I've been following many of the topics throughout this forum carefully over the past couple of months, commenting here and there, and am very impressed by much of the content. I am a senior business student, and have become extremely interested in geothermal heat pump applications (GHPs), and hope to help lead the next generation of GHP pioneers and continue the growth of the industry.

However, I believe that there is more value in this industry, even today, than it has accumlated thus far. I am aware that in much for the west, sales of residential systems has increased 30-40% per year over the last 5 years or so. Still, only about 50,000 new units are installed every year and GHPs only account for a little over 1% of all systems in the US. What's the hold up? That's my real question. They save you enough on your energy bill to make you look twice, they're more environmentally friendly than all active heating and cooling alternatives, they can be cost competitive when financed through the mortgage and with effective incentive leverage, and most underestimated of all, they are luxury systems. It's like buying a BMW. They're more comfortable and quite. Forget the price premium because its a "green" product, these systems are priced higher because they're far more luxurious.

With that being said, I've got some questions about the future of the industry. I see the potential for exponential growth right on the table. If demand sky rockets for these systems, everyone gets more business, and the price of the systmes will decrease to the around the same range of all alternatives. That is the point in which GHPs become the standard, not an alternative:

*Why is the demand so low from end users? Shouldn't marketing for these systems be above and beyond the efforts put out by the rest of the industry. Especially right now, when energy efficiency is at the top of everyones mind. Forget the housing market slowdown, nows the time for builders to try new things, and for most, GHPs are a new thing. How can marketing campaigns attract homebuyer, creating a pull strategy that would force builders to use more in their new homes?

*Besides the high cost of installation, why are builders so unlikely to use GHPs? Would they be more willing to offer them in more new homes if they only had to pay for the equipment (making the cost equal to that of using a traditional system(s)). Besides being able to offer energy efficiency, and the marketing benefits that brings, how else do builders benefit from installing GHPs? How can incentives brdy be leveraged for builders and homeowners?

Would geothermal installers be willing to perform installation jobs without using the equipment they're sold. (i.e. would they be willing to install a unit for a homeowner or builder that already has the heat pump itself)

Would end users be willing to pay a fixed amount each month for electricity if it were guranteed to be 5-10% less than the average customer in that city/county/state/etc.?

How quickly can the industry grow? In which direction will it grow most effectively?

That's about all that comes to head for now. Topics like these are on my mind all the time, and I would love to hear as much insight as possible. Also, feel free to add topcis of interest. I'd love to see a bunch of interactive feedback. Thanks all.

"What's the hold up?"

1. The installation price. People aren't stupid, they're just stupid. Even though GHPs may more than pay for any additional mortgage cost, people just don't get it.

2. The gas heating industry is HUGE compared to the geo industry. They have more advertising dollars.

3. People are quick to believe negative, and slow to believe positive. They hear 'hearsay' that someone's geothermal system doesn't work right. They don't listen to me that we have hundreds of systems up and running, and that those home owners absolutely LOVE their comfort and savings from the GHP.

4. People just don't know about them. If you ask 1000 people on the street what a GHP is, I'd be surprised if more than 10 people could actually tell you what they really are.

5. Installing Contractors have had their own success with installing gas systems. Why should they change? They don't understand the GHP process, either, nor will they even give it a chance. It's
not what they do. They've never done it before and don't see the need in changing. (it's idiocy--doing the same thing all the time and expecting different results)

6. It is a Homeowner driven product. General contractors are not out there to build the best house. They are out there to make the most money. The only thing general contractors see as a plus on GHPs is that it differentiates them from everyone else. But they don't want to try and sell comfort, anyway. That's why they use cheap fiberglass insulation, cheap windows, etc. They put in expensive cabinets. People can show off their floor, kitchen, things they can see. Nobody cares about their heating system.

7. Home owners don't care. Especially the first time builders. They have no idea that the cheapest heating and cooling system is any different than the most expensive. They look at it like this: ABC company gave me a bid for a 13 SEER A/C and 90% furnace for $5,000. Therefore, all heating systems should cost me $5,000. That's like getting a quote on a brand new Yugo for $8,000. Hence, all brand new cars should cost $8,000. If I take that price to a Mercedes dealership, and tell them I want a brand new Mercedes for $8,000--because I got a quote for $8,000 for a new car-- that they have to give me that price. It's ludicrous, but people do that with their heating system.

