Geothermal Energy. How it Works

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1 Geothermal Energy The Ocean Pines Association Board of Directors asked the OPA Environment and Natural Assets Advisory Committee (ENAAC) to provide information about how geothermal energy could be useful and cost effective for buildings being considered to be upgraded or rebuilt in the community. The following is a summary of the information gathered from a variety of sources listed in this document for the Board. The ENAAC recommends that the Board pursue efforts for geothermal energy to be used in the community s buildings. If a new building is to be built or one is to be updated and retrofitted with new systems, geothermal installers should be requested to respond to a proposal for consideration. As part of that consideration, the life cycle costs and benefits need to be taken into account. Geothermal systems have shown that the cost savings over the life cycle of the system make up for the initial investment costs. In addition to costs savings over the life cycle of the building, there are environmental and health benefits associated with using more renewable energy sources. Geothermal energy is an enormous, underused heat and power resource that is emits very little greenhouse gas, provides reliable energy, and is fully homegrown, helping to make us less dependent on foreign oil. Geothermal resources range from shallow ground to hot water and rock several miles below the Earth's surface, and even farther down to the extremely hot molten rock called magma. In some places most famously Yellowstone National Park geothermal activity occurs at the earth s crust, and the ability to tap these sources for utility-scale power is viable. But almost everywhere, the upper 10 feet of Earth's surface maintains a nearly constant temperature between 50 F and 60 F, making residential and commercial-scale geothermal a possibility for anyone. Geothermal heat pumps produce energy savings of up to 40% while using energy that is 70% clean. Geothermal heat pumps leverage the consistent temperature of shallow ground to provide heating and cooling for an adjacent structure. These are built on a simple system of looped coils filled with fluid that help to transit heat to and from a heat pump that regulates indoor temperature. How it Works A geothermal heat pump system consists of pipes buried in the shallow ground near the building, a heat exchanger, and ductwork into the building. In winter, heat from the relatively warmer ground goes through the heat exchanger into the house. In summer, hot air from the house is pulled through the heat exchanger into the relatively cooler ground. Heat removed during the summer can be used as no-cost energy to heat water. March 11, 2011

2 They may be used in combination with solar photovoltaic systems to form geosolar systems, further reducing the electricity demand. Geothermal Energy in Maryland In Maryland, the geothermal heat pump for residential and commercial heating, cooling, and hot water is the common application of geothermal or more specifically ground source energy. Geothermal heat pump systems are viable in just about any location in the state and can provide a consistent, reliable, and largely clean source of energy for residents. Studies show that approximately 70% of the energy used in a geothermal heat pump system is renewable energy from the ground. Geothermal heat pumps can dramatically reduce energy costs. The U.S. Environmental Protection Agency estimates that geothermal heat pumps can lower energy bills by 30%-40%. Geothermal installations require professionals to help design and install the system, as well as contractors who can do the labor required to install the loops and the pump equipment. Why Geothermal Heating and Cooling? The most readily developed source of geothermal energy in Maryland is the geothermal heat pump. Also known as the ground source heat pump, it is a highly efficient renewable energy technology, using 25% 50% less electricity than a conventional heating or cooling system. Geothermal heat pumps can reduce energy consumption up to 44% compared to air-source heat pumps and up to 72% compared to electric heating with standard air-conditioning equipment. Geothermal systems also can provide water heating for household use or even pools or spas. Excess heat from the geothermal heat pump's compressor can be transferred to the building's hot water tank, even operating when the heating and cooling systems are turned off. Additional benefits of the geothermal heat pump include: Humidity control maintaining about 50% relative indoor humidity; Space-efficient and easy installation in new or retrofit situations, the hardware requires less space than conventional HVAC systems; Flexible zone space conditioning allows you to set different temperatures for the different areas of your home; Long life relatively few moving parts which are durable and highly reliable, with systems often lasting 20 years or more and warranties of years for the underground piping. Quiet with no outside condensing units. 2

