What the Geothermal Heat Pump Industry Can Learn From the Solar Pros

Chris Williams, HeatSpring
June 07, 2011 | 24 Comments

While geothermal is the most efficient HVAC system to operate, it's a reliable and proven technology, provides solid financial returns, and directly decreases our country’s use of imported oil, the solar photovoltaic industry has succeeded in being the fastest growing industry in the USA, according to SEIA, the solar energy industries association. Last year the solar industry grew by 67% compared to 30% for geothermal heat pump industry. The geothermal industry needs take its rightful place and make the investment and critical decisions needed to further increase growth of the industry.

Why Focus on Geothermal?

Geothermal can produce between 50% and 80% (you can find quotes in the whole range) lower heating and cooling costs for a building over the next 30 years. Although solar does provide solid returns, if you look at the energy it displaces, it will rarely lower the electricity consumption of a building by more then 25% because the energy density of the panels is so low. Why does this matter? Geothermal can provide a solid return by utilizing only federal tax credits (the 30% ITC) and accelerated depreciation for businesses. Solar on the other hand MUST utilize federal and state incentives. This shows that the majority of the returns geothermal provides are by replacing the use of fossil fuels while solar tends to provide solid returns by utilizing government incentives.

Why does this matter? If you analyze each technology and look at dollars invested versus energy reduction or CO2 emissions displaced, geothermal is a better investment. This means it is better able to reduce our dependence on fossil fuels and is more applicable because it can be applied through the whole country as it’s not restricted to state policy.

So why then, are geothermal heat pumps falling behind solar in terms of adoption? There are many reasons on the consumer side why solar seems more attractive, but there are also other items the industry can focus on.

5 Critical Things the Geothermal Industry Can Learn From Solar

1) Vocal, Passionate Industry Assocations with a Clear Message.

The solar industry does an amazing job at branding and organizing national chapters that provide one clear message for installers, distributors, and manufactures to consumers and the government. These organizations make it easy for the industry to get involved locally and nationally. SEIA and ASES, the American Solar Energy Society, are both great examples of this. Not only do they have a national chapter to lobby the government, but they create state chapters as well to provide a clear path for interested companies to get involved. NABCEP, the North American Board of Certified Energy Practitioners, and IREC, the Interstate Renewable Energy Council, have done a great job providing news and information on policy, net metering and training that have helped to develop the industry by disseminating information quickly.

Within the geothermal industry, there are two main organizations working to develop the industry; IGSHPA, the International Ground Source Heat Pump Association, and GeoExchange. These two organizations do an amazing job at promoting the industry and providing resources, too. However, the geothermal industry still tends to be very fragmented regionally and weak politically. If we want to continue to develop the geothermal industry, we must focus on uniting all the stakeholders in the industry so that we can establish a creditable and powerful voice to both consumers and politicians and provide useful and accessible information to geothermal installers, distributors and manufacturers.

2) Group Purchasing.

Solar, like Geothermal, is a large investment up front that pays for itself over the 25-year-life of the system. They’re both amazing investments, but the long term view keeps some from purchasing for equally justifiable reasons. For a long time, this upfront investment hindered the growth of the solar industry. Group purchasing with 1 Block Off the Grid, is one concept that has substantially decreased the cost of installing solar. There is ABSOLUTELY NO REASON why the geothermal industry should not also utilize group purchasing similar to the solar industry. The economies of scale for a geothermal company to bid on ten, twenty, or thirty $40,000 contracts could decrease the installed costs by 10%-25%. This is due to purchasing power of building equipment as well as efficiency of the design team and installation crew. Geothermal group buying should start immediately. 1BOG is a for profit organization, meaning that it's a very sustainable and scalable business model. A geothermal organization could easily replicate this processes or a manufacturer or distributor could attempt it as well.

3) Market Luxury, Sell Investment.

The solar industry has implemented this strategy with extreme success. Homeowners and businesses typically become interested in solar because of the environmental benefits--the same reason that attracts many news stories. However, they are sold on the financial benefits of solar (in states where the needed incentives). The geothermal industry mainly sells its product as an investment only. The geothermal industry should utilize the fact that heat pumps provide very comfortable, even heat to a location, and they are more comfortable than traditional heat systems. This makes geothermal seem like a luxury, piquing people’s interest, like granite counter tops. The sale will then be completed due to the very attractive returns that geothermal will provide.

