Since 2009, the geothermal heat pump (GHP) industry has benefited from a 30 percent residential and 10 percent commercial federal tax credit.
Abruptly, the government elected to end those credits at the close of 2016. As a result, many GHP manufacturers, distributors, and contractors had an abysmal year in 2017.
After multiple geothermal representatives spent countless hours lobbying in Washington, Congress reinstated the tax credits as part of its $320 million continuing resolution (CR), which became effective Feb. 8. In that bill, Congress made the residential incentive retroactive to Jan. 1, 2017, and it will continue at that level until 2020, when it will drop to 26 percent. The credit will phase down to 22 percent in 2021 and officially sunset on Dec. 31, 2021. The 10 percent commercial investment tax credit will remain static through Jan. 1, 2022.
Attendees of the 2018 International Ground Source Heat Pump Association (IGSHPA) Conference and Expo were glowing with optimism, encouraged that the worst may be behind them.
“Geothermal is the best heating and cooling option available today,” said Steve Smith, CEO, Enertech Global. “It’s great to have the tax credits back, but we need to plan now for a future without them. Our market share is less than 1 percent. We have to change that. The only way to do that is to work together.”
The conference, which carried the theme “Better Together,” featured 29 presentations in residential, commercial, and technical tracts; an expo with 28 exhibitors; a leadership panel; a dealer/contractor panel; an awards ceremony; and more.
IGSHPA has been very busy developing its training courses over the last year. The organization held 35 training classes across 19 locations, resulting in the training of 275 professionals in its Accredited Installer (AI) courses. The organization also began offering its AI courses online, which allows individuals to complete IGSHPA courses at their convenience.
“As we continually examine how we’re going to connect with the next generation, we recognize that we need to reach them online, wherever they are,” said Erin Portman, manager, IGSHPA. “This offers business owners an advantage, too. Now, you don’t have to spend your employees’ time by sending them to Oklahoma or wherever our training may be.”
IGSHPA also introduced a master training schema, which will ensure that all courses are properly vetted, and entered into a contract with Heating, Refrigeration, and Air Conditioning Institute of Canada (HRAI). Additionally, the New York Geothermal Exchange Organization (NY-GEO) is beta testing a live course on behalf of IGSHPA.
“We aimed to change the way we’ve been doing things so that our training is more accessible,” said Garen Ewban, 2017 IGSHPA board of directors president and managing member of Ewbank Geo Testing LLC. “If anyone wants to view our course content, process, or all the metrics we lay out, it’s our aim to make that available to everyone. We’re now headed down that path.”
During the opening ceremony, Michael Albertson, senior vice president, WaterFurnace Intl. Inc., reinforced the better together mantra.
“With the temporary expiration of the tax credits, we have a lot of ground to make up,” he said. “Better together is not only a theme; it’s a necessity. It’s going to take every one of us to grow the market just one half of 1 percent. We have to properly plan and implement a strategy so that we can obtain some sustainability. We can’t survive and grow the market by relying on a coupon.”
The IGSHPA conference brought several geothermal manufacturing leaders together on one stage for a unique question-and-answer session that covered numerous topics from tax credits to industry growth to industry unity. Of course, the short- and long-term future of the tax incentives was a hot-button topic.
“We’re already late when it comes to spreading consumer awareness,” said Smith. “If we’re going to change our direction before the tax incentives phase out in 2021, we’re going to have to start now with a planned, concerted effort that needs to be communicated in a unified manner.”
Vitor Gregorio, regional president, North America, Bosch Thermotechnology, said tax incentives should not drive the industry.
“We spoke last year about the tax credits’ expiration, and now we’re talking about utilizing the tax credits,” he said. “We advocated for the credits together, but it’s out of our control. I feel our efforts are better utilized on things we can control. The industry needs to be more active, and we need to be more active as manufacturers as well.”
Todd Graf, vice president and general manager, ClimateMaster Inc., agreed.
“While in Washington, we were asked, what did you do on behalf of the industry outside of the incentives over the last eight years, and we were left speechless,” he said. “Last year was certainly challenging, but it gave us time to reflect and allowed us to consider how we would stand on our own. Yeah, we have the tax incentives, but we have to do something now so that we’re not in the same position in 2022 that we were in 2017.”
The panel was asked exactly what they’re doing individually to unite the sector as well as attract the next generation of leadership.
“Geothermal is a small segment of the market,” Albertson said. “IGSHPA doesn’t have all the solutions, GEO [the Geothermal Exchange Organization] doesn’t have all the solutions, the geothermal manufacturers don’t have all the solutions. But ultimately, we’re better together. We need to have a clear understanding that we’re stronger when we work together so that responsibility falls on all of us. We need to identify that voice and message and put it out together to help educate the consumer.”
“Got Milk?” said Smith. “The dairy industry was united with that message. Every dairy farmer had that slogan all over their vehicles. Whether it was print, TV, or on the internet, the message was clear and concise. We need a unified message that is repeated over and over again.”
The HVAC industry as a whole is struggling to attract new talent; it’s not just the GHP industry, said Joe Parsons, geothermal advocate/consultant.
“Geothermal has an advantage in that we have to teach techs to be good business people as well as good techs,” he said. “That drives the industry toward the mainstream.
“We need to create some awareness from a technical standpoint as well as to the business side of geothermal,” Parsons added.
John Thomas, president and CEO, WaterFurnace Intl. Inc., said millennials are aligning with geothermal’s organization and business model because it serves a purpose.
“We believe what we’re doing is transforming the way society uses energy, and I think that allows you, as dealers, the opportunity to have a deeper conversation with the younger generation,” he explained. “The efficiency and the perspective that we’re on a mission to preserve resources and work in better harmony with the environment is appealing to the millennial generation.”
Publication date: 7/9/2018