For Homebuyers and Homeowners

Considering Going Geo? Here’s What You Should Know.

House_Loop.pngIf you are thinking about building a new home or wish to retrofit an existing heating-cooling system in a home you are about to build or purchase, you may very well be thinking about going geothermal. You may be like many of today’s homebuyers: especially well educated purchasers who want to know about the full range of features, options and equipment they can to put into their home, to include the heating-cooling system and equipment involved.

You also probably know that heating-cooling your home is going to be your biggest utility expense, so you want a system that will deliver comfortable, well modulated indoor comfort that operates with minimal service requirements while saving on energy bills. You might even desire a system that uses renewable forms of energy, minus any carbon fuel reliance. For all the right reasons, geothermal should definitely be a system option you should consider. 

When it comes to a geothermal system option for a home, potential customers will quickly learn about geothermal’s many advantages. To get a better understanding of what’s involved in selecting geothermal for your home, and considering what an important decision this is, let’s first review some of the clear advantages that any candidate for geothermal will be sure to learn about.

We call these “tangible benefits” because even though most of the geothermal system is out of sight, these benefits are very real and easily understandable.

What Are the Tangible Benefits of Geothermal?

  • F2.jpgGeothermal eliminates outdoor equipment which means it’s resistant against damage or corrosion by weather and lasts longer than outdoor-mounted equipment. 
  • There is no direct burning of carbon-based fuel sources on-site so less pollution to the environment results. Direct fossil fuel costs are therefore zero. And there is no need to be concerned about flames or related accidents occurring
  • There is also no freshwater consumption in operation (closed loop systems)
  • A geothermal system operates very quietly and provides consistent, comfortable heating and cooling
  • Geothermal systems enjoy lower maintenance costs because of the absence of oil filters, nozzles, storage tanks or chimneys
  • Notably longer operational life of the system: up to as much as 25 years on average for the heat pump and typically much longer for the underground loop
  • Geothermal also can be used to produce domestic hot water and provide for pool heating
  • A home equipped with geothermal will likely see its value increased
  • Geothermal systems are by far the most efficient heating and cooling system available; a geothermal system converts a small amount of electrical energy into a large amount of heating and cooling
  • Installation of a geothermal heat pump qualifies for a 30% federal tax credit (through 2016 currently) as well as various state, local and utility provided rebates
  • Geothermal combined with a solar PV (photovoltaic) array that produces free electricity combines two renewables (solar and earth/geothermal) into one almost perfect system. This combination can reduce electric energy use to near zero, a situation called “Zero Net Energy” wherein during occasions when the solar system generates more power than a home or building is consuming (with some consumption coming from the heat pump(s), excess electricity is returned (“sold back” in essence) to the utility grid.

An Educated Geothermal Customer Will be a Satisfied Geothermal Customer

Happy_Family_.pngIt might sound redundant to refer to an “educated geothermal customer” because one can hardly think of someone electing to go with geothermal who has not done their homework in the first place. And geothermal does require homework because, even though geothermal is a fairly simple concept, it can be an operational challenge, especially with regard to its installation. It is certainly more complex to design, size and install than conventional forced air or hydronic (fluid/water based distribution) systems – two HVAC system approaches that have fully matured industries and are available to you.

After all, viable geothermal heating and cooling applications were first attempted in both residential and commercial buildings only in the late 1940’s and a geothermal contractor industry didn’t begin to develop until the 1980s. Like any service industry, the geothermal marketplace has a large trained and experienced workforce, capable of handling any geothermal job. But it also has its share of less than stellar installers who pass themselves off as experts, sometimes promise more than they can deliver, and who also sometimes cut corners.

To end up a satisfied, happy geothermal homeowner requires two things:

1. The first is to learn as much as you can about geothermal so you can ask the right questions of the geothermal “professionals” you will encounter in getting work bids.

2. Second, what resources are out there to help you ultimately validate/select the very best geothermal professional in your area to do the work for you and to stand by that work. (Note: More details on selecting geothermal professionals are included under “Finding and Selecting the Right Geo Contractor.”)

