Slash Geothermal Costs With Free Money

Couple inherent energy cost savings with incentive dollars to make a huge dent in the cost of a geothermal system.

Jay Egg, Egg Geothermal

Jay Egg, Egg Geothermal

The economics of purchasing and operating a geothermal HVAC system are not solely reliant on paying notable upfront costs and then counting on energy-cost savings to recoup those costs in the first few years of operation. In fact, much of the upfront costs can be quickly offset by taking advantage of a variety of available incentives.

To start the discussion, let’s simply list the various incentives that are available to residential and commercial consumers. Residential options are included for comparison purposes. Here is a list of the most readily available options:
Residential:

  • 30% Federal tax credit, uncapped.

Commercial:

  • 10% Federal tax credit, uncapped
  • Maximum Accelerated Cost Recovery System (MACRS)–benefit as high as 38%, uncapped.

Commercial and residential:

  • Property Assessed Clean Energy (PACE) funding funds entire geothermal HVAC projects for property taxpayers
  • State and local government incentives (varies by region)
  • Utility incentives and funding (On-Bill financing)
  • Geothermal utility services (ORCA Energy).

Many of the incentives/benefits cover the entire cost of a new geothermal HVAC system or retrofit/improvements to an HVAC system. These improvements can include the following:

  • Geothermal source (ground loop/pond loop/Class V well system or standing column well
  • Geothermal (water sourced) chiller/heat pump equipment
  • Ductwork, distribution piping, and specialties
  • 100% fresh-air equipment (geothermal water sourced)
  • Controls and indoor air quality (IAQ) items
  • Electrical service connections
  • Excavation & recovery costs
  • Engineering drawings, permits, and fees.

Federal incentives for geothermal HVAC systems that are currently in effect through the year 2016 include different criteria for commercial and residential.

If the project is residential, all that is required is that the client be a taxpayer and fill out IRS form 5695. The customer will realize 30% of the entire cost of the geothermal HVAC system in direct tax credits. The credits can be rolled over from year-to-year until the full incentive is earned. For example, a $30,000 HVAC system, purchased in 2014, will generate a $9,000 tax credit on the very next tax filing, through 2016.

The reason I included residential is for comparison. If the customer is a commercial entity who owns the commercial property, that entity receives a 10% Federal tax credit. That doesn’t appear to be favorable until the rest of the story is considered. When MACRS is applied, the geothermal HVAC system is depreciated in an accelerated manner from 27 yr. down to an abbreviated 5 yr. A 50% bonus depreciation is also applied to the first year. This 50% bonus has been extended and modified several times since 2008, most recently in January 2013 by the American Taxpayer Relief Act of 2012.

By taking advantage of the commercial/corporate geothermal HVAC tax credits and incentives, an expenditure of $1 million for a geothermal HVAC system will net tax incentives amounting to $480,000 over 5 yr. under current program guidelines. A 48% tax incentive for corporate clients is clearly favorable to the 30% tax credit for residential clients.

PACE is a Federal program, currently available in 31 states, designed for residential and commercial consumers. The program works best for commercial customers in participating areas. PACE is arranged by local government and pays for 100% of the project’s costs. Payback is accomplished through property-tax assessments. Though PACE is also available for the residential sector, the housing market reverses in 2010 brought that funding to a halt. Commercial PACE programs have accelerated and, as of February 2013, 16 commercial PACE programs in seven states are accepting applications to fund geothermal HVAC and other energy-efficient projects.

On-Bill financing provides a way for consumers to repay the capital costs of retrofit geothermal HVAC systems as part of their monthly electric bill.

Electrical service providers have made energy-efficiency retrofits available to consumers for years. The utility companies use their reserves or third-party capital providers to cover the cost of the efficiency upgrade projects. Consumers/businesses are then obliged to pay the costs back over a period of 20 yr. on their electric utility invoice. These programs seem to be gaining favor and continue to grow, as shown by House Bill 1428, MD., “Public Utilities-Geothermal Heating and Cooling On-Bill Financing-Pilot Program,” initiated in February, 2013.

Third-party capital providers have emerged with programs such as “In-Electric Rate Funding,” introduced in January 2013 by Constellation Energy.

