Full ‘Steam’ Ahead: Is Geothermal the Future of American Suburbs?
Four mega-developments are ditching traditional HVAC systems for geothermal heating and cooling
Visitors won’t find an air conditioning unit in the Pinewood Forest community, despite the steamy Georgia summers. And for the 50 new homeowners who moved in around Christmas, they won’t hear the on/off cycle firing up when they’re outside enjoying an evening on the porch, either.
That’s because Pinewood Forest is one of several large, master-planned developments that’s sidestepping the traditional HVAC system to embrace — and mandate — geothermal heat pumps for heating and cooling communitywide.
Geothermal technology isn’t new, although it’s more common in Europe — like in Iceland, where it makes up a quarter of the country’s total electricity generation. And it’s gaining steam in the U.S., as more cities and states incentivize or mandate sustainable energy sources for new construction. Even so, in 2016, only 0.4 percent of total U.S. electricity generation came from geothermal power plants, according to the U.S. Energy Information Administration.
That’s starting to change. The 234-acre, mixed-use Pinewood Forest (backed by Chick-fil-A CEO Dan Cathy), which kicked off construction in April 2017, is the latest of several New Urbanist developments that mandate geothermal heating and cooling, as either a conscious lifestyle choice or an adaptation to local building codes. In northeast Louisville, Kentucky, Norton Commons has just completed its 200th home in the North Village section, anticipated to encompass over 1,500 houses, all heated and cooled using technology that harnesses energy produced beneath the Earth’s surface. In Austin, Texas, Whisper Valley is set to build more than 7,500 single- and multifamily homes, plus more than 2 million square feet of commercial space, creating a mega-development that incorporates geothermal wells as part of large-scale, affordable, green suburban living. And almost 15 years since it built its first home, the progressive community of Serenbe, on the edge of Atlanta, continues to heat and cool its homes with ground-source heat pumps as part of the community’s philosophy of holistic wellbeing, sustainability, and connection with nature.
Historically, backlash to geothermal energy has been the initial price of installation, said Doug Dougherty, president and CEO of The Geothermal Exchange Organization (GEO).
“I’ve said it for 30 years: The No. 1 impediment is still upfront cost, and the cost differential between a conventional HVAC system and geothermal heat pump is the cost to put the loop in,” he said.
Planned developments that require geothermal circumvent the cost factor that’s often a deterrent to individual homeowners.
“When you talk about the energy savings of geothermal heat costs, you always talk about upfront cost, and the wife says she doesn’t want to give up the cost of granite countertops,” Dougherty said. “It’s very tough to overcome. But planning entire geothermal communities shifts the responsibility off the homeowner. You’re not giving the homeowner a choice; you’ve taken the cost of the loop out of the equation.”
Then, the challenge becomes getting buy-in from developers, who often balk at the price as well.
“It’s hard to imagine that a very large homebuilder is going to increase his HVAC cost 50 to 100 percent and try to go out and compete,” said Charles Osborn III, managing director, Norton Commons.
That’s true, said Rob Parker, president of Pinewood Forest — it’s not for everyone.
“It does require some patient capital, so it will not work for developers who are interested in building and getting out,” he said. “When you’re sitting there deciding if you want nicer countertops and appliances or upgraded geothermal HVAC, it’s tough because it’s underground — you can’t see it.
“It’s overcoming the fact that it’s expensive on the front end, and the payback is a little longer term,” Parker continued.
But Parker, and other developers in these kinds of communities, aren’t in the business to flip a quick buck.
“For us, it’s a long-term, multigenerational play,” he said. “We’re an early adopter; although the technology has been around a long time, we were one of the first to do it on this scale, so people didn’t come to us initially and ask for geothermal. But I think when there’s a demand created, developers will respond to that.”
Dougherty concurred that while still in the early stages, geothermal developments are gaining traction across the nation as developers and regulatory bodies begin to recognize the value of heat pumps.
“I use the term ‘monetizing’ the ground heat exchanger,” he said. “Smart land development people have realized there’s money in the Earth, and there’s value to using the Earth as a sink of energy. The more people see the Serenbes and Whisper Valleys of the world, the more people now are going to say ‘wow, this is a really big development, and they’re not doing it to lose money.’ These planned communities are really moving the market.”
Taking geothermal mainstream will require people to think differently about how to develop land, said Dougherty. Take Whisper Valley, where geothermal is treated like a utility and is planned and installed upfront, similar to water/sewer lines.
Whisper Valley is located in Austin, where the city has passed a municipal mandate that all new construction be net-zero energy. Using a “geo grid” keeps costs low for the developer and keeps home prices affordable, said Axel Lerche, CEO of EcoSmart Solution, a subsidiary of Taurus Investment Holdings, the developer of the Whisper Valley project. (Homes in Whisper Valley start in the low $200,000s).
