Geothermal energy is an effective marketing tool in energy-efficient and net-zero homes. But the technology’s complicated laws and installation process can sometimes overwhelm builders.
According to a 2015 NAHB survey, 84 percent of Millennials are willing to pay extra for an energy-efficient home, but only 25 percent of builders are offering some form of residential renewable resource such as solar or geothermal energy. That’s a quite a gap in supply and demand.
Geothermal energy can help you reach that large, lucrative share of Millennial homebuyers who are willing to spend more on an energy-efficient home. But understanding the legislation surrounding the tech and its installation process is the first step.
“Geothermal legislation has started in the northeast corner of North America, with Ontario and New York State being the real frontrunners. You’ll be able to watch over the next few years, by 2020, as this technology begins to blanket the entire country,” says geothermal consultant Jay Egg.
Egg owns his own business, Egg Geothermal, and regularly consults domestic and international governments about the benefits of geothermal heating and cooling.
With his expert guidance, TecHome Builder breaks down the installation process, legislation, struggles and benefits of geothermal HVAC technology.
Geothermal’s Process and Potential
“One of the things that people don’t realize about geothermal heating and cooling is that geothermal is fundamentally a solar technology,” says Egg.
Geothermal pipes harvest heat that is trapped underground, which is supplied through solar thermal energy. Geothermal is installed by digging a large trench, then filling the new space with coils that harvest thermal energy. Once the coiled loop-field has been installed, the builder installs and calibrates the equipment indoors.
Builders can install residential geothermal systems in a range of styles and designs that meet the needs of homebuyers in different regions and climates. When building near a body of water or on a property with well water, builders can install an open-loop system that harvests heat from the water. A closed-loop system is the most popular system, due to being cost-effectiveness when compared to open-loop systems.
Installers rely on the more expensive, open-loop method when there is no other alternative or when a body of water is close to the home. For example, if building a home on a mountainous lot, builders could rely on the open-loop because there may be less flat, usable land and more water sources nearby. Builders should consult with local installers to maximize installation and usage efficiencies.
The biggest benefit of geothermal systems is the increased efficiency and energy savings when compared to traditional systems. According to the Energy.gov, geothermal heat pumps use between 25 to 50 percent less electricity than conventional HVAC systems.
Expiring Federal Subsidies and Legislation to Watch
One of the biggest disruptors to the industry builders should be focusing on is the 2009 federal tax credit program, according to Egg. It affords federal grant money to renewable energy sources such as wind and solar.
This stimulus package is set to expire at the end of this year, which Egg describes as a “nail-biter for the entire industry.”
Builders need to pay attention to this potentially expiring piece of legislation, because without a federal subsidy, builders and installers will see a significant rise geothermal installation costs.
The sweeping federal law is just the tip of the iceberg. Builders in certain efficiency-minded states are eligible for significant savings on top of the federal initiative. According to Egg, almost every state in the U.S. has some form of geothermal legislation that compliments the federal law, with some states being more aggressive than others.
“New York took it a step further than other states by passing a law in January that mandates that every public building in New York City, when the HVAC system needs to be replaced or in new construction, must be geothermal,” says Egg. New York State is working on similar legislation. By 2020, the state aims to reduce 80 percent of its carbon emissions.
On the international level, Canada has passed a climate action plan that mandates by 2030, heating and cooling in new construction must be non-combustible. “The only way to heat a building just with electricity in a climate as cold as Canada’s is to use a geothermal heat pump.” says Egg.
Increased attention from governments could lead to more subsidies and greater savings for builders looking to install geothermal.
What Builders Should Consider: Cost and Lifespan
But as it stands now, the biggest barrier is geothermal’s cost when compared to traditional heating and cooling systems.
“The premium for geothermal comes from installing the infrastructure for the heat-exchanger,” says Egg. In layman’s terms, Egg is referring to putting the pipes in the ground and hooking the system up to the house.
That increased cost, however, is reflected in the extended lifespan of geothermal systems. Some of them are warrantied for decades. Builders could market geothermal as a long-term investment to the home’s energy-efficiency needs, which could seal the deal among green-minded homebuyers.
“The good part is that when you put that heat-exchanger in the ground, it is made out of high-density polyethylene (HDPE). And HDPE is warranted by manufacturers for 50 years. The federal government says there’s no reason it won’t last 60 years, and the pipe manufacturers say it’s a 300-year product,” says Egg.
There is nothing known to man that is a solvent to or that will adhere to HDPE, according to Egg.
This means that once the geothermal system is in the ground, it’s in there for generations.
Part 2 of this series will dive deeper into HVAC integrations and other state laws to watch!
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