3 How Do Geothermal Heating and Cooling Systems Work? The geothermal heat pump takes advantage of the constant temperature of the ground cooler than the air above it in summer, warmer in winter by transferring heat stored in the Earth or in ground water into a building during the winter, and transferring it out of the building and back into the ground during the summer. The ground, in other words, acts as a heat source in winter and a heat sink in summer. It is important to note that geothermal heat pumps are different from air-source heat pumps. Air-source heat pumps transfer heat to or from the outside air while geothermal, or ground-source heat pumps, exchange heat with the ground. This is much more energy-efficient because underground temperatures are more stable than air temperatures through the year. A geothermal heat pump system includes three principal components: Earth Connection: Using the Earth as a heat source/sink, a series of pipes, commonly called a "loop," is buried in the ground near the building. It circulates a fluid (water, or a mixture of water and antifreeze) that absorbs heat from or radiates heat to the surrounding soil, depending on whether the ambient air is colder or warmer than the soil. Heat Pump Subsystem: For heating, a geothermal heat pump removes the heat from the fluid in the Earth connection, concentrates it, and then transfers it to the building. For cooling, the process is reversed. Heat Distribution Subsystem: Conventional ductwork is generally used to distribute heated or cooled air from the geothermal heat pump throughout the building. Will Geothermal Work Well for your building? Geothermal heat pump systems are viable in just about any location in the state of Maryland and can provide a consistent, reliable, and largely clean source of energy. Geothermal heat pump systems are not do-it-yourself projects. To ensure good results, the piping should be installed by accredited professionals. Designing the system also calls for professional expertise: the length of the loop depends upon a number of factors, including: Whether you use vertical or horizontal loops; Your building's heating and air conditioning load; Local soil conditions and landscaping; and The severity of your climate. 3

4 Depending on the site, the geothermal loops can be installed vertically, sinking down into the ground, or horizontally, laid out flat beneath the surface of the ground. In either case, homeowners may need to rip out existing landscape to accommodate the system. Larger buildings requiring more heating or air conditioning generally need larger loops than smaller buildings. How Much Do Geothermal Heating and Cooling Systems Cost To Install? Geothermal systems cost more than traditional HVAC systems sometimes twice as much for a comparable unit. Add to that the cost of installing the geothermal loops, and the cost of a full system runs tens of thousands of dollars. But don t get sticker shock! Many cities and counties in Maryland offer low or no interest loans and property tax incentives for the purchase of geothermal heat pump systems. Rebates, tax credits, and exemptions are available from the Federal and state governments too. How Much Will I Save on My Heating and Cooling Bills? The U.S. Environmental Protection Agency estimates that geothermal heat pumps can lower energy bills by 30-40%. Most geothermal heat pumps systems recoup their costs in savings within 5 to 10 years. Savings on geothermal energy has been marketed to the masses in many different ways. Here are a couple of key points about geothermal heating and air conditioning: Everyone heats and cools their homes. Some people use all electric sources to heat and cool their homes such as central heat and air conditioning, heat strips, window air conditioners or box fans. Some people use natural gas, propane or oil burners. Some use a combination of these. No matter how you heat and cool your home, it costs a specific amount per year to do this job of heating and cooling. All of this cost to heat and cool your home will show up in your electric bill if you use all electric sources of heating and cooling. If you use part electric and part oil or gas, the cost for heating and cooling your home will be split accordingly between the two. Geothermal heating and cooling reduces the cost to heat and cool your home. Of all the ways to heat and cool your home, geothermal heating and cooling uses the least amount of energy and therefore costs the least. You must determine your savings by energy usage NOT energy costs. For several years, Delmarva Power had a cap on the costs to provide me electricity. A few years 4