“A ground source heat pump, from a price standpoint, is not much different from other energy sources,” Lerche said. “What makes it more expensive is your upfront installation of the heat exchange: the bore hole.”
Instead of an individual loop per house, the development uses an integrated community system of vertical bore holes, 360 feet deep each, and a combination of horizontal and vertical piping.
“The advantage is, we could install it all up front,” he said.
That meant 40 percent lower installation costs on the community loop, as opposed to a house-by-house basis. It’s easy for a production builder, too, he said, as all the builder has to do is connect to the source — the same way you would with a sewer line. To connect to the geo grid, homeowners pay a monthly fee, similar to a homeowner’s association fee. Whisper Valley retains ownership, access rights, and easements and is responsible for maintenance and repair.
By contrast, Serenbe residents have the opportunity at first ownership to purchase their home’s loop system and take advantage of any geothermal tax credits available. Alternatively, they can forego ownership of the loop and instead pay a monthly bill to the utility.
Whisper Valley uses Bosch’s CDi Series SM Model in 2-ton and 3-ton models because of its energy efficiency rating, said Heather Anderson, aftermarket and sales operations director, Bosch.
“Geothermal is a quick way to meet [the municipal] requirement, and adding in a geothermal unit that is as efficient as the Bosch SM model will get you to that requirement even faster.”
Once installed, the community grid system maximizes efficient energy usage, Lerche explained.
“If you connect 230 homes in one of those systems, one homeowner may be on vacation, one works at night… you create a stronger but much more diverse system,” he said.
Setting up a community geothermal system requires extensive planning in terms of infrastructure. It’s almost a utility-like approach, Lerche said, adding that the complexity makes it a “completely undervalued” avenue.
The average life of a loop is 50 years, so projecting future needs as the development progresses and installing the correct size system is an important factor, especially since there’s not a lot of wiggle room once the system is in place, Anderson noted.
Lerche said the major challenge is not the engineering itself but becoming part of the approach of a production builder — an industry that’s often reluctant to change.
“To really coordinate our approach, which is pretty broad, requires a certain willingness on all sides to make that work,” he said.
With a willing partner, the infrastructure for a geothermal grid can serve double-duty as groundwork for other utilities. Whisper Valley uses a geothermal/Google Fiber intermix to bring its residents high-speed internet.
“It’s a cool side aspect,” said Lerche. “When we came up with plans for the geo grid, it required a large amount of trenching to connect all those homes, so we offered Google Fiber access to these trenches, and they simply put conduits into the trenches.”
For Norton Commons, individual loops for each home were the more efficient choice, said Marilyn Osborn Patterson, marketing director and general counsel.
“Our project’s very large: 600 acres, single-family homes, townhomes … because of the variation and size of the project, each property needed to be on its own loop,” she said.
Norton Commons used two options for equipment: ClimateMaster’s Tranquility® 22 Digital Series, offered as the base model, and the Tranquility 30 Digital Series, offered as the deluxe version. Loops are largely placed under garage slabs, where they won’t be disturbed — something that’s important in a high-density area like Norton Commons, where lot lines are sometimes only 6 feet apart. Initial challenges had included outside air condensing units falling into their neighbors’ basements, which was one reason for eliminating them.
“It’s written in: It has to go geothermal,” said Titian Burris, regional account manager — South Central U.S.A., ClimateMaster, Inc., who managed project planning for Norton Commons. “Ground loops are already in the ground, prior to construction of the house. As they’re grading these lots, they’re putting in these loops; they just tap into it.”
While drilling each loop individually requires less upfront engineering, it does require having a strong team in place — local contractors, loop installers, product support — once the project gets underway, especially for a builder or developer who’s not familiar with ground source heat pumps, said Burris. Norton Commons had seven different builders working in the community, and all of them had to be trained on proper procedures.
“That’s where what I called the ‘wedding planning’ came in,” he said. “It was a lot of networking, planning, getting everybody on the right page and questions answered correctly, product training … It took about two years to finally get this thing really ramped up. It doesn’t happen overnight. But it’s like a machine now. It’s been very smooth because of the upfront investment in time.”
In the Louisville area, the network and the interest already existed in the business community. For places where that’s not the case, Burris recommended approaching the manufacturers of geothermal heat pump products to get the ball rolling.
“If someone would have approached ClimateMaster and said ‘Hey, I’m looking at doing this, what can you do?,’ I would then start heavily researching that market and do everything I could to basically build up that infrastructure,” he said.