Should I keep going?

"Would geothermal installers be willing to perform installation jobs without using the equipment they're sold. (i.e. would they be willing to install a unit for a homeowner or builder that already has the heat pump itself)"

Not necessarily. Part of any installation is selling the equipment. The installer needs to make money on selling the equipment, otherwise he has no reason to install it. An installer must make money to be profitable and stay in business. Sure, they make some money on their labor, but usually, they need to make money on the equipment for it to be equitable.

Of all the excuses above, I think the biggest thing is the education of people. People need to be made more aware of the GHP option. When they are, more will be sold on the idea of comfort, efficiency, and reliability.

I'm going to weigh in again on one more thing...

To educate people, one of the best avenues I think would work is through television news reports. Almost every station has a morning or mid-day show. They would have a great platform for talking about GHPs. I've tried to get the news stations interested in telling people about GHPs, but I have yet to even receive a reply to my emails and calls. Unfortunately, I don't think they put much value in our opinion. We're from a very rural area. Maybe if it were coming from someone in a more prominent area, they'd listen. The thing that bugs me is that we've been doing geothermal for the longest in our state. Why won't they listen/believe us? Anyway....

I'm open to suggestions on how we might get some news stories done on some of these projects.

I have lists of examples. We had weather that hovered around 0 to -20 for weeks this year. Some of the January 2008 electric bills (total electric bill for the home, which includes the heating) have been:
--a 4500 sq. ft. house, $184.00
--a 5400 sq. ft. house, $212.00
--an old 3800 sq. ft. house, one level, $143.00
--a 3800 sq. ft. house, one level, $154.00
--a 3200 sq. ft. house, $186.00
--a 2400 sq. ft. home, $117.00
--a 1380 sq. ft. home, $83.00

Most of these homes are all electric. In fact, most of them heat their domestic water with the EarthLinked DX system. The only ones that have gas, only use it for cooking, and a couple of fireplaces, which of course are just for aesthetics, anyway.

Another way to educate people is to do community seminars. I think it'd be a very beneficial way of teaching people the benefits of GHPs. I've just never followed through with the idea completely.

I completely agree. I have seen a couple of news stories on case studies and they seem to be effective, and it could be a great guerilla marketing tactic. I also agree that seminars are a great idea. Planet Geothermal, out of Southern Utah, told me that they have been puting on seminars, and with the help of the local utility cooperative, sales have been through the roof. Thanks, Clark, for the critical responses to my topics, which is exactly what I was looking for. All the reasons are consistent with what other industry leaders are saying. I guess the problems geothermal face are what need to be considered and overcome.

One of the holdups is people themselves. People continued to buy big Gas guzzling SUV's even though Hybrid's were available. Any fool could see that gas prices were doomed to go higher and higher. It's only now that recent spikes in fuel prices have people seriously considering the Hybrid as there next car.

Same goes for Gas and Oil, which both have deep pockets for advertising, I remember hearing commericals all the time about how efficent the New oil heating systems are on the radio. Geothermal doesn't have the clot required advertise to really educate people about how it makes oil and gas look medival in comparision.

Qoute from tuffluckdriller:
4. People just don't know about them. If you ask 1000 people on the street what a GHP is, I'd be surprised if more than 10 people could actually tell you what they really are.

I'll have to admit I didnt have a clue either until I had one. I thought a Geothermal system circulated cold air thru the ground in pipes to heat it up to the ground temperature and then used gas or reistance electric to heat it up to ideal temperatures. And hot air in summer was circulated theu the ground to cool it for A/C. 

Qoute for Tuffluckdriller:
 3. People are quick to believe negative, and slow to believe positive. They hear 'hearsay' that someone's geothermal system doesn't work right. They don't listen to me that we have hundreds of systems up and running, and that those home owners absolutely LOVE their comfort and savings from the GHP.

People can hear 10 horror stories about poor gas system installations and still pick gas as a heating source. They just need to hear one negative story about Geothermal and they would never consider it. I don't have the link available, but i do remember a story about a library that used an open source geothermal where the lousy water caused so many problems they ended up converting back to gas after a few years. It only takes one of these kind of stories to cause major damage to the young geothermal industry. 
 
