Are Geothermal Homes Part of Your Business Strategy?
Homes equipped with geothermal systems are on the rise. Consumer awareness of the benefits of geothermal heating and cooling is prompting educated homebuyers to look into going geothermal, whether they are building their own home or seeking to purchase a home that is already equipped with the clean, combustion free technology that can achieve high, long-term energy savings. They also understand that having a geothermal system can increase the value of one’s home and is an asset when it comes to resale.
Builders and property developers are responding to this development by considering the geothermal option, especially those engaged in high performance and green homes. These are the kind of homes that many discriminating home purchasers are seeking, and that more and more fast-growth municipalities around the country are, in fact, mandating.
New service models are emerging and are now in practice to relieve the homebuilding industry’s concerns about going geothermal, due to the up-front costs of putting in the underground loop infrastructure.
New Geothermal Models for New Homes
While payback efficiency for geothermal systems is well demonstrated, the first cost of excavating and installing the underground geoexchange loop can still be a roadblock for prospective geothermal customers. The geothermal industry is well aware of this and is coming up with new models for minimizing or even eliminating these first costs. Geothermal heat pump manufacturers are partnering with emerging companies whose business mission is to assume responsibility for installing the geothermal loop, maintaining it as necessary over a long period of years, and serving as the utility provider for the homes that now come equipped at the time of first sale with an installed system.
This “Thermal Service Model” comes in several variations but in its most comprehensive and simplest form the home developer agrees to partner with a heat pump manufacturer who brings in with them a geothermal utility provider. The utility provider excavates and installs the geothermal loops to the new homes to be built, and upon occupancy bills the homeowner for the electricity used by the geothermal heat pump supplied by the manufacturer. Under this model homeowners receive a one-time connection fee (often offset by financial incentives and rebates) and then a monthly or quarterly utility charge that consists of a capacity charge and a variable monthly energy fee indexed to the Consumer Price Index (CPI). The monthly utility charge is designed to be set at or below actual space heating-cooling and hot water energy savings as compared to baseline mechanical systems. This provides the homeowner with stable and predictable energy savings over time. Homeowners have no upfront or maintenance costs on the geothermal system and can save as much as 30%-50% in heating and cooling costs.
New Home Developments With Geothermal
New large-scale home communities opening up around the country are using the Orca model or a variation of it. Two such examples are Badger Mountain South in South Richland, Washington (www.badgermountainsouth.com), with 5,000 new homes, and Whisper Valley in Austin, Texas (www.WhisperValleyAustin.com), with plans to build a total of 7,500 homes. All the homes in Whisper Valley will come pre-equipped with both geothermal and solar to achieve the community’s goal of being Zero Net Energy. In the case of Badger Mountain South, all homes will be geothermal and pre-wired for solar, leaving the decision to go geo-solar with the homeowner. In other community developments, the geothermal loop connection is provided to all homes but, again, the decision to connect is left with the property owner.
Private Entrepreneurs & Public Utilities for Geo
Orca Energy (www.orcaenergies.com) is a leading geothermal utility. Under Orca’s model a homeowner can exercise a right after 5 years to purchase the infrastructure connection from Orca, which has ownership of the ground loop infrastructure for a period of 25 years. Other geothermal utilities are springing up in various states: PanTerra Energy became the first private company to be registered with Colorado’s Public Utilities Commission (PUC) in 2012.
Existing public electric utilities are also encouraging ratepayers to consider going geo. Wyandotte Municipal Services in Wyandotte, Michigan, for example, which started providing electricity to its customers back in 1892, has added geothermal services to the utility’s offerings: Wyandotte Municipal Services, backed by actions undertaken by the city government to help save energy, is creating a direct-use geothermal system infrastructure of wells and piping loops to city homes. When a customer requests geothermal service, the utility drills a vertical bore field at no charge. The customer is responsible for the cost of the horizontal piping connection and the heat pump, and gets charged by the utility for the cost of electricity.
Rural electric utility cooperatives, where customers in effect own the utility, are also getting involved. In Oklahoma the Western Farmers Electric Co-Op and its members aim to transform the Sooner State by removing 100 MW of peak load from its grid through the use of geothermal heat pumps.
Continuation of the Federal Tax Credit
The 30% federal tax credit for homeowners expires at the end of 2016. This tax credit makes a big difference for homeowners/homebuyers who elect to go with geothermal. Efforts are underway to persuade Congress to extend the tax credit for another term, which would be very helpful in driving the geothermal industry forward. Regardless of federal action, the geothermal industry will still retain a host of state-by-state and electric utility providers offering rebates and incentives for installation of geothermal systems, and these will help mitigate the negative impact of the federal tax expiration, should that happen.
The principal resource for locating up-to-date rebates and incentives at the state level can be found at the Database for State Incentives for Renewables & Efficiency (DSIRE) maintained by the North Carolina Clean Energy Technology Center at North Carolina State and funded by the U.S. Department of Energy. www.dsireusa.org.
Are you ready to Geo?