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The good news is that a sharp slowdown in nonresidential construction spending in the near term is improbable, especially if Congress acts to keep the nation from falling off the approaching fiscal cliff, said ABC’s chief economist Anirban Basu. “However, the outlook remains roughly flat for private nonresidential construction spending in the U.S.”
Geothermal heat pump (GHP) systems seem to be bucking this trend, though, as most manufacturers state that sales of commercial equipment are increasing.
Sales Amid Skepticism
“Our commercial sales have continued to grow despite this recent downturn in the economy,” said Alan Niles, Western region commercial sales manager, WaterFurnace International. One reason for that, he added, is that federal tax incentives continue to play a positive role in the industry, and many of the federal tax incentives for commercial ground loops do not expire until the end of 2016.
Those federal tax incentives include a 10 percent investment tax credit (or grant) to businesses that install GHP systems, as well as a five-year depreciation period, which makes geothermal technology more attractive to building owners and operators.
The federal tax incentives are definitely having a positive impact in the commercial market, noted Tony Landers, director of marketing — commercial products, ClimateMaster. “While geothermal systems are increasing in acceptance, it is still a battle to convince some developers to change their cookie-cutter approach to system design and reengineer their HVAC design to include geothermal. Many times conventional systems are installed simply because a particular developer has always used conventional systems.”
Sean Piekaar, sales manager, Modine Geofinity, agrees with this assessment, noting that engineers often lack awareness, knowledge, and/or understanding of geothermal technology, which may lead them to choose more conventional HVAC equipment. However, he added, experienced designers find that buildings utilizing geothermal technology can often cost less to build than other HVAC options.
“There are significant savings due to reduced mechanical space needs thanks to the elimination of boilers and cooling towers. Because the components of a geothermal system can be installed anywhere, they can also reduce the required capability needed for rooftop equipment and the associated high maintenance and structural costs that accompany such products. A positive side effect of these space savings is the decrease in square footage requirements allows architects more freedom designing buildings that no longer require a flat roof. More windows can then be added, or exterior walls can be moved or reshaped.”
Piekaar noted that by utilizing geothermal technology, building owners can also create an environment that supports the stewardship of the earth. “The private industry is increasingly looking for ways to demonstrate its concern for the environment through actions that give it an image of being green.”
Given the growing awareness of the positive impacts of this technology, GHP systems are now typically included as a system choice in most preliminary HVAC design discussions, said Robert Koschka, systems engineer, engineering solutions team, FHP/Bosch Group. “A lot of commercial jobs that would have gone to a different system in the past to be converted to geothermal in the last couple years. Projects that make it to the construction phase are usually with owners who have seriously considered the long-term savings they will see in operation and maintenance costs compared to conventional equipment. We are also seeing building resale value becoming a consideration during the economic discussions.”
While federal tax credits may convince building owners and managers to take a closer look at GHP systems, they are also interested in their increasingly high levels of energy efficiency and flexibility. Indeed, Niles noted that the energy efficiency of the individual water-source heat pump (WSHP) has increased significantly over the past 10 years, which not only reduces the operating cost for cooling and heating but dramatically impacts the size and the first cost of the commercial ground loop.
“Consider that in a 200-ton commercial project — with commercial projects typically being cooling dominated — the difference between a system with 15 EER WSHPs and one with 20 EER WSHPs could result in as much as a 25 percent reduction in the size of the ground loop and a first cost savings of $200,000. Ground loop systems have become economical for a much wider range of commercial projects.”
Another important trend in the commercial geothermal market is the hybrid system design, added Niles. “Many commercial buildings operate at only 60 percent of their peak cooling load for 85 to 90 percent of the hours in each year. By installing only 60 percent of the total size of the ground loop and adding an additional heat of rejection device or an additional heat of addition device, the building operates 85 to 90 percent of the hours of the year as a high-efficiency geothermal system, while reducing the first cost of the ground loop by 40 percent.”
Koschka noted that using a hybrid design that utilizes cooling towers or fluid coolers to dump excess heat allows engineers to design the ground loop to the heating load and saves installation money as well as ground area. That is probably one of the reasons why sales of Bosch’s water-to-water heat pumps (WWHP) are up, because “high-efficiency projects are being designed to replace existing chillers. This allows the owner to take advantage of the commercial tax incentives of geothermal and still have a chilled water system.”
Building owners are also taking advantage of the ability of GHP systems to use or capture heat for other purposes in the building, said Landers. “Whether it is domestic hot water, pre-heating water for laundry services, snow melt, or radiant floor heating, the building loop can easily and efficiently move the heat around the building.”
Indeed, a geothermal system is the ultimate energy transportation system, noted Niles, with WWHPs regularly added to commercial projects to provide domestic hot water, snow melting, and in-floor radiant heat. “Exhaust air is often used as a source of free heat for geothermal systems, so even non-HVAC related devices, such as ice-making machines and refrigerated cases, can be connected to the geothermal system. Really, any part of the building or any device in the building that needs heat or needs to reject heat can be connected to the geothermal system.”
Going forward, manufacturers hope that energy-efficient equipment and federal tax credits will continue to spur interest in commercial geothermal equipment. “If I were a building owner, I would strongly consider installing a geothermal system before the 2016 deadline,” said Koschka. “Even though the installed costs of a geothermal system compared to other systems will always be a challenge, the financial advantages are extremely beneficial.”
But getting that word out to building owners and managers will continue to be a challenge, noted Niles. “With over 50 years of geothermal commercial installations, there are still design engineers, business leaders, and government policy makers that have little knowledge about this renewable energy resource, or else they have incorrect information that can lead to poor decision making. Fortunately, as more customers request high-efficiency systems, more design engineers will learn how to professionally design geothermal systems effectively. The biggest challenge for the commercial geothermal market is training those design engineers.”
Publication date: 10/8/2012