual cost burden.
We will need thoughtful policy measures and programs to reconcile these gaps.
The public investment in electricity generation and distribution infrastructure that is needed to power a transition to a low-carbon economy must also include consideration of energy utilization technologies that result in such significant avoided system costs.
Thank you for your time.