As electric and natural gas costs increase and cities and states pass energy standards and renewable energy tax credits, sales of energy-efficient technology — like heat pumps — get a boost.

In the U.S., shipments of air-source heat pumps increased 14.8 percent from January 2016 to January 2017, 12.9 percent from January 2017 to January 2018, and 9.1 percent from January 2018 to January 2019, according to the Air-Conditioning, Heating, and Refrigeration Institute (AHRI). Ground-source heat pump sales rose 37 percent from 2017 to 2018, due largely to the reinstatement of federal tax credits for geothermal — although geothermal remains just 1.7 percent of the market, according to Doug Dougherty, president and CEO of the Geothermal Exchange Organization (GEO).

“We’ve had excellent feedback with our ground-source customers,” said Brian Houchin, vice president/general manager of Bratcher Heating and Air Conditioning in Peoria, Illinois. “They’ve all seen energy savings, thousands and thousands and thousands of dollars a year. Versus propane, they’re saving $1,000 to $1,500 a year. I go back to some of my first customers, and they’ve saved $40,000. They’ve paid for their system twice over.”

 

WHEN THE MATH WORKS OUT

John Ciovacco is president of Aztech Geothermal in Ballston Spa in upstate New York.

The company installs heat pumps mostly in single-family homes and in some small commercial buildings. About half of Aztech’s work is in new construction, and half involves existing homes.

“Heat pumps can be used for 100 percent heating, 100 percent air conditioning, dehumidification, and other applications,” Ciovacco said. “Air source, water source, geothermal … all of those really do the same thing.”

Ciovacco sees a lot of interest in heat pumps from homeowners who don’t have access to natural gas.

“They have to use oil or propane, and it costs two or three times as much,” he said. “We’ve been able to help homeowners realize tremendous savings [through installing heat pumps].”

Heat pumps account for about 15 percent of Houchin’s business.

“Heat pumps are just another way to heat your home,” he said. “When we’re quoting a customer, we’re looking at: Does the customer have natural gas available to them, or propane, or is the alternative fossil fuel? It’s the cost per Btu that the system’s going to provide, versus the alternative fuel source. What’s our primary fuel source if they don’t want propane? Is the option to go electric, or go heat pump?

“We’re evaluating the cost savings,” he continued. “For example, with geothermal versus propane, we know where the energy savings are, and we can show them what the energy savings would be. Obviously, straight resistance electric heat is a straight ratio; it’s 1 COP, whereas [geothermal] is 5 COP. It’s five times more efficient to be geothermal than straight resistance electric.”

In Houchin’s market, natural gas is very prevalent in the municipalities and towns, and he does a lot of dual fuel with air-source heat pumps, using natural gas as the backup. Out of town, he does ground-source heat pumps.

“Because in our market, we spend most of the winter at less than 55°F,” he said. (The rule of thumb goes that ground temperature is 55°.) “An air-source pump is just what it says: taking heat from the air and putting it into the home, and ground source is putting heat from the ground into the home. There’s a point where an air-source heat pump can no longer provide the Btus to maintain the temperature.”

 

WASTE NOT, WANT NOT

The second big driver in the heat pump market is people’s increasing concern for the environment — both at the personal level and at the state level.

“Increasingly, we need to think about not creating new energy and not wasting energy that could be used somewhere else,” Ciovacco said. “In New York, there’s a big push to reduce fossil fuels. With that, we’ll see a big reduction in heating and hot water in buildings. Heat pumps will be the big player to fill that void: from the air, from the ground.”

With new construction, heat pumps are not commonly done in big developments, but more of that is taking place, he said. Often, new construction means putting heat pumps in individual new homes where the homeowner doesn’t have access to natural gas for heating and cooling, and doesn’t want to use propane or oil. It’s the same with retrofits: people who show interest. As natural gas lines are run to a decreasing number of new developments, and states adopt energy policies and goals, more homes will be converted, and a lot more heat pumps will be installed upfront in big developments, he predicted.

“We really need to look at having heat pumps share energy between buildings, in campus environments and urban environments,” Ciovacco asserted. “Some do refrigeration, some do heat … We need to figure out how to get energy from one place to the other. If we can eliminate boilers and cooling towers [where energy is being thrown off, as opposed to being used somewhere else], that’s the way we need to go.”

For example, in situations where there’s a larger system — a server room that’s throwing off heat and a dorm that needs heat — the ground loop might exist solely to facilitate the exchange.

“We’re not going to do all skyscrapers in New York City as geothermal,” he continued.

Air-source pumps work well for a small home with an open floor plan, or a setting (like a high-rise apartment) where getting down to the ground just isn’t feasible. One of Ciovacco’s customers lived at the top of a winding mountain road. Drilling wasn’t feasible, but the homeowner wanted to get off fossil fuels. Ciovacco put in a three-headed air-source heat pump, which the customer loved.

“I think that more and more people want to find electric heat pump solutions, especially in New York and Massachusetts,” he said.

Jens Ponikau is an owner at Buffalo Geothermal Heating in West Seneca, New York; vice president of the New York Geothermal Energy Association; and an accredited International Ground Source Heat Pump Association (IGSHPA) geothermal installer and geoexchange designer with a doctoral degree from the University of Hamburg.

“People want to get off fossil fuels, and get off high bills,” he said. “There are advantages [to installing heat pumps] not only for the homeowner but also for the grid.”

That means significant savings for utilities that need to add additional capacity.

For an example, Ponikau pointed to Tompkins County in New York, near Cornell University. The public service commission had approved an extension of gas pipelines.

“Then the county legislature said, ‘No, we object to that. We have alternatives which can fulfill all those needs.’ Normally, the community is begging to be on cheap gas, and the municipality is dragging their heels on getting financing … Here was the financing, and the town said ‘We don’t want it.’”

That’s because utilities don’t want to make the investment anymore; they finance their infrastructure with 60- to 80-year bonds, and governmental agencies like the state of New York are no longer willing to invest in fossil fuel infrastructure.

“This is where air-source and ground-source heat pumps really do shine,” Ponikau said.

Another example: In the suburbs of New York City, utilities ran into a problem. When dirty No. 6 heating oil was outlawed, customers tried to hook up to natural gas. But on the coldest day of the year, the gas pipelines were not big enough, and would never be big enough, to add future customers.

“They needed resilience: the capacity to serve everybody under all the circumstances,” Ponikau said.

A new pipeline would cost $110 million. The utility, Con Edison (the largest New York state utility), wasn’t ready to pay that.

“They said, ‘We don’t want to invest into this infrastructure any more, which serves only the purpose of helping a technology that, at the end of the day, we’re trying to get rid of. It doesn’t make sense,’” Ponikau said.

Putting out a bond for the work would get in the way of hitting certain state goals and mandates, like reducing fossil fuels by 40 percent by 2030 and 80 percent by 2050.

Moreover, if the state did hit those goals, the question would become: Who would pay off the bonds for all that fossil fuel infrastructure? Con Edison decided this would be detrimental to the ratepayer and proposed to instead put 8,800 geothermal heat pumps into the area where the pipelines would not be extended. The cost: $65 million, or just over half the cost of extending the pipelines.

“They realized that putting in the geothermal systems would be cheaper than putting in the new pipeline but would essentially end up at the same result,” Ponikau said.

That result means everything is reduced: the cost to the utility, the homeowners’ heating and air conditioning bills, and the carbon emissions put into the atmosphere to maintain the quality of life we have come to expect.

Publication date: 5/20/2019

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