Otherwise you risk the chance of having a geothermal system in your home that may not deliver the peak level of heating & cooling comfort that you expected and which you were promised.

Guess What: It’s Not the Geothermal System’s Fault

Disappointed geothermal customers are out there: They have installed Geo systems that have problems. However, though vocal occasionally, they are a small minority. The majority of geo customers people who are very satisfied. Here’s a common take-away to understand, one that’s revealed when the experiences of those unhappy with their geothermal system are investigated: in the vast majority of cases it’s not the geothermal system’s fault. Geothermal heating and cooling technology and its application methods are absolutely true to the promises made about geothermal and confirmed by thousands upon thousands of successful installations where the geothermal systems perform exactly as they were presented, delivering superior comfort over an extended number of years at a very low energy cost. 

The problems, in the vast majority of cases, are in the geothermal design and installation. And that goes back to the contractor hired to do the job, which reconfirms the critical importance of doing your upfront homework and taking advantage of the resources available that will lead you to hire the right professional in the first place.

Educating Yourself About Geothermal Heating & Cooling

F4_Geothermal_References.jpg

To make sure you get educated about geothermal and what’s involved, and especially how to guarantee that you have a successful installation, there are three excellent resources for the homeowner we’d like to share with you. These t sources provide a wealth of information in great detail, far more than we can cover here. They also have been extremely helpful in the presentation of the information found on these pages.

  • The Smart Guide to Geothermal by Donal Blaise Lloyd. This 184-page book, published by PixyJack Press (2011), is an excellent layman’s introduction to all things geothermal. Lloyd’s guide will not only explain geothermal to you but provide a wealth of resources to tap into.
  • Homeowner’s Guide to Geothermal Heat Pump Systems by the folks at Ground Energy Support LLC (www.groundenergy.com). Another invaluable resource that walks through how geo systems work, considers if a geo system is right for you, and how to evaluate/select the right installer using the industry’s consumer resources like IGSHPA (the International Ground-Source Heat Pump Association), regional and state associations and manufacturer’s websites.
  • Geothermal HVAC: Green Heating and Cooling by Brian Clark Howard and Jay Egg. This textbook-handbook by geothermal experts, published by McGraw-Hill Education (2010), is an indispensible source book and covers residential geothermal heating, ventilation, and air-conditioning technologies and explains how to take advantage of their money and energy saving features.  

Is Geothermal Right for You?

Perhaps the first question to be asked is precisely this: While geothermal heating and cooling has a range of advantages and is clearly good for our planet and the environment, is a geothermal system the right thing/best thing for your home? 

To answer that question, here are a few basic questions in turn:

Can you afford a geothermal system? Depending on the loop application selected, a geothermal system can cost between $25,000 and $30,000. Most of the cost of the system centers on the need to excavate and prepare the geothermal piping loop: this upfront cost can amount to as much as $20,000 of the total cost, depending on the region of the country you live in, the prevalent soil conditions or water access, and the concentration of established geothermal business in your area. The inescapable fact is that a geothermal system costs more than a conventional HVAC system, although the payback on the system occurs much faster due to the energy savings achieved with a geo system. Plus, with at least up 30% coming back to you in the form of federal and possibly more from state tax credits and possibly utility rebates, the actual cost is about 40% lower than its first price.

Some residential developers have chosen to install the underground geothermal loops in advance, and new homeowners can tap into the loop while paying a modest monthly fee, much like a utility cost. This can save significantly over the cost of drilling your own geothermal loop.

Is your home properly insulated? If not, are you willing to pay for insulation? For a successful geothermal or any high efficiency HVAC system experience, a tight building envelope, achieved through effective insulation, is essential. Otherwise electricity costs won’t come anywhere near what you’ve been promised. Homeowners whose geothermal-equipped homes don’t have a tight envelope will blame the geo system for their high electricity bills when the lack of good insulation is the real culprit.