Geothermal Utility Services are a promising program that has been party to a market penetration of almost 40% of heating system replacements in Canada in 2011 according to the Canadian GeoExchange Coalition. Geothermal Utility Services, such as Canadian based GeoTility, and its US sister company, OrcaEnergy, cover the cost of the exterior geothermal ground heat exchanger/well system. The consumer then pays a one-time connection fee and a predetermined monthly utility charge to the geothermal utility. The consumer is then only concerned with the cost of the geothermal heat pump/chiller upgrade and is still eligible for many of the other programs mentioned, including the federal tax incentives (U.S.).

But, how much more do geothermal HVAC systems cost than standard HVAC systems? That subject is covered in the Commercial Conversation podcast, “Breaking New Ground With Geothermal.”

Briefly, standard HVAC systems may cost about $3,000/ton, compared with geothermal HVAC systems that may cost $5,000 to $6,000/ton at the lower range tonnage (less than 500 tons). As the tonnage goes up, the cost per ton goes down until, in many cases, a geothermal HVAC system can have a competitive first cost comparable to a standard HVAC system.

In other words, when a commercial entity takes advantage of federal incentives for geothermal HVAC systems, they are realizing essentially a 48% cost reduction benefit on the entire mechanical system. One can be reasonably assured that the resultant first cost of the system can actually end up being substantially less than the first cost of a standard HVAC system.

However, the federal incentives and energy efficiency of a geothermal HVAC system, though compelling, are secondary to some of the other tangible benefits of going geothermal. Consider the following advantages that can be attained only with geothermal:

  • Elimination of outdoor equipment
  • Storm proofing (geothermal equipment is sheltered from storm events)
  • Longevity of system (a result of all indoor equipment)
  • Elimination of fresh water consumption (from commercial cooling towers)
  • Elimination of fossil-fuel consumption (on-site)
  • Superior comfort in heating and cooling modes (more on this in future columns)
  • Enabling thermal load sharing (swimming pools, domestic hot water, HVAC re-heat)
  • System efficiency, as high as 40 EER.

You can see that we are in a favorable market with the many incentives for the implementation of commercial geothermal HVAC technologies. It does take a little legwork on the part of the contractor, engineer, and consumer. Construction professionals that up-sell to geothermal HVAC have all of these resources available to them.

Jay Egg is a geothermal consultant, writer, and the owner of EggGeothermal, Kissimmee, FL. He has co-authored two textbooks on geothermal HVAC systems published by McGraw-Hill Professional. He can be reached at jayegg.geo@gmail.com.

Igniting Creative Energy (ICE) Student Competition Marks 10th Year

Igniting Creative Energy ChallengeThe Igniting Creative Energy (ICE) Challenge, a national competition for kindergarten through twelfth grade students to share ideas about wise energy choices and environmental stewardship, is celebrating its tenth year. To mark this milestone, Johnson Controls and Kohler Co., the competition’s sponsors, announced the addition of ICE Water, a new category for the competition that aims to also educate student about water conservation.

Water efficiency is a growing concern. According to a 2008 study by the U.S. Environmental Protection Agency, nearly 36 states expect water shortages within the next five years. Accordingly, ICE Water will encourage teachers to include water into their classroom discussions about energy and natural resources.

A total of five Grand Prize winners, four student winners and one teacher will travel to the 2011 United States Energy Efficiency Forum (EEF) where they will share their winning projects with national leaders and energy policymakers. In addition to the national winners, the highest scoring student in each qualifying state or province will receive recognition as the State or Province winner.

The ICE Challenge is administered by the National Energy Foundation (NEF) on behalf of Johnson Controls and Kohler. NEF has served as the ICE education partner over the life of the competition and continues to help create awareness about the competition among teachers and students throughout the nation.

All ICE Challenge entries must be postmarked by March 4, 2011; submissions postmarked by February 18, 2011 will qualify for additional early bird prizes. ICE Challenge winners will be announced in late March 2011.

