Tax Credits, Fuel Prices Concern Geothermal Manufacturers
ORLANDO, Fla. — While their booths were spread out on the show floor, the geothermal manufacturers shared the same concerns at the 2016 AHR Expo in Orlando — tax credits and natural gas prices.
The geothermal industry is acutely aware that government-issued commercial and residential tax credits are set to expire at the end of 2016. Currently, geothermal heat pumps in commercial applications are eligible for a 10 percent income tax credit, and residential applications may receive up to a 30 percent incentive. However, most at the show were confident these incentives would be extended. The industry thought they were in the clear when the omnibus bill passed last year in Washington, but, upon further review, a “drafting error” gave solar and wind a tax credit extension, but not geothermal.
“These rebates are extremely important for us,” said Tim Litton, director of marketing communications, WaterFurnace Intl. Inc. “We are pretty optimistic they will be extended.
“They [Congress] made promises that they will get to geothermal in the first quarter, though, if they aren’t renewed, this may have an effect on sales for the first year. But, we were profitable and growing before the tax credits, and we will continue to grow and be profitable after the tax credits.”
Litton was quick to point out that 2008, the year before these tax credits were introduced, was one of WaterFurnace’s best years.
FOSSIL FUELS AND PREHISTORIC PRICES
Perhaps an even bigger concern for the geothermal segment of the industry is the depressed prices of natural gas and fossil fuels. While these low prices certainly can’t last forever, it does make geothermal a tougher sell at the kitchen table.
This is one of the main reasons manufacturers are seeing much more growth on the commercial side of the business.
“When we look at the overall market, we see the price for the other energy sources — oil and electricity — is very low. As a result, we are seeing a slowdown on the residential side, where people are choosing to use those fuels as energy sources instead of geothermal, especially given its upfront investment. With the cost of energy low, geothermal is not as appealing,” said Vitor Gregorio, president, North America, Bosch Thermotechnology. “On the commercial side, builders are targeting the HERS [home energy rating system] index, and geothermal is one of the big contributors to helping them with that efficiency. They are betting on this technology. We believe geothermal is a technology that is here to stay. We are investing in the future.”
WaterFurnace was once again focusing in on the commercial market this year.
“We’re definitely serious about commercial,” said Litton. “We brought a lot of our commercial products down here, and people have responded well. We’re putting a focus on growing our commercial share and have a lot of headwind on the commercial side.”
The Fort Wayne, Indiana-based manufacturer was showing attendees its new commercial rooftop water-source system, which is available in 3-6 ton and 8- to 30-ton models. The unit features Aurora Controls with optional Aurora UPC DDC controls to integrate into building automation systems. The unit features two-stage capacity operation, an optional two-stage fan control, and full-load operation. WaterFurnace reps were also quick to point out that the fully weatherproof and durable cabinet protects the system from the elements.
The company also showcased a variable capacity unit for commercial applications. It’s available in 2-6 ton as well as 10- and 15-ton models. The product has a capacity range of 20-100 percent and has the ability to maintain a contractor’s small cabinet building needs.
Bosch upgraded its SM Series two-stage packaged geothermal water-source heat pump. The newly reconfigured Greensource Complete Design with Innovation (CDi) Series features redesigned vertical and counter-flow enclosures, upgraded front water connections, and an all-aluminum air coil, which the company says resists formicary corrosion.
Bosch also redesigned the internal layout for easier access through the front panel to components most often requiring service or adjustment. All SM packaged units now feature the new Bosch Heat Pump Controller, which provides protection, intuitive setup, diagnostics, and improved unit serviceability.
Modine Mfg. Co. announced its geothermal and water-source heat pump systems have earned the Air-Conditioning, Heating, and Refrigeration Institute’s (AHRI’s) certified mark. The systems also feature an enhanced control platform, which has served the manufacturer’s school systems and commercial ventilation product lines for more than a decade. All of the systems — from 1.5-12 ton — now feature the Modine Control System, providing quick startup, easy safety device wiring, multiple inputs and outputs, BACnet IP/Eth, BACnet MSTP, and Lon capability, the company said.
Despite the current hurdles, manufacturers see geothermal continuing to grab market share.
“The key is to have salespeople and contractors buy in,” said Ray Schaffart, marketing and sales support manager with Modine. “We need contractors preaching it to their customers. That is how this market grows.”
Publication date: 2/22/2016