Is the soil composition in your area well suited for geothermal? Not all areas of the U.S. are as well suited to geothermal as other areas. For example, in Florida closed-loop geothermal is impractical because of the cooling dominant nature of the Sunshine State. Rather, placement of properly designed loops or exchangers in an adjacent body of water or pond is a great alternative as is what’s called a Class V Thermal Exchange method

F5.jpgDo you have enough property (ground space) for siting the underground loopIt is well understood that a geothermal ground loop must have sufficient space for the system to function optimally and its length should be matched to the anticipated demands made by the system in either its heating or cooling mode. (For more information on types of geothermal loops, see the discussion Types of Geothermal Loop Systems). A shorter ground loop can be subject to what’s called “thermal degradation” or “glide” over time. Conversely, an oversized ground loop (or heat pump) can be just as problematical. For efficient operations the ground loop must be properly sized to meet the expected heating-cooling demand (load) that the house will require, especially during what are known as “peak times.” Determining the load of a house is therefore a critical system design task. To determine the load requirements, there are analytic tools that need be used by your system designer/contractor:

ACCA Manual J Heat Loss and Heat Gain Analysis This peak heating and cooling load calculation tool analyzes the amount of heat loss and gain to and from the outdoor environment at outdoor-indoor design conditions that must be made up by the HVAC system to maintain occupant comfort.

Closed Loop/Geothermal Heat Pump Design Standards This ASHRAE-IGSHPA document is a source of precise standards and guidelines to be used with Manual J load calculations for the design and installation of closed loop geothermal heat pump systems.

Will you need additional equipment? Oftentimes a single heat pump will do the job for all the heating-cooling required. Heat pumps can also be used for heating domestic water in conjunction with what’s called a desuperheater or a “hot water generator.” A desuperheater, an optional feature, is a secondary heat exchanger installed at the compressor discharge that uses excess heat from the heat pump and superheats the hot gas excess for the purpose of producing hot water. The excess heat energy is available in both heat pump’s heating and cooling mode and only when the heat pump is in operation. Desuperheaters are not able to provide all the water heating a home may require, so a water heater is still needed. However, they can definitely reduce a home’s water heating bill. The addition of a properly installed buffer tank can provide impressive peak hot water availability.   

Distributing your geothermal heat & cooling: forced air or radiant? Heating or cooling your home with a geothermal heat pump requires a distribution system to move the heat from the heat pump throughout the home. This can be accomplished by either a forced air (with ducting) system or with a “hydronic” system using radiant panels or under-the-floor radiant. Both types work well with different types of geothermal pumps: for forced air with a water-to-air type of pump and a water-to-water pump with radiant. Homeowners should discuss the pros/cons of each type of distribution system with their contractor for a new home. For retrofits, where a geothermal system is replacing a boiler/furnace and conventional A/C system, the contractor needs to explain what changes, and at what cost, will be required to accommodate the geo system.

Finding and Selecting the Right Geo Contractor

Geo_Contractor.pngThis is the single most important task that the homebuyer/homeowner must accomplish to ensure that the end result of going with geothermal results up being a positive, money saving experience. As mentioned previously, most customer complaints about their geothermal system are not the fault of the technology or the equipment per se, but rather how the contractor performed his job, so finding and selecting the best contractor is absolutely crucial.

Getting Started

The best way to find the right geothermal contractor is through word of mouth. If you know of a geothermal equipped home in your neighborhood, ask the homeowner about his/her experience with the system and who they used.

Otherwise the best single source for identifying qualified, experienced geothermal installers is through the International Ground Source Heat Pump Association (IGSHPA pronounced “IG-SPA”). IGSHPA is a national organization affiliated with Oklahoma State University and is the leading training and professional certification organization. It maintains a current list of IGSHPA accredited installers and certified geothermal designers specializing in closed-loop geo systems. An IGSHPA accredited installer is your best bet for selecting the right partner for your geothermal project (www.igshpa.okstate.edu).

