ACHRNEWS

Geothermal Companies Predict Growth

July 25, 2011

The geothermal industry has continued to grow in name recognition in the last decade due to its energy-savings systems and the green movement.

The tools of the trade and training are readily available to HVAC contractors - but has the general public truly embraced geothermal technology? “Adoption of geothermal is growing every year,” said Tim Litton, director of marketing for WaterFurnace International. “That’s reflected in both sales and the metrics we use to measure interest. In addition to increased sales, we’ve seen a steady increase in geothermal-based searches online. Social media is also reflective of the trend with a number of mentions and discussions daily.

“Once a consumer understands that geothermal very often provides a positive cash flow and a tremendous return on investment, it’s much easier to offer.”

All it takes is an education on geothermal to get people interested, according to Tony Landers, director of marketing, Commercial Products for ClimateMaster. “Once the consumer is educated on the benefits of geothermal, it is likely that they will embrace this technology. Among the many benefits are saving on electricity bills, tax credits, and having an environmentally friendly system in their home.

“Geo is definitely becoming more popular as gas prices increase. Everyone is trying to find a way to not be as dependent on fossil fuels. Initially, there is usually some pushback when talking about the installation costs of geothermal. This is why it is so important to educate the consumer about the long-term savings.”

ALL ABOUT EDUCATION

Though geothermal has so many positives, are people educated enough to make a buying decision regarding geothermal?

“Although awareness is increasing, there are still a lot of misconceptions among the public,” said Litton. “We’re focused on trying to provide educational materials on our website and information through our social media channels. The case for geothermal is pretty strong throughout the country, so it’s usually a matter of explaining its benefits.”

Thanks to social media, the word has been getting out. Consumers are learning about the benefits of geothermal before picking up the phone to call a local contractor. “I feel customers are embracing geothermal technology in much greater numbers than ever before,” said B. Paul Svoboda, area sales manager for Bosch Thermotechnology. “We are now seeing new trends in the field. Customers are educating themselves before they have a contractor give them an estimate, and with tax credits and financing the initial cost has become less of an issue.”

And speaking of tax credits, consumers can qualify for a tax credit of up to 30 percent of the installation costs for a geothermal heat pump, which is in effect until 2016 - another good selling point for geothermal. With these federal tax credits on geothermal installation costs, the return on investment (ROI) can sometimes be less than three years. In addition, some states are offering tax incentives as well. More information can be found at www.dsireusa.org.

“At ClimateMaster, we have pursued educating the public from two directions,” said Landers. “First, we are targeting the consumers via print media, Internet sources, and our website to raise the awareness of geothermal. Overall the response has been very positive and encouraging. Secondly, we are educating our dealers since they are the ones visiting the homes of consumers. The industry needs to concentrate on educating the end user to add fuel to this fire.

“We need both well-trained contractors and drillers to successfully install a geothermal system. By working closely with our distributors, service and install trainings, as well as drilling trainings, are conducted on a regular basis.”

Svoboda said that as consumer interest gains momentum, the number of HVAC contractors offering geothermal products will grow proportionately. “I see the trend for contractors will increase dramatically over the next few years,” he said. “Contractors will add to their product mix as customer interest and education increases. Contractors want to sell what the customer asks for.”

Landers added, “As the interest from consumers grows, contractors offering geothermal will as well. Healthy margins and a product that’s good for the community is hard to ignore. More contractors are offering geothermal than ever before. We have seen in many instances where a dealer will convert their business exclusively to geothermal.”

NEW GEOTHERMAL TECHNOLOGY

Litton said that geothermal is advancing as technology grows. “From variable-speed products to smart grid and communicating equipment, geothermal is utilizing new technologies,” he said. “The typical geothermal customer is still (ironically) considered an early adopter, so the new technologies play very well to that. The loop is also an area of great interest to manufacturers, as it represents a significant portion of the installation costs. We’re always looking for new ways to install it or make it more efficient.”

“As an industry, we have had many innovations over the past few years,” said Svoboda. “The introduction of unloading compressors and ECM motors has greatly increased the efficiency and reliability of our equipment. For the future I see the improvement of heat exchanger design and controls to be the prime innovations in the coming future.”

Smaller footprints may affect installation costs and may change the physical size of a geothermal loop system. But according to Svoboda, contractors and consumers should be aware of the space needed for a geothermal system. “In most cases, it takes a large area to install ground loops,” he said. Larger areas are usually associated with rural communities and Svoboda noted that one of the fastest growing regions of the United States - the Midwest - is a prime example of the rural growth of geothermal.

“The Midwest area of the country is and will be the fastest growing area for geothermal,” he said. “Several factors help drive this growth. Rural electric co-op rebates and state grant programs make geothermal, in many cases, less to install than conventional equipment. The low unemployment rate in the Midwest also contributes to this growth now and in the future.”

Litton said that geothermal popularity will continue to grow across the United States in spite of some initial pushback to installation costs. “Cost has historically been a barrier to adoption, but tax credits and incentives available around the country have helped reduce the issue,” he said.

Svoboda summed up the appeal of geothermal from a national economic standpoint. “The real key to this technology is the fact that each geothermal unit installed in the U.S. creates jobs,” he said. “In addition to creating American jobs from manufacturing to installation, it is a renewable source of energy that saves our electric grid and the customers check book. Our energy independence is right under our feet.”

Sidebar: Geo Legislation

In its June 2011 report to members, the Geothermal Exchange Organization (GEO) reported that on May 26, 2011, Sen. Jon Tester (D-Mont.) introduced S. 1142 in the U.S. Senate, with co-sponsors Harry Reid (D-Nev.) and Lisa Murkowski (R-Alaska). The legislation offers a broad support of geothermal energy development, amending the Energy Independence and Security Act of 2007.

GEO noted that, “Besides promoting geothermal power and direct use resources in the United States, the Tester bill recognizes that, “Geothermal heat pumps and direct use of geothermal energy, especially in large-scale applications, can make a significant contribution to the use of renewable energy but are underrepresented in research, development, demonstration, and commercialization.”

GEO said that as an organization, it stands in full support of the measure, adding, “For geothermal heat pump systems, the legislation seeks to improve the components, processes, and systems used for geothermal heat pumps and the direct use of geothermal energy and increase the energy efficiency, lower the cost, increase the use, and improve and demonstrate the applicability of geothermal heat pumps to, and the direct use of geothermal energy in, large buildings, commercial districts, residential communities, and large municipal, agricultural, or industrial projects.”

Publication date: 07/25/2011