Posted By 183eej on 10/07/2008 8:02 AM
It doesn't.  The credit is a renewable energy credit which limits it to geothermal.

Posted By joe.ami on 10/07/2008 10:47 AM
Bill,
Don't despair. You've likely saved more than 2 grand by not waiting.
J

Posted By a0128958 on 10/07/2008 1:29 PM


Joe, you're right.  Thanks for pointing out that I had 5 months of savings (reduced KWH consumption saving) last year in addition to the $300 tax credit.  This would be the correct comparison to whatever tax benefit I might otherwise have gained by waiting until this year to install my GSHP system.

I took a moment to look to see if I could quantify the savings since putting in geothermal.  Unfortunately, I don't have HVAC-only consumption numbers pre-GSHP installation (July '07) - i.e., an apples-to-apples comparison.

But at least to summarize where I'm at, geothermal consumption wise, for a Dallas climate:

We're consuming 23 KWH/day on avg, for HVAC only (including water loop pumps), and not including anything else, for a 3400 sf home.

It's a 10 month average.  With the next 2 months expected to require little HVAC, the coming 12 month average daily KWH usage should come down some.

Best regards,

Bill

Posted By 183eej on 10/07/2008 2:22 PM

You should be able to back into the pre-GSHP costs to get an apples-to-apples comparison.  You have the post-GSHP history for the past 10 months so you should be able to calculate what the rest of the house uses for that same period.  If you take the average for the rest of the house over the 10 months and deduct it from what you paid the electric company before you installed your geo system, you should have a reasonable idea of what the old HVAC equipment was costing you.  If rates have gone up during this time, you might want to consider doing the math on the kwh and costing it at the last step.

It would be interesting to find out the results.  I built new so don't have anything like that to hang my hat on.

Posted By senecarr on 10/07/2008 2:43 PM
Cyngeo in answer to both questions -
Before I looked up the 2007 form, I had thought it called for a qualified installer, but it doesn't. The form says "For credit purposes, costs are treated as being paid when the original installation of the item is completed, or in the case of costs connected with the construction or reconstruction of your home, when your original use of the constructed or reconstructed home begins." So, yes, if you finished installed it this year, you could make a justifiable case for it.


So I'm not sure if the COP must be that released by ARI ratings or what. It does say you can rely on the manufacturer's rating, so if the manufacturer gives it that kind of rating, you again might make a squeek. Failing to have an EER for most hydronic pumps might be a problem though.
http://www.irs.gov/pub/irs-pdf/f5695.pdf

Posted By a0128958 on 10/07/2008 4:57 PM


Dale, thanks.  I took another look, this time at a macro level.  Instead of using my fancy WEL instrumentation system, I used the old fashioned electric bill paper copy.

Across an entire year (12 months), prior to installing geothermal, we consumed 144 KWH/day on avg, for everything.

After installing geothermal, for the past 12 months, we consumed 91 KWH/day on avg, again for everything.

This is a 53 KWH/day reduction, a 37% reduction.  See foot note below, though.

At our current 14.68 cents/KWH rate, we're saving $8/day, $237/month, or $2800/year as a result of installing geothermal.  That's $14K in five years w/o any assumption on future KWH rate increases.  (Wish I knew what might be valid assumptions for future electric rates for the Dallas area.)

Now back to Joe's comment to me about not waiting last year to proceed versus waiting until this year for better tax treatment:

Yes, indeed, we saved $1200 (5 months) in utility costs by proceeding in 2007.  Along with the $300 tax benefit from last year, that totals up to $1500.

Add in the fact we probably would not have done construction in Winter, with loss of heat for some time period (we were without any A/C for 4 weeks when we had geothermal installed last July).  This equates to about another 4+ months of lost utility savings, say $1000 based on current rates and usage.

So we would need to see a tax benefit from this year's legislative actions of approximately $2500, just to break even with the decision to proceed in '07 when we did versus now in '08.  Meanwhile, we've already had 14+ months to enjoy the nice, quiet geothermal system, along with improved dehumidified air, and the ability to set any room or rooms in the house to any temperature we want, no matter how hot or cold desired.