4) Provide Financing.

The solar industry has also successfully created financing packages that, similar to group purchasing, decrease the up front investment in installing solar systems for consumers who want solar but don’t have a large amount of cash. SunRun and Tioga are great examples of this for private companies, and some utilities, including PGE in NJ and other utilities, will also provide financing. This is genius. The geothermal industry too needs to push for greater financing options for consumers. How would it work? A third party would pay for and own the group loop, the piece of equipment that is actually generating the heat, and sell the heat created by the loop to the property owner for a lower price than traditional fuel sources. This is similar to how PPA providers own the solar arrays and sell the electricity to the property owners. LVestus based in New Hampshire is the only company I’m aware of that provides this financing option, but we’re beginning to see more companies focusing on this.

5) Always Showcasing Installations.

Not only is the solar industry very vocal and organized, but they are always showing their installations off to politicians, students and news agencies. This basically provides a lot of free marketing to both consumers and politicians for the whole industry. Showcasing installations provides a significant amount of free marketing that increases public support from consumers and the government, both critical elements to the success of the solar AND geothermal industries. The geothermal industry must get more proactive at showcasing installations not only to each other but to the general public.

Chris Williams who works with HeatSpring Learning Institute delivering world-class IGSHPA Geothermal Training, NABCEP Solar Training, and BPI Certification training to professionals who are installing, designing or selling renewable energy systems. Sign up for their newsletter here. Chris can be reached directly at cwilliams@heatspring.com

The information and views expressed in this blog post are solely those of the author and not necessarily those of RenewableEnergyWorld.com or the companies that advertise on this Web site and other publications. This blog was posted directly by the author and was not reviewed for accuracy, spelling or grammar.

24 Comments

Gary McCallum
June 16, 2011

No argument Larry but the comment refers to 'structures that would otherwise be prohibitively expensive to renovate' I was mostly thinking of the brick veneered structures that dominate where I grew up. Adding to the exterior of a stucco or wood siding building is not a prohibitively expensive scenario. Not many people are willing to sacrifice the space in a brick veneered home or remove the brick.
There are also brick structures where the inner brick forms the load bearing capacity. They can be gutted and upgraded but bringing them up to a passive house standard would greatly impose on the overall floor space and seriously complicate trying to eliminate thermal bridging.

lawrence elliott
June 16, 2011

"Geothermal systems are costly but probably one of the better ways to reduce CO2 for existing structures that would otherwise be prohibitively expensive to renovate."

Costs on renovation are site specific but in general I can take any stick built home no matter its age and with my (not exclusively mine but the one I use) method improve the thermal envelope enough that even a structure that would be considered medium to good thermal performance will see a noticeable increase in overall thermal efficiency.An older uninsulated or minimum insulated structure exhibits extreme performance increases. If the cost to do this is amortized over say a ten year period the true cost is in no way prohibitively expensive.These costs coupled with a high efficiency inverter mini split heat pump, in all but very severe climates, is a far better deal than the costly GSHP.Couple this with some LED lighting,solar thermal and improved appliances and CO2 limiting is far better than any GSHP investment. Don't get me wrong. GSHP is great. Just in climates that require it.BTW I now have in operation a modified inverter mini split that uses a heat source for the evaporator that meets the performance of GSHP in severe low temperature climates at a fraction of the cost. Hope to get ii in serial production next year.As an added bonus I get domestic hot water anytime I use the air conditioner function. Ironically the thermal envelope is so good that in most cases the air conditioning function never gets used.

Gary McCallum
June 16, 2011

My understanding of efficiencies is ground source heat pump is the most efficient use of electricity for heat. $1 of electricity give $3 worth of heat compared to electric baseboard heat which would translate to dollar for dollar. Transmission losses and inefficiencies in coal or nuclear generated power not included.
Geothermal systems are costly but probably one of the better ways to reduce CO2 for existing structures that would otherwise be prohibitively expensive to renovate.
The geothermal heating industries need to find its rightful place in the energy and climate change issue, pales in comparison to that of the Passive House movement.