The good news things are changing, as consumers are hit with massive heating bills for gas and oil they are becoming more open to alternative forms of heating. Just like solar, it's only now becoming desireable to go solar as governments put there wieght behind the industry, like Germany which has set a goal of having 25% of the power grid on solar by 2020, they are currently on track for more than 25% at the current rate. 

As far as builders are concerned, tract development housing uses the cheapest possible materials and cheapest labor to throw together a house to sell to someone for the highest possible profit. They don't care if it falls apart after they get paid. There's no incentive for them to care it will cost people $500 a month to heat/cool it. The only houses being built with geothermal in my area are nicer custom homes where the price tag on the house is 500k or more, a 30k heating system is minor when compared to the overall cost of the house.  Try to get people to buy a 200k house with a 30k heating system, they will pick the cheaper house with the 5k system every time. 
   
  

GeoGreenAZ,

 

In my opinion your posting is a little over whelming.  I do appreciate your enthusiasm for this industry however. 

 

I read your entire post, but forgot some of the questions by the time I got to the end.  So, please bear with me if I miss a few things in my response.  Also keep in mind that my responses are my own opinion and may not be based on any real data other then my gut feelings, (my guts are real to me!)

 

First off, let me try and summarize what I think I read and try a simple answer:

1. over 1% of all systems in the US. What's the hold up?

All good things come with time. Old quote, and not sure where it originates.  Keep in mind how long the current heating systems have been around.  The change will continue to migrate to the best options as they become more available.  Look at the history of the home heating industry for the past 100 years.  I think you can learn a lot from that. 

2. Why is the demand so low from end users?

Cost, availability, unfamiliar with the technology, won’t trust something new.  Here again, look back into the heating industry history.  Anyone remember all the negative talk about 90+ furnaces when they first came on the market?
  

3. Besides the high cost of installation, why are builders so unlikely to use GHPs?

Because of the high cost of installation!  Why in the world, as a builder, would I spend extra money on something that the end home buyer might not have a clue about?

4. Would end users be willing to pay a fixed amount each month for electricity if it were guaranteed to be 5-10% less than the average customer in that city/county/state/etc.?

NO WAY, it takes the control away from me and what I might do to control my own cost, like setting the thermostat down to a lower temp.

5. How quickly can the industry grow? In which direction will it grow most effectively?

I think this was answered in your lead-in to this topic, 30 to 40% a year.

 

I believe the demand will continue to grow and once the general public becomes more familiar with it, the change over rate will increase.  Heck, five years from now there might be something that will blow away everything we are now using for heat. 

 

As a side note on education of geothermal, I have a cousin that I was talking to about geo with at the last family get-together. When I started to explain how a geo system works, he got this puzzled look on his face.  He explained that it sounded like what was in his house.  He bought his current home about 5 years ago.  As we talked I found out his home was purchased with an open loop geo system, even though he knew nothing about it, nor did anyone explain anything about it to him.  Come the first heating season they fired up the heat by setting the thermostat as they have with all their previous homes.  Feeling the air from the heat registers, he believed that the system had something wrong because it was lukewarm.  He proceeded to call a friend that was in the “heating business”.  This friend admitted he had no idea about this water furnace thing and proceeded to “help him out” by replacing it all with a new 90+ gas furnace.  Of course he gave him a really good price and hauled away all the old (2 years old) water stuff free of charge. 

 

Point being, education of the general public is key to the success of these new heating systems. 

 

By the way, I didn’t have the heart to tell him that his friend screwed him and that there may have been nothing wrong with geo system.

So much for a short posting!!

Regards,

"People can hear 10 horror stories about poor gas system installations and still pick gas as a heating source."

Yeah, and what about the houses that blow up and burn down from gas? Gas is an option in a home, not a must. Electricity is more of a must than an option. People will already have electricity in their homes. Why bring the danger of gas? And what about Carbon Monoxide? I sure haven't heard of anyone dying or going to the emergency room from CO when they have no source for it.

OMFG, Unbelieveable. A half an hour of internet searches and he could have taught himself enough to know that the "water furnace thing" is 3 times more effiecent than the best gas furance you could buy.

I don't claim to be an expert in much of anything, but I can read.