Kohler Rental powers, cools Gulf bird cleaners

Kohler Rental, part of the Kohler Co. (Kohler, WI) Global Power Group,  is providing temporary power and air conditioning services to wildlife rehabilitation centers located across several Gulf Coast states. The U.S. Fish & Wildlife Service, Washington, a bureau in the U.S. Dept. of the Interior, Washington, established wildlife M*A*S*H units following the Deepwater Horizon explosion and subsequent oil spill that has been occurring in the Gulf of Mexico off the coast of Louisiana since April.
   Included in Kohler Rental’s support effort is Fort Jackson Oiled Wildlife Rehabilitation Center, Buras, LA, an epicenter of bird rescue and cleaning operations located in Louisiana’s fringe coastal area, south of New Orleans. The center plays a crucial role in the effort to rescue, clean, and save the lives of hundreds of brown pelicans and other native bird species exposed to the crude oil that is polluting the Gulf of Mexico.
   Helping wildlife caretakers combat Louisiana’s summer heat and humidity, Kohler Rental has brought in portable air conditioning equipment and power generators to run the units and power the equipment used to clean the birds. Including additional wildlife rehabilitation centers and temporary housing for volunteers and workers located in Alabama, Florida, Louisiana, and Mississippi, Kohler Rental has been called upon to deploy nearly 30 high-capacity air conditioners and power generators in support of the oil cleanup efforts.
   “The men and women rescuing, cleaning, and nursing pelicans and other birds back to health in Gulf Coast states may not know Kohler Rental is onsite. And we’re not running the wildlife rescue camps. However, the people who do operate the rescue centers reached out to Kohler Rental and it’s our mission to climate control the rescue camp and deliver additional power. By providing a more comfortable working environment, Kohler Rental helps keep workers at their best throughout the countless hours spent caring for the helpless birds,” said Mike Nasif, general manager, Kohler Rental. “Kohler Rental is involved in something a lot bigger than Kohler and fortunately what we do—providing for temporary climate control and power needs—can make a difference. It has been awe-inspiring to see the passion and dedication of the people we support as they save wildlife affected by this environmental disaster.”

The Fort Jackson Center’s role in the crisis
Brown pelicans and similar bird species get oiled as they float on the surface of Gulf of Mexico waters or when diving for fish. Once oiled, the pelicans can lose the ability to fly, dive for food, or even float on the water. In some cases, an oiled bird will die of hypothermia or become ill as a result of ingesting oil while grooming themselves.
   If found and rescued in a timely manner, oil-coated birds have an extremely high survival rate after receiving care at bird-cleaning camps. Upon arrival, each bird is given a physical and time to de-stress. Removing a bird’s oil-coat involves meticulous scrubbing with household dishwashing detergent, followed by a rinse and dry. Prior to being released into wildlife refuges located away from the Gulf, birds at Fort Jackson are placed in outdoor aviary pens, referred to as Pelican Island, for observation, recovery, and rehabilitation.—Gary L. Parr

Trane recognizes six for energy efficiency

Trane Inc., St. Paul, MN, recently presented its Trane Energy Efficiency Leader Award to six customers. The customers, located in six countries, were recognized for doing dynamic work to link the physical environment of their buildings and assets to their business outcomes. The award is presented to customers across all sectors, including healthcare, education, retail, grocery, government, industrial, and commercial real estate.
   Award recipients leverage improvements in building design, renovation, construction, and operations to achieve real business outcomes, such as lowering energy and operating costs, reducing tenant turnover, creating better learning environments, and achieving improved patient outcomes.
   Award recipients were:

  • Ivory Properties Group and GH Consultants Sdn. Bhd., Penang, Malaysia, for development of the Penang Times Square shopping mall. The mall was initially designed to include a conventional air conditioning system. Ivory Properties Group, with support and advice from GH Consultants Sdn. Bhd., instead opted for a more energy efficient Trane chilled-water system. The system is expected to achieve 0.63 kW/ton system efficiency on an annual basis and will be 30% more efficient than conventional chiller plants found in typical commercial buildings in Malaysia.
  • Macalester College, a private college in St. Paul, MN, with 163 full-time faculty and nearly 2,000 students, was recognized for a campus-wide dedication to efficiency and sustainability. This effort led to significant energy saving upgrades on campus. Upgrades included a chilled-water system plant, an Eco House (on-campus green living experience), and the construction of LEED Platinum-certified Markim Hall. Markim Hall, which opened in July 2009, is a $7.5 million, 17,000-sq.-ft. facility housing the college’s Institute for Global Citizenship. The building is the first higher education facility in Minnesota, and one of the first nationwide, to receive the highest level of LEED certification. Energy simulation models predict that Markim Hall will use nearly 80% less energy than a standard building in an equivalent climate.
  • Monterrey Tec is a private, independent educational institution with more than 8,500 teachers serving more than 90,000 students at the high school, undergraduate, and post-graduate levels at its 31 campuses in Mexico. Based in Monterrey, Mexico, the school is recognized for recent infrastructure improvements that significantly reduce annual energy consumption. As a result of the upgrades, the university has created a more comfortable teaching and learning environment while also reducing energy consumption by 13% to 15% year.
  • The P.P. Porty Lotnicze Terminal at Warsaw Chopin Airport, Warsaw, Poland, serves nearly half of the passenger air traffic in Poland. The P.P. Porty Lotnicze Terminal features high-performance infrastructure systems that make the state-of-the-art terminal operationally and energy efficient, while at the same time providing visitors and workers with a comfortable environment. It is estimated that during the first 10 years of operation the infrastructure systems will save enough energy to power a city of 11,000 people for one year.
  • Tishman Speyer received an award for development of the Castelo Branco Office Park in São Paulo, Brazil. Because of the investments in efficiency, the 1.1 million-sq.-ft. site provides the same quality and technology of premium areas of the state capital, but at less cost. The office park encompasses a 27-acre site that includes six towers, a horizontal corporate space for parking and services, and state-of-the-art buildings using the latest technologies in climate-control solutions.
  • Transitions Optical, Galway, Ireland, the optical industry’s top photo-chromic lens manufacturer, recently completed upgrades to its plant that are generating €144,000 in annual energy savings and reduced the energy required to produce each lens by 50%. Automation has saved Transitions Optical €432,000 over the past three years, saving enough electricity to run the plant for three additional days every month.

   This group of recipients makes a total of 25 Trane customers who have received the Trane Energy Efficiency Leader Award in the past year.—Gary L. Parr

Tool predicts building energy use

The American Institute of Architects (AIA), Washington, announced a tool that predicts a project’s energy use and project modeling. “This tool is a valuable resource for architecture firms and will be used on their entire portfolio, not just for projects seeking green building certification,” said AIA president, George H. Miller, FAIA. “The tool was specifically developed to be simple to use and to be used by firms of all sizes on a variety of building types, large and small.”
   The tool is available by participating in the AIA’s voluntary 2030 Commitment Program. The program asks architecture firms, and other entities in the built environment, to pledge to develop multi-year action plans and implement steps that will advance the AIA’s goal of producing carbon-neutral buildings by the year 2030.
   The Excel-based reporting tool requires the user to enter project use type, gross square footage (GSF), and predicted energy use intensity, in addition to answering some basic yes/no questions such as, Is project Interior only? Is the project modeled?. Based on that information, for modeled projects, the tool will automatically calculate the national average site energy usage index (EUI) for that project type and the project’s percentage reduction from the national average EUI toward meeting the firm’s 2030 goal for the current year (currently 60%). For non-modeled projects, users enter the design standard or code and the sheet will calculate the project’s contribution toward the firm’s 2030 commitment.
   The Excel tool will generate three easy-to-decipher graphs that aggregate the individually listed active projects within the spreadsheet. These three graphs will constitute the report that firms will forward to the AIA under the 2030 Commitment Program. The three charts will show a snapshot of the firm portfolio including the percentage of GSF:

  • of active projects meeting the current reduction goal
  • being modeled
  • for which the firm will gather actual energy performance.

   Firms are asked to track all active design projects for the reporting year, not just those that are seeking green-building certification. Reports developed with the tool are meant to provide a year-to-year summary of a firm’s work. Firms of all sizes and building type expertise will use the same tool and report in the same manner.
   The tool can be used for any type of building project and was developed through a collaboration between members of the AIA Committee on the Environment, AIA Large Firm Roundtable, AIA Chicago Chapter Working Group, and individuals from AIA member firms.—Gary L. Parr

GE, Lithonia Lighting want better school lighting

GE Lighting, Cleveland and Lithonia Lighting, Atlanta, have combined efforts to help schools improve their classroom lighting quality and cut energy costs by as much as 50%. The information-delivery vehicle for this new effort is a website at www.BetterLightingBetterSchools.com.
   According to the press release: “Better quality, more controllable and efficient lighting is an investment that ought to be on the radar screens of school districts across the U.S. this year. Superintendents, business managers, and school boards can take a meaningful step toward extraordinary, lasting lighting energy savings—and improved, more flexible learning environments—by visiting www.BetterLightingBetterSchools.com.”

