Research suggests HVAC contractors installing geothermal technologies could be in line for an increased workload. In terms of revenue, the global geothermal heat pump market was valued at $55.3 billion in 2013 and is anticipated to reach $130.5 billion by 2020, per Transparency Market Research.
“Geothermal HVAC systems are becoming common features of eco-friendly homes as part of the growing green-building movement,” said Jay Egg, president, Egg Geothermal, Port Richey, Florida. “Green projects accounted for 20 percent of all newly built homes in the U.S. last year.
“The premium for installing a geothermal HVAC system is mostly contained in the cost of the geothermal source — the ground heat exchanger/well system,” continued Egg. “The geothermal heat pump installation is comparable to a high-efficiency heat pump installation in cost, when subtracting the cost of the geothermal loop/well source. Taking into consideration the current 30 percent U.S. federal tax credit [for residential geothermal installations and 10 percent federal tax credit for commercial installations], this will begin to make the installation of geothermal HVAC systems more fiscally attractive than ever before.”
“I think it’s always good to give customers options,” said John Bailey Jr., senior vice president of sales, ClimateMaster Inc. “I strongly believe in a good-better-best selling strategy. Geothermal gives the consumer the best option. Secondly, satisfaction rates run extremely high for geothermal systems and provide the green component many customers are looking for.”
Understanding the Market
As geothermal continues to grow in popularity, it’s important for contractors to be properly trained in geothermal installations and functionality.
“One of the realities of the ground-source heat pump (GSHP) industry is that, to some degree, it has been a victim of its own success,” said Kevin Rafferty, author and consulting engineer. “Years ago, the struggle was to simply get design teams to consider using the technology. Though this is still an issue in some areas, nationally, it’s far less of an issue than it was 20 years ago. There is now fairly wide recognition of the benefits of GSHP systems, particularly on the part of building owners in the schools and office building sectors, where the technology has achieved its highest penetration rates. However, there also is a widely held view that anything bearing the name ‘geothermal,’ ‘ground source,’ or ‘earth energy’ will produce the desired high efficiency and low operating costs. As a result, poorly designed systems are often installed, and building owners’ expectations are unmet.”
Joe Parsons, COO, EarthLinked Technologies Inc., said getting into geothermal is not as difficult as some originally assume, though, many misconceptions still exist.
“As geothermal HVAC manufacturers, we fail to grasp the breadth of the dealer base out there who have no idea what geothermal really is,” said Parsons. “We try to show them that geothermal, when used properly, offers a real advantage. Consumer awareness of geothermal is growing higher and quicker than contractor awareness is. Our communication to contractors is that you need to be ready for a market that is ready to emerge and grow.”
A lot of contractor trepidation surrounding geothermal stems from the increased upfront cost of a geothermal system as compared to a more traditional unit.
“We are constantly finding ways to address [concerns about upfront installation cost],” said Craig Lazinsky, marketing program manager at Bosch Thermotechnology Corp. “Especially with new developments, we are working with builders to equip their homes with geothermal, starting with the loop installation. The first cost of drilling wells can be spread out over all the homes in the development. A well driller can do the work and then have the cost of installation, as well as maintenance, billed back to homeowners over a number of years. Often, the billing may be lower than utility bills with a conventional HVAC system.”
Geothermal Training Opportunities
Geothermal manufacturers offer several unique ways to train and educate contractors. Bosch, for example, recently announced its sponsorship of a National Geothermal Day campaign, an educational program combining community-based events, seminars, and media-rich resources. The website for the campaign will feature information and activities relating to geothermal heating and cooling along with an educational video and interactive children’s activities.
“The campaign really came about because Bosch is constantly challenged with educating contractors of the benefits of geothermal energy,” said Lazinsky. “We are often hearing resistance to geothermal in some form. First cost is a constant issue, but we tout efficiency and the long-term benefits and energy savings with geothermal systems. With this campaign, we are trying to start a dialogue with a much broader base, including builders, homeowners, the media, and tomorrow’s generation. We want awareness by all.”
Bosch does not stand alone in its efforts to raise awareness. ClimateMaster Inc. offers technical training through its manufacturer representatives, and Earthlinked holds at least one technical training session for contractors per month at its base in Lakeland, Florida.
“We show contractors a business proposition for selling geothermal,” said Parsons. “We focus on sales training, installation training, and technical training. Our training really encompasses the total installation of geothermal and the importance of selecting the right system. A lot goes into it, but, we feel, given an understanding of basic HVAC industry technology, contractors can come away from two to three days of training ready to install systems.”
This year, as the company brings on new contractors, it is sending out contracted employees to be on the job with contractors for their first geothermal installation to make sure they understand the process.
“Fear is the biggest thing holding contractors back as they overestimate and don’t have confidence during that first install,” said Parsons. “Having one of us there to help and answer questions is very important to raising the confidence levels of contractors.”
WaterFurnace Intl. Inc. has operated its Future Leaders In Geothermal HVAC Technology (FLIGHT) School since February 2014. The program has a stated goal of educating anyone in the industry who interacts with a consumer on why geothermal is a viable and affordable option.
“The key result we drive home in FLIGHT school, which is a highly interactive seminar, is that contractors drive the geothermal conversation,” said Bret Ross, WaterFurnace regional manager. “The cornerstones of the seminar are the questions we present. What do consumers truly want? What are they buying? We have to show students what customers want. Contractors will generally tell you consumers want the cheapest thing available. The reality is consumers want the absolute best they can afford. We must demonstrate the true cost of geothermal ownership. Let us demonstrate what will happen to a family’s cash flow over a longer period of time. The cash flow impact of geothermal to a consumer is nowhere near what it is perceived to be.”
In fact, per Energy Environmental Corp., a typical 2,500-square-foot home, with a heating load of 60,000 Btu and a cooling load of 60,000 Btu, will cost between $20,000-$25,000 to install and can reduce utility bills by 40-60 percent. The payback for a system can range from two to 10 years, while the lifetime of a system can be 18-23 years. “What we find is contractors who weather the first few installations, learn the lessons, and capitalize on what they learned will get the most out of FLIGHT school,” said Ross. “Geothermal gets into their blood, and they become passionate about it. The lessons learned in FLIGHT school are then sustained, and they see great results.”
“The FLIGHT school itself is growing quickly, as well,” added Ross. “When we started the initiative, a few people were coming to class, but, now, demand is such that we’ve gone from one instructor to three. We have requests from all over the country. It is currently contained to the WaterFurnace dealer network, but it is information that ultimately should be shared with the entire geothermal industry.”
Publication date: 3/23/2015