bob freeston
June 15, 2011

Speaking to the article-- some thoughts--GSHPs came out of the drilling industry in Oklahoma and the national association is at Ok State still. The International Ground Source Heat Pump Association (IGSHPA) will have their national conference this year in Oklahoma, where it is most years. Solar and Wind came more out of the environmental movement. Thirty % growth per year for GSHPs in this economy is pretty good. It's also world wide. Watch the Chinese. Existing HVAC people are steadily coming in. Installers are still early on the learning curve. Many areas of the country don't have installers or have so few that pricing is not yet competitive. The technology has to prove itself, which it is doing. It was invented only about 25 years ago. Solar is well over 50. GSHPs are very commercial and will expand whatever the political climate. Solar can be slowed by political blockages. I work with architects, engineers and builders. That's a good place to focus as many of them need to be brought up to speed.--best Bob member IGSHPA and ASES

B McCutchin
June 15, 2011

Hi,
Great question and I don't believe there is an easy answer.

My point is this - Over the last 8 years living near Green Bay and installing GSHP systems I have noticed a big change. When I first started marketing geo everybody asked what it was, how does it work, back-up heat ect...Thinking it was some new gaget hitting the market. Now, over the last 2 to 3 years, most people have at least heard of geothermal and many have formed opions, some unfortunately bad, which is the largest challenge this industry will have to overcome. Many untrained professionals jumped into geo installations when the gas sales fell in 2007. Unlike most solar installations, if a gshp doesn't work the occupant knows it. So as the anonymous writter at the top of the blog stated, the most important part of any installation is the contractors knowledge or better yet, the installers.

Bill Brandon
June 11, 2011

Chris - You have made a good and interesting point. As a designer and specifier, I can tell you something about my clients (the customers). Few, if any, would even know the term ground source heat pump but would recognize a PV solar system and maybe a domestic hot water solar system. All customers have budget limits and most would buy some sort of kitsch first. All of their friends will ooh and ah about the granite counter tops but not the HVAC system. While the electric PV may require incentives to make it work, the incentives gives the customer the illusion that they have received some value for nothing even though the figures might prove that their personal money would be better spent elsewhere. This is the 'kitsch' of the PV industry.

As a slight twist to your point #3, ground source heat pumps generally fall under the area of conservation and efficiency, not resource replacement. Most clients (customers) will have a handle on efficiency because the government has made a big deal about it where small investments can reap large returns. Most read this as insulate, insulate and insulate which is the correct place to spend your first money. Tell them how much an LED light fixture costs and they will usually pass even though the pay out will be there in a longer term.

While your original points are well made, the first issue is public knowledge so when they tell their friends that they have installed a ground source heat pump, their friends say "oh, you have!" rather than "what's that?"

Chris Williams, HeatSpring
June 11, 2011

First, I'd like to thank everyone for their comments.

On the flip side, after skimming through all of them, it's an amazing demonstration of what I was writing about and the real (and large) problems that the geothermal industry is facing from a PR, marketing and sales perspective. I wrote a post about how the geothermal industry can learn some of PR, marketing and sales strategies that the solar industry has used so effectively to become the fastest growing industry in the country and all of sudden we're talked about COPs, 10 by 10 by 10 ft dry wells, CAPX and OPEX, etc and all these other technical issues.

I'm not saying the technical aspects are not important and I have no problem shooting the "stuff" with engineers, but when we're talking about marketing and customer adoption of GHP, WE NEED TO BE TALKING about the customer! Not the technology. I look forward to everyone's feedback on how we can start talking about customer adoption of GHP and how we should be speaking to the public about the technology.

Chris

bob freeston
June 10, 2011

Ground source heat pumps generally operate year round at a gross COP of 4. They are heat in the winter, central air in the summer and produce most or all (newer systems) of the building's hot water. I converted 6 years ago by connecting to my existing water well via open loop. I dump to a 10 by 10 by 10 ft dry well. I think I'm paid off this year. There is a lot of misinformation in above comments. Air source heat pumps also can be a viable option--less investment up front but way less efficient in areas of deep winter like upstate NY where I live. They may be the best investment in moderate climates. They have no advantage over regular air conditioning in warm months. GSHPs are twice as efficient. Vertical bores are the most expensive option. We are getting new construction where the foundation trench is enlarged for horizontal loops--paybacks are supposed to be well under 5 years. In new and retrofit situations the first thing to do is create a high efficiency envelope so all loads are reduced.