GE and Lithonia's www.BetterLightingBetterSchools.com website is a new resource aimed at helping schools improve lighting and cut energy costs.

   The site provides a spectrum of information about how schools can improve lighting energy efficiency. It features a lighting audit request form tied to the introduction of energy-efficient Class Pack Lighting Systems from GE Lighting and Lithonia Lighting. By installing Class Pack Lighting Systems, schools can reduce annual lighting-related energy costs as much as 50%.
   “We want to help school districts across the country understand the significant opportunity that today’s energy-efficient lighting systems can provide,” said Jason Raak, a marketing manager with GE’s lighting business. “Recent new product advancements make current high-performance lighting far superior to systems installed just five years ago, and payback periods are shorter than ever.”
   Qualified school representatives can use www.BetterLightingBetterSchools.com to request a school or district-wide energy audit (restrictions apply). Visitors to the site will see a host of supporting statistics and details on how school executives can reduce the cost to renovate facilities by using NEMA premium ballasts and CEE qualified HPT8 lamps which, in many regions, can defray initial costs through utility rebate eligibility.
   The Class Pack Lighting Systems combine high-light-output, full-spectrum fluorescent lighting with a ballast system that delivers customized lighting levels on a two-lamp platform. With fewer, longer-life components, it minimizes maintenance and lamp replacement costs. It’s designed for fast, easy installation after school is out for the day or during summer renovations.
   “We think BetterLightingBetterSchools.com provides school districts with many of the resources needed to make smart financial decisions about lighting and energy savings,” said Monik Mehra, director of marketing, Lithonia Lighting. “It’s a vital tool at a time when school districts have to do more with less, while striving to improve the quality of their students’ learning experience.”—Gary L. Parr

DC power: Coming soon to an office near you

There’s a movement underfoot to bring DC power to commercial building interiors. Members of the EMerge Alliance agreed upon a standard, but the announcement last month didn’t make much of a splash in the press. To tell you the truth, I put the press release aside until this week when I spoke with alliance chair Brian Patterson of Armstrong World Industries. He filled me in on the year-old organization, the work it is doing, and the implications of this standard. EMerge Alliance Standard Flow Chart For instance, building owners soon could find it easier to reconfigure space for new tenants.  Instead of rewiring a floor, owners can plug light fixtures into the ceiling grid. They’ll move fixtures around as easily as furniture. Facility managers will be able to integrate native wind energy into their buildings without first converting it to alternating current.
The statement from the alliance said the standard establishes a more efficient means of powering digital, DC-powered devices, such as sensors, lighting, and IT equipment. It creates an integrated, open platform for power, interior infrastructures, controls, and peripheral devices to facilitate the hybrid use of AC and DC power within buildings.
EMerge Alliance members favor the use of 24-V DC power, which allows for a “plug and play” approach to rewiring, said Patterson. He added that low voltage no longer equates to low performance.
Founding members are Armstrong World Industries, Johnson Controls, Nextek Power Systems, Osram Sylvania, and Worthington Armstrong Venture. Convia, Creston Electronics, Herman Miller, Lutron Electronics, Southern California Edison, Steelcase, and Tyco Electronics are among the participating members. The not-for-profit organization seeks additional members.
The alliance is establishing a third-party registration and evaluation program for labeling products based on the standard. The program is scheduled to begin this fall. Standard-compliant devices will be branded with the EMerge designation.
Check out the EMerge Alliance website for more informational, including a 3-minute instructional video. If you are attending Greenbuild in Phoenix next week, stop by the Alliance’s booth 2252. — Jim Carper

Kick some rooftop unit “tires” on this tour

The Lennox Rooftop Unit Rollout Tour lets you kick some HVAC-system "tires."

The Lennox Rooftop Unit Rollout Tour lets you kick some HVAC-system "tires."

