KingSett Capital’s Valhalla Village will be its first project developed in-house making use of a geothermal energy source, nearly eliminating natural gas consumption at the Toronto rental housing project, thanks to partner Geosource Energy.

Planned to consist of 10- and 29-storey towers ready for occupancy by late 2026, Phase 1 of Valhalla Village will have 494 units with 172 designated as affordable housing. But unlike many towers in the city, it will be heated and cooled using the ambient temperatures of the ground, utilizing a system from Caledonia, Ont.-based Geosource.

The family-owned company constructs geothermal systems primarily for multiresidential buildings in the Toronto area, CEO Stanley Reitsma told Sustainable Biz Canada in an interview. The clean energy technology builds out a network of pipes and ground heat exchangers that take the heat from the ground in the winter to heat a building, and the subterranean cold for cooling in the summer.

Geosource has serviced over 380 clients in the institutional and industrial sectors, with partners such as EllisDon, Reliance, Windmill Development Group Ltd. and Hullmark. It services approximately 20 million square feet of real estate space, Reitsma said. The company claims to have offset over 150,000 tonnes of carbon.

For KingSett, a Toronto-based real estate investment firm, the choice to install geothermal technology is both an environmental and practical decision, Jeff Thomas, the group head of development, also said in an interview. Such an undertaking is voluntary and the right thing to do, he continued.

“These are assets we want to own for the long-term. To be more sustainable and predictably affordable in terms of energy costs, which can fluctuate quite a bit, is what the customer wants both in the affordable and market side,” Thomas said.

Decarbonizing Valhalla Village with geothermal energy

Geosource drilled holes and placed pipes 850 feet underground that will snake their way to the mechanical room and heat pumps in the building, which is powered by grid electricity. Such a system will provide temperature regulation and hot water, which eliminates the need for natural gas-powered equipment for heating and cooling. A backup gas boiler will be kept for heating. Thomas added that some natural gas will be used for barbecue grills.

Reitsma touted the efficiency and consistency of the geothermal system: it will remain highly effective even in high or low outdoor temperatures because the ground temperature in Toronto hovers in the 10 C range year-round.

“The real key here with geo is that it’s local, it’s under your feet, it’s there, it’s renewable, every year it keeps coming back for as long as you need it. You’re not combusting on site. It’s an electric system that’s highly efficient,” he said.

Such a system essentially means the building will have its own utility, freeing it from having to purchase natural gas, Kate Cheng, Geosource’s vice president, said in an interview.

Drilling work started in 2022, but then hit a major roadblock from elevated interest rates and inflation, which suspended work on Valhalla Village, Reitsma and Cheng said. Such a detail was corroborated by Thomas, who recounted how KingSett had to pause and re-evaluate how to save costs.

After the stop-and-go nature of the development, which shrank the number of parking spaces for cost efficiency, drilling is now complete. Commissioning will take place when Valhalla Village is complete, Reitsma explained.

The result will be a 60 per cent to 90 per cent reduction in greenhouse gas emissions from heating and cooling compared to a similarly sized building that is equipped with natural gas-powered systems, Cheng said. Such a reduction is equal to taking 200 gas-powered cars off the road, according to Thomas.

Financial savings will result from reducing the carbon tax burden of the building and the stability of costs such as maintenance.

KingSett is aiming to certify Valhalla Village under the Canada Green Building Council’s Zero Carbon Building – Design Standard this year. Overall, the intent is to slash operational carbon by 88 per cent compared to the Toronto Green Standard, Thomas said.

Plans for Geosource, KingSett

KingSett manages $18 billion across its funds, with sustainability considerations integrated for some.

Its Canadian Real Estate Income Fund, for example, has the goal of reducing carbon emissions by 35 per cent by 2027 and 67 per cent by 2035, according to KingSett’s 2023 ESG report. Notable efforts to achieve this include Vancouver's Arthur Erickson Place, and Scotia Plaza, and the Fairmont Royal York Hotel, both in Toronto.

The real estate firm has other projects in various stages of planning, including more purpose-built rentals like Valhalla Village and condos that will use geothermal energy, Thomas said. Additionally, Phase 2 of Valhalla Village will also be designed to meet the Zero Carbon Building – Design standard while being a larger development than Phase 1.

As for Geosource, the company plans to expand to the U.S. There is “huge growth” in the renewable energy source because of the abundant incentives for clean energy, Cheng said. An ambition is to convert gas-burning infrastructure powering Toronto’s district energy facilities to geothermal equipment instead, she added.

On the technology side, Geosource is investing in an angled and directional drilling technique. This would unlock the thermal potential of underground rock mass while minimally disrupting the building, widening the accessibility of its technology for retrofits.