lawrence elliott
June 10, 2011

To put this another way

The amount of money I spent to achieve a drastic reduction in my overall energy consumption was low enough that it could be duplicated by the vast majority of folks who are on the lower end of the economic scale. That constitutes a large percentage of the population. Therefore the aggregate reduction in total energy use would far exceed any marginal gains you're (Bill) seeing in the use of a system with far more embedded energy and total economic outlay than my system. Thus; Why bother with GEO HVAC when a better (value judgement I know) solution exists? I know of some GEO HVAC systems installed in a moderate climate here in Oregon where the cost of the bore holes was in excess of $90K. And that is residential. What I could have done with all the diesel fuel used in that install not to mention the fact that I could have upgraded at least 45 or 50 'energy hog' homes with the money just spent on a hole.

Chris Williams, HeatSpring
June 10, 2011

How can we better sell geothermal? From what I've noticed the public does not care about how the technology works, but the services it provides. Is there a way we can stop talking about geothermal in technical terms and start talking about it in a way that property owners and politicians can relate with?

William Fitch
June 10, 2011

Hi:

No I didn't miss the point. You should no better than to use ROI to judge choices. It is total BS and is purely a business function which the conventional fuels industry loves to brainwash everyone into using.
Total return on investment over the entire life cycle of the system is where a much truer picture presents itself. The shortest ROI does not mean you will save the most money over the whole life cycle.
PV and wind (elect power generation) are the last aspects of my whole energy project. The PV should be within 18 months and wind a year or two later. I am still load flattening and adding more solar thermal for the Geo...

.....Bill

Bill Brandon
June 10, 2011

I was an 'early adopter' (1979) of ground source heat pumps. When did we start to inappropriately call them geothermal heat pumps? I may be nitpicking and there may be some weird explanation, but they have nothing to do with the traditional concept of geothermal. This being said, there will always be a place for ground source heat pumps, but there are trade offs with other options.

As a resident of a dense urban area (down town Washington DC) I have often wondered if all of my neighbors used this technology, how deep would we need to go to get enough storage capacity? My lot is 2000sqft with maybe another 800 in adjoining public streets, walks and alleys. My structure is 4000sqft. These ratios are significantly different than in a suburban setting. Any one done any estimates on this?

Comment #6 has some validity, but since most homes have central AC now, the summer peak electricity use would be there in any event. Winter use is highest at night when electrical demand is lowest, so there are a whole set of variables here. Since we are talking about increased CAPX to lower OPEX, there are other options based on the old gas AC thermal cycles. Active solar heating systems can use this cycle for summer cooling. I would also like to see some cost and efficiency comparisons between ground source heat pumps and a traditional thermal heating with gas AC. The figures might be surprising.

lawrence elliott
June 10, 2011

#10 Bill
You missed the entire point of the discussion
As stated my costs for achieving a 1.5 COP (stated another way I have a %50 advantage over using resistance heating)are as dirt cheap as you can get and therefore a much better $$ value relative to the extremely high cost of GEO HVAC. BTW I derive all of my power from PV power. So you have a COP of 6? That's nice but at what overall cost? My ROI was less than one heating season. What I would have wasted on a GEO HVAC I was able to put into an electric vehicle. Your no more comfortable in winter than I am and I'm driving on sunshine. Thus;Why bother with geothermal HVAC??

Dan Foster
June 9, 2011

I thought the article summed up the GHSP and PV Solar Systems comparisons very well.

I installed a 2.7 KWp system in Jan 2010 for $16,100 (before the 30% ITC). My Utility is paying me $0.52/kwh for about 3000 kwh/yr for 12 years. After that, it will pay only the Utility rate which is increasing about 6% a year. If SRECs are still marketable then, I will get them then. I also spent $5000 to re-shingle my roof and another $5000 to take down 15 Scot pines and a massive cottonwood tree. I calculate I will earn $25,357 in 25 years.

I have a bid for a 3 ton Ground Sourced Heat Pump for $16,800. There are no other costs. It also qualifies for a 30% ITC. It has no other incentives unlike my PV Solar System. I will save $41,258 in natural gas (heating and hot water) and electricity (cooling). There is no question that the GSHP will be much more cost effective than my PV Solar System. I do love the PV Solar system but it has constraints (night, clouds, snow) that the GSHP will not have.