If a new rooftop unit is at the center of an upcoming HVAC-system project, you can do a little “tire kicking,” compliments of the upcoming 2009 Rooftop Unit Rollout Tour, offered by Lennox Industries Inc., Dallas. The tour allows specifiers to compare the benefits of various manufacturers’ HVAC systems, including energy usage, control-system intelligence, dehumidification, and comfort control. The tour will also include the Lennox Energence rooftop unit line, said to be the industry’s most energy-efficient light commercial unit.
   The tour will stop in 17 cities across the U.S. and Canada during November and December. Each stop on the tour will include product displays, refreshments, door prizes, and a chance to win a trip to Greece.
   Scheduled stops are:

  • November 3: Dallas and Toronto, Ontario
  • November 5: Kansas City, KS, and Montreal, Quebec
  • November 10: Denver
  • November 12: Boston and Los Angeles
  • November 17: Parsippany, NJ, and Phoenix
  • November 19: Columbus, OH, and Sacramento, CA
  • December 1: Chicago and Portland, OR
  • December 4: Atlanta
  • December 8: Charlotte, NC, and Vancouver, BC
  • December 11: Calgary, AB

   Registration, location, and time information is available at www.lennoxcommercial.com.—Gary L. Parr

Overcoming my green guilt

Three months ago we started a kitchen remodeling project. That action tipped the first domino in a long line of those little black rectangles. Since the kitchen, dining room, entry hall, and living room are all on one floor, and because no home project can be simple and defined, we’ve ended up remodeling the entire floor. Part of that project involved removing the carpet from the living room and dining room floors so we could enjoy the hardwood floors that lie beneath.
   With that background, here’s where my green guilt comes in.
   This past Friday I helped our waste removal specialist toss several rolls of old carpet into his mechanized trash transporter. Since I write and read about sustainable building materials every day, all that went through my mind, as I heaved rolls of carpet into that bin, was whether I should have made an effort to find some kind of carpet recycling pickup service instead of allowing the carpeting and foam padding to go to the landfill. I felt guilty.
   Yesterday I had an opportunity to communicate with the good people who do public relations for Dow Chemical Co., Midland, MI, and their carpet backing manufacturing plant in Dalton, GA, which uses Dow’s LOMAX technology process to manufacture latex carpet-backing material. I’d heard the story before, but I’ll tell it again so others can learn and because it helps me with my guilt.
    At the Dalton, GA, plant, the process annually uses 160 billion BTU of methane gas from landfills to produce carpet backing material. According to the Dow people, using the methane as an energy source reduces annual CO2 emissions by approximately 20 million lb. and replaces more than 200,000 barrels of black gold. The Dow people also claim that their carpet backing products can represent as many as five points under the renewable-energy section of the new NSF 140 Carpet Sustainability Standard (NSF Int’l, Ann Arbor, MI). Carpets certified under the NSF standard are eligible to receive a half to two LEED innovation points. I could list several other features/benefits about the LOMAX technology, but you get the idea—it’s green good.
   Now that my LOMAX knowledge is refreshed, my guilt level is greatly reduced because I can rationalize that maybe the rotting carpet I should have had recycled will do some green good by generating methane gas to power some Illinois entity.—Gary L. Parr

DOE Retrofit Ramp-Up program going fishing

Maybe it’s my cynical mood today, but the recently announced $454 million DOE Retrofit Ramp-Up program, even though it’s in its information-gathering phase, seems to be little more than a fishing expedition. The program is described as being designed to “catalyze a nationwide upgrade that experts estimate could save $100 million annually in utility bills for households and businesses.” That part sounds good. What makes me wonder how well thought out this effort is are vague phrases such as the “program will pioneer innovative models for rolling out energy efficiency,” and “will support large-scale models that can open new energy efficiency opportunities to whole neighborhoods, towns, and, eventually, entire states.”
   The announcement is, technically, a Request for Information, designed to generate ideas/feedback for how to spend this money. The announcement was made on Sept. 14 and the feedback period ends Sept. 28. In that timeframe, if you want to provide legitimate input, you either have to already have a plan cooked up or be willing to burn a lot of midnight oil.
   According to Energy Secretary Steven Chu, “The aim of the ‘Retrofit Ramp-Up’ program is to jump-start an industry that makes energy efficiency savings easy to access and available to everyone. By encouraging partnerships between local governments and effective private enterprises, we hope tune-ups for buildings will become as accepted as tune-ups for cars.”
   We’ll see. Sounds to me more like putting $454 million worth of baited hooks in the water and hoping we hook something bigger than a bluegill.—Gary L. Parr