So, Joe's continually clearly correct - there's no better time to get going that the immediate moment, regardless of what's happening in the legislative or financial markets.

It's pretty clear - geothermal based HVAC is the real deal.


Foot Note:

A key assumption here is that our KWH usage pattern for the 12-month post-geothermal period is similar to the 12 month usage pattern prior to geothermal, and that no material changes have been made to the envelope of the home.

Indeed these assumptions are valid, with the exception that 3 months into the post-geothermal 12 month period we removed every incandescent light bulb and replaced them with CFL.

In another 3 months I'll be able to figure out the CFL impact using WEL data.  For now, I'll leave the CFL impact as simply a footnote.



Best regards,

Bill

Posted By 183eej on 10/07/2008 11:15 PM

... Historically for the past 6-8 years, we have experienced about 12% increases for electricity ...

How many tons did you install by the way?

Posted By a0128958 on 10/07/2008 11:56 PM

OK, this is helpful, Dale.

If you take my $2800 annual savings and factor in 12%, then in 5 years, my savings will be

$2800
$3136
$3512
$3934
$4406

totalling about $18K.  This is of course assuming maintenance expenses are no different than with an ASHP or conventional HVAC.

My installer installed 8 tons total for a single-story 3400 sf home.  Two WaterFurnace Envision 2 stage variable speed motors, with one of the units having an attached 3-zone system.  All details are located here:  http://welserver.com/WEL0043/ .

Best regards,

Bill

Posted By 183eej on 10/08/2008 7:05 AM
 
Maintenance costs should be about 18-20% less for your geo system so, at 3,400 SF that should help your numbers by a couple of hundred dollars a year...

... In that example, you would have paid $16,000 more for your geo system.  The savings numbers above shows you will have gotten your money back in ~4.5 years.  Not bad.  The better story to me is the internal rate of return is 28% on this geo investment.  We're certainly not getting that kind of return from Wall Street...

... and the TXU incentive I just learned about ...

Posted By senecarr on 10/08/2008 9:33 AM
Dale
1. If you don't like burning natural gas for a fuel, I suggest you sign up with this guy's plan -
http://www.pickensplan.com/ -I'm on there somewhere, but not active in it.
2. How do geo systems have less maintenance?

Posted By a0128958 on 10/08/2008 10:18 AM

Dale, thanks.

I hope maintenance costs are minimal with GSHP.  While there's no outside unit anymore, we have a lot more 'stuff' up in the attic, where it gets very hot in the Summer (2 GSHP compressors and electronics, 3 water loop pumps, and zoning electronics).  And there sure is a lot of water pipe fittings, valves, connections, etc. up in the attic to constantly worry about leaks (none so far).

I agree that payback analysis needs to focus on the cost difference between replacement alternatives, not the total cost of a geothermal installation.  This is a point often missed by many.  With the residential market in the Dallas area being so one-sided toward conventional/ASHPs, I estimate my alternative difference was about $20K.

Can you point us to details on the TXU incentive you note above?  Thanks.

Best regards,

Bill

Posted By Brock on 10/08/2008 5:42 PM
Bill is your house all electric? Or did you have some natural gas usage in there as well?

...

Let's assume for a moment you paid $6,000/ton for your geo system and you could have paid $4,000/ton for a good quality air sourced heat pump.  In that example, you would have paid $16,000 more for your geo system.  The savings numbers above shows you will have gotten your money back in ~4.5 years.  Not bad.  The better story to me is the internal rate of return is 28% on this geo investment.  We're certainly not getting that kind of return from Wall Street.  That is awesome. 

For people considering geo today, the $2,000 tax credit improves this return to 31% and the TXU incentive I just learned about yesterday for 8 tons of geo (~$1,200) increases the rate of return to 33%.

Now that is what I call green.