Geothermal heat pump manufacturers are also a good source for locating local contractors and should be consulted in your search. These contractors have undergone training on specific manufacturer heat pump offerings. They may like to use one specific heat pump manufacturer over others, but they should have the knowledge and experience to work with more than one manufacturer’s products, depending on the specific needs of any project. (For more on heat pump manufacturers, see the section Geothermal Goes Mainstream). 

Your selected contractor will know of local drillers for the ground loop and will recommend them to you. You should aim to use a Licensed Driller. In some cases, geothermal contracting firms have integrated the drilling function into their operations.

Questions to Ask

Here is a list of questions to ask the contractors you engage with in the selection/bid process:

  • How long have they been doing geothermal work?
  • How many projects have they completed?
  • Are they accredited (if they’re not on IGSHPA’s list)
  • Can they recommend past customers for you to speak with?
  • Do they specialize in residential-scale geothermal installations?
  • How do they size the geo system? Do they use ACCA Manual J or ASHRAE methodology?
  • Do they use load calculation software to determine the best size heat pump unit for your home and the loop field needed?
  • What type of heat pump do they recommend and by which manufacturer?
  • Will they give you a written cost appraisal, delivery & warranty for their work?
  • Are they knowledgeable about available state and local tax credits and possible utility rebates in addition to the federal tax credit?
  • What type of monitoring system do they recommend you have to make sure your geothermal system is working properly?
  • Do they offer a service/maintenance contract so they stay with your system in operation?


A good blog resource where you can discuss with other people engaged in the geothermal process and get good answers and feedback is at the National Geographic Energy blog.

Requesting Bids and Undergoing Site Visits

Unless you know of a contractor who has done work that you can verify with a family member, neighbor or friend who has a geothermal system installed by this contractor, you should develop a short list of possible installer candidates who you would be confident to engage further with. This will provide you with a range of prices and suggested approaches in terms of system design and heat pump options.

After completing your initial contacts, at this point you will want to receive bids to complete the work from each of these candidates. However, for them to prepare appropriate bids, site visits to your property will be required. These visits will allow the installer to evaluate your specific property and your home (or your builder’s plan) with you and give you the opportunity to ask all the questions you have prepared and additional questions that will inevitably arise in the course of your time and conversation with the contractor.

Bear in mind that the site visit is the occasion for the geothermal contractor to gain a better understanding of your specific situation and your property’s suitability for a geothermal install. More precise information will be contained in his bid. The Homeowner’s Guide to Geothermal Heat Pump Systems points out that his design strategy may be something he likes to keep to himself for competitive reasons: “In many markets, the design is the installer’s competitive advantage that they have honed over years of experience in conditions specific to your geographic location. The effectiveness of their designs will be evidenced through talking to their references, performance data from their other installations, and a service agreement that shows they will stand by their work.”

The authors of Geothermal HVAC: Green Heating and Cooling add: “good job proposal should leave nothing up to chance or misinterpretation and should spell out the exact equipment to be used. You are spending a lot of money on a new system, whether for a residential or commercial application, and you deserve a detailed roadmap of the process.”

Making the Final Installer Selection

If you solicit several or more bids from accredited installers, your final selection may either be self-evident or a more nuanced decision. In any event, the final decision on who to go with will come down to experience and credentials, the cost of the work and your budget, and what may be most important, your gut feeling about confidence/trust and rapport with the installer. Good luck!

National and State Incentives for Geothermal Installations

Currently, a 30% federal tax credit is available on the total cost of a geothermal installation. This credit will last through the end of 2016 if Congress does not reauthorize it. However, there are many state incentives that will not expire and it’s important that any homeowner/homebuyer considering a geothermal system be aware of what the state they reside in offers. These state rebates can save you money and make you feel even better about the choice you made!

Chances are the majority of geothermal customers don’t know exactly what’s available, or how to take advantage of the multitude of geothermal HVAC incentives out there. To help you, we have provided the following information, to include a state-by-state reference tool, to guide you through the process of discovery.

