People involved in geothermal systems in Manitoba say the industry has been dealt a blow by Manitoba Hydro's decision not to use heat pumps in the first phase of the massive Waverly West subdivision.

Manitoba Hydro had abandoned plans to install heat pumps in the subdivision's first 186 homes because technical issues would have added substantially to the cost of the homes, government officials recently confirmed.

The provincial government, which owns half of Waverley West's land, had initially touted the use of the more environmentally friendly geothermal systems in the massive suburb. The southwest Winnipeg neighbourhood could, over 20 years, grow to include 13,000 homes.

Geothermal energy takes heat from the ground, transmits it through a fluid, pumps it into a house and converts it to warm air in the winter. In the summer, the process is reversed to cool the house.

Brent Laufer, president of the Manitoba Geothermal Energy Alliance, was not surprised to learn the proposed geothermal installations were not going ahead in Waverley West.

"We knew probably a year ago that this project wouldn't be going," he said.

Laufer says Hydro didn't take advantage of local expertise on how to install the system — and the negative publicity has given geothermal energy a "black eye."

"Basically, they're putting out that it's too cost prohibitive, so anybody that has not already done their homework will not do their homework now," he said. "The only thing that they hear is that it's too expensive."

Energy Minister Jim Rondeau says his government supports geothermal energy, and if new homebuyers in Waverley West want geothermal heating, they are welcome to install it themselves.

"If a house owner wishes to work with the developer and put it in, they can. It was not a case of the geothermal not being able to [be done in Waverley West], it was just cost-prohibitive."

If it's cost-prohibitive for Manitoba Hydro to add to the entire neighbourhood, however, it's not clear if individual homeowners would find it any more affordable. However, Rondeau says some homeowners may still choose to go the geothermal route.

"They might do things based on what they wished to do, as far as their long-term locking in of their energy cost," said Rondeau, who has had a geothermal heat pump installed in his own home for about $24,000.

"I did it because it would fix my cost of energy. I did it because I thought it would reduce greenhouse gases. Those are decisions I made.  Did I expect a cost payback in a strict amount of years? No, I did it because of those considerations."

Manitoba Hydro estimates going alone would cost about $30,000 per home.

Geothermal installer John Kubilanski is hopeful the province will make amends by imitating programs in Saskatchewan and Ontario that match a federal grant of $3,500 for homeowners who install geothermal systems.

"Manitoba has got the most installs per capita in the world, and I'm surprised that we haven't [implemented a grant] as well," he said.

About 5,000 geothermal heat pumps are at work in Manitoba; 920 of them were installed over the last year — the highest number so far.