TALK THE TALK
With more cities and states adopting progressive building requirements and more homebuyers interested in an energy-efficient lifestyle, coupled with the recent reinstatement of the geothermal tax credits, some industry leaders are optimistic that geothermal is poised for takeoff. But many are concerned that a lack of awareness, and emphasizing the wrong points in a sales pitch, is hampering the industry’s potential.
To get buy-in from developers and homebuilders and take these developments mainstream, the geothermal industry needs to change the way they talk about the payback and the benefits, said Steve Nygren, founder of Serenbe.
“They start with energy savings, and say it will take three, five, seven years to pay back,” he said. “That’s the wrong start.”
With his demonstration home, he said, it was more expensive to build, meaning the monthly payment was more than it would have been in a house with a traditional HVAC system. But that increased monthly payment was less than their increased energy bill would have been. “They talk about it backwards: It’s cash positive on day one,” he said.
Dougherty said it’s lifestyle choices that will ultimately end up drawing people to geothermal.
“The big thing is noise abatement,” he said. “The moment you start talking about tech, you lose them. But if you mention you get hot water, etc., with no outside condensing unit, it opens people’s eyes.”
Osborn said it sometimes takes living with geothermal and then moving back to a home with a regular HVAC system to really drive the message home.
“Off the cuff, if you ask someone are they willing to spend $75,000 not to hear that cycle, anyone would say ‘heck no,’ but that might change as they get used to it,” he said. “Especially after they realize the cost of ownership over the life of the unit: less maintenance, less care, piping for the loop system is guaranteed for 50 years … there are savings over time.
“Candidly, I think the [federal] government needs to do what’s good for the environment — kind of like with solar panels and wind energy,” he added. “We’ve got all this cutting-edge technology that is really expensive right now but is good for the country and good for the population. We need support in terms of tax subsidies and credits, like we’re seeing right now.”
Even when the geothermal tax credit was unavailable, sales at Norton Commons remained strong.
Still, even homebuyers in the community don’t all know about the credit, Osborn said.
“There’s a perfect instance of where the industry should be screaming it from the top of their lungs right now,” he said. “We have several people in the neighborhood who are entitled to the tax savings but don’t even know enough about it to know to take advantage of this retroactive tax opportunity.”
Dougherty sees the Dandelion project, Google’s recent venture into geothermal, as a major validation of the technology as well as a PR boost for the industry.
“Their ad campaign is a big movement on consumer awareness, and that’s what it’s going to take,” he said. “The more recognition they get, the more publicity they get … and these developments on a grand scale — there’s a lot of press about it, and that makes it more likely people will say, ‘I’m gonna go Google geothermal heat pumps.’”
It’s not just the folks building or buying these homes who need to see geothermal as a viable investment, Nygren said. It’s also going to require buy-in from financial institutions. Back in the mid-2000s, he ran into an issue: Builders doing geothermal spec houses couldn’t get bankers to fund their premiums because even though the houses might be EarthCraft certified, appraisers didn’t take that into account.
“When they’re appraising a house, they do it on square footage, number of bathrooms … they don’t take into consideration the environmental impact,” he said. “Financial institutions that are funding builders and developers need to understand not only the energy savings, but it [abates] noise pollution, which causes health and a lot of other side issues. I believe we have builders and markets ready to embrace this. Appraisers do not recognize it, but it’s starting to change.”
Geothermal mega-developments are scalable, too, and they’re starting to filter down into the suburbs. It’s called a “geo hood,” Anderson said, and it’s the type of thing that a small-scale developer might consider for a cluster of 30 homes — or that a group of neighbors might decide to go in on together to get a lower cost from a driller.
“There’s a town in west Illinois with 10 or 12 all-geothermal subdivisions because the builders and land developer, for a 15 to 20 home development, began to see the value of a geothermal heat pump in the home and sold the home as an energy-efficient home,” said Dougherty. “What you had was a very competitive market for drillers, and the cost to drill in Quincy plummeted. So the added cost for putting in a geothermal heat pump was not that different. If you had to add $5,000 to a mortgage to put a 4-ton unit in, your energy savings far outweighs the additional 5,000 bucks.”
Anderson doesn’t see geo hoods extending to cities in the near future, due to the technicalities of underground construction in a densely-built, pre-existing environment. If it becomes relatively quick and easy in the suburbs, though, and if people become aware of the option, she sees it becoming a viable alternative among those who either want to be environmentally responsible, or simply want to take control of costs in a fluctuating energy market.
“You control your destiny because you’re not depending on rising energy costs anymore,” Lerche said. “It is great technology; it’s been tested in so many countries for a long time, but it’s not integrated here yet.
“I think the market is asking for it,” he continued. “Why wouldn’t you buy a house that is ready for the future?”
Publication date: 5/21/2018