I am developer in the PV Solar Industry. I develop large commercial systems (500 KW - 5 MW). For friends that ask me about residential installs (which I do not install but have contractors I recommend), I tell them to get a GSHP as a foundation and a PV Solar System or small wind system if they are obsessed with either.

William Fitch
June 9, 2011

Hi:

#9 COP 1.5!!
horrible.. I pull 3.5 at my worst point in Winter and once I add in more solar, my worst will be 4.5 with a best COP of 6.0.
Geo is an excellent choice if it is designed and installed right... The system eff is far, far more stable since it is not effected by the outside air temp like air based units...
That is simple fact... sounds like you had fun doing your system though...

.....Bill

lawrence elliott
June 9, 2011

Why bother with Geothermal HVAC?
Even if someone is still foolishly using the antique ducted HVAC that most advanced societies discarded long ago ,you still can beat the cost of GEO HVAC.
Example: For less than the cost of a used Yugo I updated my 1957 vintage home's thermal envelope in Oregon sufficient enough that my 1 ton inverter mini split heats 1400 ft sq comfortably at 30 degree outside temps on less than 600 watts with a COP of 3 on the air to air unit
At an outside temp of 7 degrees F I was still heating the home to 68 F and still had a COP of over 1.5.
I do all of this on a Mitsubishi unit but my cheap $700 Chinese knock off did just as well.
My 1500 ft sq shop with radiant floor heating easily keeps it toasty at 25 F outside and only a run time of about 2.5 hrs in 24 on a COP of 3.5 and peak power of less than 1200 watts.
Total setup including the inverter mini split modified to run as air to water cost less than $3000. Unless your living in very severe climates the ground loop system is a foolish waste of money.

William Fitch
June 9, 2011

Hi:

God, what a mish mash of misunderstanding and some misinformation...
I put my own geo in, 2.5 ton for 2000 sqft for about $8500 gross... 2000 ft horiz loop field at 2 meter depth. etc..
Works great and I am heavy solar as well. In fact the last part of my whole thermal system will be boosting the loop field temp in heating season with more solar energy to create a "ground neutral" effect. This will further advance my Winter COP with little penalty in Summer.
The installation person is VERY important. Short drilling can be a big issue, especially if the customer has no idea what is going on, or is up in age...
Solar and Geo actually are great together like male and female. There can be, like the sex's misunderstandings between them, but when the relationship is done right the result can be something great....

.....Bill

Brian Hayden
June 9, 2011

Chris - this article really made me think. Thank you. I especially like the positive tone of the title. I think the geothermal industry does have a lot to learn from the solar industry.

What I don't like are when geothermal and solar (or thermal, or micro-CHP, etc) companies bash other great technologies. Or worse, when geothermal companies bash other geothermal companies. It's really off-putting for consumers. And because adoption rates are so low for all of these technologies, by far the biggest opportunity is growing the overall market for renewables. Knocking other, good, technologies to make yours look better isn't a great long-term strategy.

Copying good ideas from related markets makes a lot of sense to me. Thanks for offering up these suggestions!

Frank Tettemer
June 9, 2011

Geothermal does reduce fossil fuel use at the installation site, and it does save the home owner dollars spent each month.

But does it really reduce fossil fuel consumption?

All I see is increased electrical use, not reduced fossil fuel use.

The electricity used at the home site certainly cost the home owner less money.(Electricity is government-subsidized, money coming from the home owner's taxes.)
Electricity is also made predominantly from fossil fuels. And with a rate of 3 to 1. For every 1 Kwh of electricity used by that heat pump, there is more than 3 Kwh of fossil fuel energy spent producing it.
Geothermal is a hoax and a marketing myth, not a fossil fuel conserver.

V. Bruce Stenswick
June 9, 2011

I am not an expert,but have paid some attention to the industry. One problem at the present time, at least in Minnesota, is a shortage of qualified installers and well drillers. When I put my system in 10 years ago, bore holes for the vertical loop field were $1000 each in the Twin Cities area; they are $2500 each now. That's 9.6% increase each year. We certainly have not had 9.6% inflation. I have three suggestions for local government.
1. Give tax breaks for well-drilling equipment to get more people into the well drilling field.
2. Give training programs to get more installers.