TechGromit,

 

It is pretty unbelievable; I cringe to think it was my own cousin.  I would of thought that this “friend” would have least had him contact someone that knew something about heat pumps.  To late to do anything now, but I still wonder where the equipment they removed ended up.

 

I failed to mention that his friend also sold him a new a/c system with the deal too.  I found this out because he was complaining about the noise from the condensing unit that was located near his hot tub.  It’s hard to talk while in the hot tub when the a/c is running!

I'm new to this forum and new to GHP. I agree with tuffluck that education is a major problem in regards to the majority using GHP or PV. I live in CT and last summer I started looking into PV. After researching for 100s of hours and having numerous phone calls with different people to educate myself, I finally went on the grid on Mar 18,2008 with my 3KW PV system. OK, now after paying 3.82/gal. for fuel oil, I want to attack my heating bill. I was dispointed and disturbed that when I went to the CT website to learn about GHP there was nothing to be found about GHP alternative energy. I think our Federal, State, and Local Governments are not doing there jobs in pushing these energy alternatives. I feel a model home in different areas in the country should be built and tested using oil, gas, electric, and GHP for heat, and posting the results comparing the cost between them including the pros and cons. The internet is great, it's the best research tool I have ever had, but the amount of info out there is massive, and it is hard to figure out what info is accurate and what is inaccurate. I'm glad I found this forum because I think it can help me sort this out. I'm just starting to see if GHP is a viable alternative for me. I don't think that everybody is willing to spend the time and effort that I or most of you on this forum are willing to spend to research alternative energy. I think the government could have a major website to simplify and consolidate the info for the average person to revue and make a decision if any of these alternatives are for them. I also feel that america has to wake up and change the way they look at things. When I told my friends that I was putting up a PV system, the first question I got was "how long will it take for you to get your money back?" How come nobody ask that question when they buy a new $40,000 car. My reply was "when you remodeled your kitchen for $25,000 did you ask yourself that question?" In 10 years your used kitchen won't be adding any significant value to your house. I see it as, I paid $9,700 for a system that cost $25,500, about 8.50/watt installed before rebates. My property value according to the National Real Estate Assoc. has increased $10,000+ and they can't charge me property tax on it. This value will hold for 20+ years. The $9,700 I paid is like a high interest CD, it will pay me 8% tax free (in savings on my electric bill) the first year, and will do nothing but go up for the next 20+ years. I see it as a no brainer. I'm hoping to find the same about GHP. Thoughts??

Excellent point, no one blinks a eye when you say your buying a new BMW for 40k, but if your installing a Solar Photoelectric system for 40k they look at you like your pissing in the wind. What's PV stand for anyway, I assume it's Photoelectric panels, but I'm not familar with the term.

Quote, "My property value according to the National Real Estate Assoc. has increased $10,000+ and they can't charge me property tax on it."

In theory yes, but in actual pratice the value of your property is only as high as someone is willing to pay for it. I'd be willing to wager that if a home buyer where to see two houses exactly the same side by side on a street, one Gas heated with a regular roof and one with PV and GHP most would pick the gas heated house, its something they are familar with. People are resistant to change. That's why Personally I feel the recent spike in fuel prices is overall a good thing, People only change when forced to, and money is a powerful modivating factor. So bring on the $5 a gallon gasoline I say.

PV = PhotoVoltaics

 

Thanks
What a great site - very helpful

Thanks for the feedback and link

geogreenas,

Return on investment is a major hurdle. I would like to go geo but I need to justify where my investment goes. For example; You take an average quality home as a starting point. Let's say if you install a geo system for $30,000 and cut your heating bill in half, $300 reduced to $150. The true heating season is mid Nov- mid Mar, 4 months. Cooling season might be 3 months but AC bills are reduced from $150 to $75. So you save less than $1000 a year for your investment. The $30,000, if in your morgage, has intrest of $1500 a year. Also, the equipment has a 25 year life.

Another point of view I have seen is, invest in the construction that reduces the heat demand in the first place. Take away that "average construction" element by ICF, SIPs and super insulation methods. What is considered to be good frame construction, 2x6 stud walls, really only has whole wall R-values of R-13 due to the R-19 fiberglass is interupted by studs every 16" and even more at corners and windows. Air infiltration can also a big loss in frame construction. If $30,000 was invested in greatly improving the air tightness and insulation value, I believe the reduced heating bills would be as much or more as Geo.