Let’s start by running down what’s available to to geothermal customers here in the U.S. Here is a quick list of some possible benefits that may be of advantage to you. Visit the National and State Incentives page on the website to learn more. 

Determining Payback

One of the most compelling justifications for going geo is the opportunity to earn back the money you invested in a geothermal system. This is accomplished in two ways:

  • Federal_Tax_Credit.png30% federal tax credit plus 10% state and local tax credits adding to 40%
  • Electricity savings

Another way to look at payback is to compare the added costs of a geothermal heat pump over and above the cost for an oil, gas or electric heating-cooling system. Again, that comes down to the energy savings achieved with a heat pump as opposed to a furnace/boiler for heating and the electric costs to run air conditioning.

Generally speaking, the estimated average payback time for a geothermal system is about 3 to 10 years. Let’s examine two payback scenarios as presented in Donal Lloyd’s The Smart Guide to Geothermal:

Scenario #1 – Payback on Added Costs, No Subsidy

The cost of a geothermal system totals $28,000. That’s $8,000 more than you would have spent on the $20,000 cost of a natural gas boiler and full house A/C. Savings on not having to buy gas amounts to $2,500 every year. To run your heat pump costs $200 in electricity per year.

$2,500 - $200 = $2,300 savings per year

$8,000 ÷ $2,300 = 3.5 years payback

Scenario #2 – Payback on Added Costs, With Subsidy

The 30% federal tax credit is meant to get more consumers to opt for renewable forms of energy like geothermal. Accounting for the 30% federal tax credit alone makes for a big difference in payback time and savings.

$28,000 geothermal system cost x .30 = $8,400 tax credit

$28,000 - $8,400 = $19,600 actual cost

Considering Scenario #1 with the cost of a natural gas boiler and full A/C at $20,000, the payback for the geothermal system is immediate!

Now let’s take the annual energy savings from Scenario #1 of $2,500 for not  buying gas and just $200 a year for electricity for the geo heat pump ($2,300). In five years that’s $11,500 in fuel savings; in just 8 1/2 years fuel savings amount to $19,900. 8.5 years payback.  

Note: Lloyd’s calculations for natural gas costs stem from 2010-2011. Of course, we all know from experience that energy costs can be volatile. More recently the price of natural gas might be higher, depending on a variety of factors including weather, supply and market conditions.

A more recent (2014) payback calculation is presented in an article in Green Builder magazine for modestly sized house:

“The home is in Chicago, and we’re comparing a gas furnace to a ground sourced heat pump with a Coefficient of Performance (COP) of 4.0 and an Energy Efficiency Ratio (EER) of 22, and it provided the following data.

The “results” page states that the home will save $1,331 in Year One, and a cumulative $17,544 by Year 10. It also states that it increased the value of the home by $26,620.  Savings by Year 20 could be in the order of $50,000.

 

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, to include high performance home developers and builders. 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

Whisper_Valley_project.pngNew 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.pngOrca 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.        

 

Geothermal Goes Mainstream

GeoShipments_REV.jpgIn the years ahead the geothermal industry will grow rapidly as more companies get into the geothermal business to meet rising demand fostered by new housing communities equipped with geothermal, municipalities electing to reach Zero Net Energy as a future goal, and utilities offering geothermal services to their customers. Geothermal, as the most constant and efficient renewable that we have, will gain momentum. A continuation of the federal tax credit beyond 2016 will serve as a major stimulus for taking geothermal mainstream in the near future.

A Note on Heat Pump Manufacturers Heat pump selection should be based on the following factors:

  • Their equipment offerings comply with various standards and certifications: US EPA, DOE ENERGY STAR, ISO 13256, etc.
  • They incorporate the latest technology
  • They offer a strong warranty on parts and labor
  • They have good efficiency ratings (expressed in COP ratings – coefficient of performance of 3.0 and above. COP is a measurement of the efficiency of the heat pump.)


Here are the major heat pump manufacturers in alphabetical order:

 
Are you Ready to Geo?