The people currently in the field will not like either of those two suggestions.

3. Sell bonds and loan homeowners the money for the loop field, using a PACE mechanism, but make the loan subservient to the mortgage so as to not run into problems with the mortgage holder. Even with more competition, the loop field could be a deal breaker for many people.

An example, using local prices pared down a bit. Suppose a loop field cost $9000; loan the homeowner the money that owner of the property responsible for 1/3 of the loop field, and the next two owners responsible for 1/3 each. The first homeowner would pay a nominal fee--$5 month until he/she sold the house, at which point they paid the balance of the $3000 that they were responsible for. Ditto for the next two owners of that house. If a homeowner did not net enough from the sale of the property, the balance just is passed onto a 4th owner of that property.

Brian Neveil
June 8, 2011

We have had 2 clients install Geo in PA both were number driven and say they will see a return. The return is mainly based on the sales pitch like a PPA where the fuel cost will rise "usually showing on the unknown/extreme side" over time. Anyway to create energy: heat/travel/AC I am all for when we can harness it in a very clean way. By the way 1Bog is about a $1.50 per watt more on 20 panel plus installs in the PA area then 3 established installation firms around them. This is for Central rail based systems with Sun-tech Panels. They send kids out for sales calls yet alone have no clue what the guys names are that will be installing solar on the clients home. Very weak so you can stop promoting them now you know the truth from someone that has beat them every time on price alone. Thanks

ANONYMOUS
June 8, 2011

I can't speak about the installation prices varying by state... did that 60-100K figure include the duct work in your new home? What did you end up paying for your heating and cooling system? What was the difference?

I searched for a few examples of geothermal and found a prime example in PA, here is the link for those that are interested

http://www.geothermalgenius.org/thinking-of-buying/geothermal-installation-by-the-numbers-in-pennsylvania.html

James Kempf
June 8, 2011

The lack of success for geothermal heat pumps in the market has nothing to do with the 'soft' marketing issues cited in this article. I recently did a system remodel on my home and had originally planned to incorporate a geothermal HVAC system. However, I cancelled the geothermal HVAC system for two reasons:
1) it was enormously expensive
2) the technology seemed very primitive, and not very well intergrated with other HVAC systems
The cost in California for geothermal for a 2500 sq. ft. house runs around $60-100K. That is far too expensive, even with the federal tax rebate. But the cost wasn't the worst problem. The worst problem was the primitive state of the technology. For example, I also had a HRV system put into the house, but it was impossible to integrate the air conditioning loop into the HRV system. I would have had to install a whole separate air handling system for the geothermal. In addition, I had to install a 80 gallon buffer tank to avoid having the heat pump cycle on and off. In California, the climate is so mild that the heat pump doesn't stay on for very long. This is a problem because the motor is not designed to cycle on and off frequently.

Contrast this with solar where rapid technical advances in panels and BOS components such as microinverters and DC power maximizers has resulted in a more than 2x increase in the amount of power available from the same roof area in the last 8 years, and a decrease in system complexity and installation difficulty.

Until these cost and technology issues are addressed, geothermal heat pumps will remain a minor component of the renewable energy solution.

http://netzerolife.blogspot.com

ANONYMOUS
June 8, 2011

This is a great article. Geothermal Heating and Cooling is a wonderful technology - if you are heating your home with propane or heating oil you need to immediately consider geothermal, not only for comfort, but as a smart financial decision.

The most important part of geothermal for the home or business owner is the contractor. They need to be experienced, trust worthy, and have great references. Geothermal is sometimes hurt by the very contractors who sell and install it - often times inexperienced companies under size the loop fields (to save the customer money), but everyone loses when this happens. The system doesn't work, the homeowner is upset, and communities blame geothermal technology instead of poor design and execution by the contractor.

I think a financing method and effective marketing from industry organizations (not a technical blog displaying conversations about broken pumps, etc.) could go a long way.

You can't see geothermal once its installed like solar panels. Geothermal is not going to advance itself, the contractors in the field and those who have their interests at heart will.

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Chris Williams, HeatSpring

Chris works with HeatSpring developing new products and managing online content. He combines his business education, technical training and hands on experience to help contractors grow their companies.