Energy | Building societies are also interested in geothermal heating in an unprecedented way – not everything went according to plan in the apartment building in Vantaa

Pair A month ago, there were exciting times at Martinlaakso’s Kivivuorenkuja. A housing company from Vantaa was replacing the old district heating system with geothermal heating.

The district heating equipment had been dismantled, but the renovation was stalled and the new system could not be put into operation yet. The nights began to cool and the temperatures in the apartments on the lower floors began to drop. Terrified?

“It didn’t hurt,” they assure Ein and Reijo Vainiowho have lived on Kivivuorenkuja since the completion of the apartment building, more than 50 years.

“We trusted the board of the housing company and believed that the project would be completed with honor,” they say.

And so it happened: Warm water started flowing in the radiators in October, and now the Vainios are really satisfied.

“I don’t know what crystal ball the government had, but you couldn’t have imagined a better time to switch to geothermal heating,” says Reijo Vainio.

Geothermal heating is now of unprecedented interest to building societies. The war of aggression in Ukraine and the energy crisis have made the ecological and inexpensive way of heating more interesting than ever.

In Kivuorikuja the job is already on the profit side. Asphalt walkways are lined with elegant tuja bushes. Only the well cover says that 16 thermal wells 300 meters deep have been drilled in the yard.

“Through difficulties to victory”, sighs the chairman of the board of the housing company Jenni Valkamawho is a lawyer from the Swedish Real Estate Association by civilian profession.

“At the moment, there is certainly a strong demand for geothermal heat. If geothermal contractors procure too much work, it can cause traffic jams, delays and even tight turns,” says Valkama.

He explains what should be taken into account when drawing up a contract in order to avoid the pitfalls of the contract.

In Kivuorikuja we started thinking about geothermal heat three years ago, when the housing association started preparing for line renovation, i.e. pipe renovation. The company includes two apartment buildings completed in 1971. There are a total of 99 apartments.

The building company decided to find out whether it would be worthwhile to improve the building company’s energy efficiency in connection with the pipe repair. Energy costs are also the largest single item of expense in this housing company.

The engineering office made calculations and came to the conclusion that geothermal heat combined with a heat recovery system could, at the current cost level, reduce the housing association’s heating costs to up to 60 percent of the current level.

It would mean that the investment would pay for itself in approximately 10–12 years.

Not all residents were enthusiastic about the idea.

“There was controversy, and especially not all elderly people wanted to invest in geothermal energy,” Eine Vainio remembers.

“We represented the position that solutions should be made keeping in mind what is sustainable for the environment and the housing association, and not what is the easiest for a private resident. The house will remain here even after us,” says Eine Vainio.

The general meeting voted on the matter and geothermal energy won.

Geothermal contract and for the heat recovery renovation, the housing association had to take out an additional loan of more than 600,000 euros in addition to the pipe renovation loan. The final report is still in progress, but according to Valkama’s estimate, both pipe and geothermal repairs will cost the residents 850 euros per living square.

For Vainio’s apartment of almost one hundred square meters, the bill will be around 84,000 euros.

The project was financed with a traditional bank loan, which had no interest hedging. In addition to the rise in interest rates, the rise in the price of electricity now causes its own challenge, as the geothermal system also needs electricity.

“Interest rates and the rise in the price of electricity are of course suspicious. But the project has stayed within the budget, so in that respect we are happy,” says Reijo Vainio.

Kivuorinkujan the geothermal project was implemented as a side project separate from the pipe renovation. The housing company already asked a designer and an engineering firm to help with the project in the first step.

Bids were requested from four different contractors on a turnkey basis, i.e. total responsibility construction.

“There were considerable differences in the offers, so the help of an expert was necessary in the comparison,” says Valkama.

The number of thermal wells to be drilled in the ground varied from 16 to 22 in the original offers, and the depths of the wells also varied. In addition, some of the offers included a heat recovery system, some did not.

Valkama notes that the definition of the number and location of the heat wells is precise, as dimensioning errors can lead to premature cooling of the wells.

The building company ended up with an offer that included 16 heat wells and a heat recovery system.

“It wasn’t the cheapest, but considering the whole, it was the cheapest,” says Valkama.

A job it was decided to start a year ago in October. According to Valkama, the biggest inconvenience from the renovation for the residents was the commotion caused by the drilling of the wells, which lasted two to three weeks. The digging in the yard also caused trouble.

However, Vainio felt that the disadvantages were tolerable. The drilling of the thermal wells took place during the summer months, when the Vainiots were mainly at the summer cottage.

The wells were connected to each other by pipes, for which a half-meter-wide, 60-centimeter-deep groove was dug from each well to the other. At worst, the yard looked like a battlefield with trenches to the Vainioi.

“We had to scare the contractor quite a lot in order to get fences in the yard so that no one walks into a hole in the dark,” says Valkama.

According to Valkama, the initial phase of the project progressed quickly, but the final work began to slow down.

“The saddest thing was that the contractor had repeatedly assured us that we were on schedule. The geothermal heat was supposed to be in use on September 13. Surprisingly, it wasn’t.”

According to Valkama, the reason for the delay was that the subcontractor had sold his calendar too full.

“The workers were stuck at another site. No wonder things didn’t progress.”

On October 28th, during the acceptance inspection of the contract, it was also noted that the contract is not yet finished.

“All the finishing touches had not been done, and a few other mistakes and deficiencies remained,” says Valkama.

After that, however, things began to happen on a hectic schedule.

“However, it took active effort to get to this point,” he says.

Jenni Valkama recommends that the housing company uses experts in the implementation of the geothermal project.

At least these things should be taken into account when agreeing on the contract and during it:

1. The schedule of the work should be recorded in the contract in such a way that if a certain intermediate goal is not realized in the agreed time, a euro sanction will result. “In our case, for example, it would have been worthwhile to record that if the heating system cannot be put into operation on the agreed date, a euro sanction will result. Then the daily late fine would have already started running from that day and not until the agreed completion date of the entire contract.”

2. Recording milestones in the contract is especially important when different contracts have to be coordinated. “When, for example, a geothermal contract is carried out in connection with pipe repair, you should not rely on the good wishes of the contractors, but impose heavy delay fines in the contract and demand that they act as agreed.”

3. The contract must clearly state what is included in the contract. For example, when planning the location of thermal wells, the contractor should define precisely in advance which plants are to be kept and which ones are to be discarded. “We had to ask an arborist to assess whether a birch agreed to be kept will remain standing, the roots of which have been cut off during excavation work. Now we are arguing with the contractor about who will pay the costs of felling the birch.”

4. If the contractor has made mistakes or neglected to do things recorded in the contract, the contract price should not be paid in full until the agreed tasks have been completed. If the dispute concerns large sums, the building society should acquire legal expertise well in advance to ensure its own position and its own claims in a possible dispute situation. Help can be found, for example, from law firms familiar with construction contract projects.