Then next question is why not both? The return is reduced on the second investment. If we imagine several energy saving systems are used and each one saves 50%. The $100 ele bill goes from $100 to $50 for the first system. The second system takes the $50 to $25. A third would take it to $12.5. Each addtional investment has less and less effect. Point is, select your investment/s wisely.

Insulation has a good return. Let's say you have an ICF home and you are looking for more investments for energy savings. The ICF has a totle of 5.25" in foam, R-23. (Already nearly double of a 2x6 wall whole wall R-vale). You look at adding 4" foam additional R-18. Expanded foam is about $10 a sheet for 4'x8' 2" or doubled, $20 for 32 sq-ft of 4" thick. The home is 3000 sq-ft, 2 levels 30' x50'. With 10' tall walls, 3200 sq-ft of exterior walls. So the material cost is $2000 to bump the R-23 to R-41. The attic/roof works about the same, 30x50' is 1500sq-ft, so for less than $2000 you could add 8" of foam to the existing insulation plan, adding R-36. A home with R-70 attic and R-40 walls will not be depending on a large heating system.

I like the concept of geo and I look forward to the day the price comes down

Patrick T

1. The Very best Gas/oil systems, 90% efficency, Standard base line Open loop Geothermal system about 270% effieceny. That's 3 times better, thus you heating bills should be cut by a 1/3 in thoery. i think your saving will be higher than your estimating.  

2. Oil and Gas prices on average are going to continue to rise year after year, not go down.
 
3. If you building a new house, the costs shouldn't be 30k more than a standard heating system.  Given this is a very general estimate, but a 5 ton open loop system runs about 8k installed, not including the well / pump. each heating zone, like a 2nd floor adds another 8k to the price. How much is that gas/oil system going to run you? I'd say at least 4k for the best model available. So your true cost is a lot less then 30k.... Unless of course if your installing a Closed loop DX system, you costs could then be well into the 30k ranges, but than look for an effiecency rating of about 400% than, that's more than 4 times the best gas / oil system.
 
4. Better Installation will reduce the size of your heating system required, weather its gas, oil or Geo. thus a lower installation cost. 

5. I don't know where you live, but it's Mid april here and it still gets down to the 30's at night, the days are beginning to warm up, but the nights are still cold enough to justify having the heat on. It all depends on where you live, but in some areas of the country, heat is a requirement well into May at night. Your True heating season range is too narrow in my opinion.  

6. The replacement cost of any system is going to be lower than the inital installation. If it's a closed loop system, the loops should be good for at least 50 years and that's just a mininum estimate, there's iron water pipes in older cities that are over 100 years old. I think you will find most close loops will out live there installers. The same is true for open loop wells. the pump might go, but you don't have to redrill the well, a new pump is going to be a lot cheaper to replace. And as Geothermal slowly become more mainstream, I do beleive the prices of the systems will come down somewhat. It will proably always be more of an initial investment than gas or oil systems, but the savings are well worth it.          

Careful - efficiency is only part of the story when it comes to ROI. The region, and even the exact locale dictates the operating cost. The annual heating and cooling loads are obviously very different throughout the country. The other key component is fuel cost which also varies greatly. In my particular area for example, oil and propane are currently running about 4 times as much as much as a GSHP, natural gas is only about 50% more, and plain old coal is still the cheapest option (or wood if you have a source for it), even at 60-65% efficiency. Future energy prices are impossible to predict, but over the long term, electricity tends to track fossil fuel prices.

Installation costs also vary hugely depending on type of system and region. On this web site and others I've seen bids of 30-50K and up for moderately sized geo systems. In my case, since my heating bill with oil was approaching $6000 per year and I did my own installation, my GHSP should pay for itself in less than 4 years (2 years if you consider my oil boiler was in desperate need of replacement anyway). Conversly there are many areas of the country where a GSHP will never pay for itself due to low annual loads, relative fuel prices, high installation costs, or come combination of these factors. GSHP payback really has to be calculated on a case-by-case basis.

Well Said!!

It is true  prices vary widely.  We are starting a job this week that will have a 5 ton heat pump with a slinky loop field.   Total price  $21,252.