5 ago, this cap was lifted and bills increased by 70% immediately. Did people use more electric to incur this cost? No, people were just paying more for the same amount of electricity usage. In order to determine savings, you must go to the source of the savings, which is energy usage, shown on your bill as kilowatt hours, or KWH. Case Study 1 Case Study from Weber Drilling and Geothermal : Let me use my home as an example: I live in an all electric home. I heated my home with baseboard heat strips and in the summer I cooled with window air conditioning units. During the coldest months and during the hottest months my energy usage, not the actual cost of my bill, was around 2700 KWHs per month. Months that had only partial usage of heating and cooling were averaging 2450 KWHs per month. The most important months, though, were the months I did not heat or cool my home. These months showed me how much energy was needed to run my whole house, i.e. water heater, appliances, because these items run every month all year long. Looking at my bill, I now know the amount of my base electric usage, which is around 1600 KWHs. Regardless of what the electric company charges me to use 1600 KWHs, the fact is I am still using 1600 KWHs every month to run my home. Now, how much extra energy did I use to heat and cool my home utilizing baseboard heat and window air units? On average, I used an additional total of 5500 KWHs for heating and cooling in the hottest and coldest 5 months, and I used an additional total of 4250 KWHs in the 5 partial months. So what do these figures mean? If I had not used any heat or cooling source for my house over a one year period, I would still have used 19,200 KWHs. Because I used a very inefficient way of heating and cooling, I added on an additional 9750 KWHs to my yearly bill. If you will notice, my heating and cooling costs also appear to be about 34% of my yearly usage. Installing a closed loop geothermal system has significantly affected those numbers. My energy usage has dropped to the point that my heating and cooling is now only 5% (1440 KWHs) of my total yearly bill instead of 30%. That is a savings of 8310 KWHs! I want you to see this example another way, too. If the electric company charged me.15 cents per KWH, the old way to heat and cool my home would have cost me.15 X 9750 KWH = $ per year. With the reduction in energy usage since the geothermal installation, I am now paying.15 X 1440 KWH = $ per year. This breakdown on energy savings can be done no matter what your energy source, as long as you can get an idea of how much of that energy you are using. If you are using propane, for example, you may need to contact your propane company to assist you in determining how much propane is used for actual heating, as opposed to using it for cooking or your hot water heater. So in summary, geothermal pays for itself in energy savings which translates into fewer dollars spent on total heating and cooling throughout the lifetime of your system. NOTE: See Appendix A (page 9) for another Case Study. Incentives and Financial Opportunities There are several tax credit, rebate and grant opportunities available for geothermal and renewable energy projects. There are federal and state, and in some areas, local incentives that could be available to help offset the costs for installation. Licensed and 5

6 certified installers would be up to date on all of the incentive programs available and should be helpful in being able to identify and apply for the appropriate incentives. For residential installations there are examples such as the Federal government offering the Investment Tax Credit a 30% credit against income taxes due to the IRS. Also, there are rebates of up to $3,000 for residential heat pump systems can be applied for through Maryland s Geothermal Heat Pump Grant Program - Additional resources for the latest in financial incentives can be found at the Maryland Energy Administration s Incentives & Resources page and the Database of State Incentives for Renewables and Efficiency. Finding a Geothermal Contractor It is important that you work with an accredited and experienced geothermal contractor who first can conduct a thorough analysis of your residential site. Designing the system also calls for professional expertise. Questions to ask when looking for a geothermal contractor include: Are they licensed as a Maryland Home Improvement Contractor, electrician, HVAC, or plumbing contractor? Does the contractor offer energy audit services or will you need another contractor? What kind of site analysis and consultation services does the contractor offer prior to installation? How many installations have they done over the lifetime of the company and in the last year? What kind of certifications does their staff hold? Is someone on the staff certified by the North American Board of Certified Energy Practitioners (NABCEP)? How will they help you with incentive and grant funding applications? Does the contractor only install the system or do they also provide maintenance? Are they a national organization or local to the state? The Maryland Clean Energy Center resource directory identifies Maryland companies who specialize in geothermal heat pump installations. Green Energy Design is the only Maryland Eastern Shore Company listed on the Maryland Clean Energy Centers website. Weber Well drilling is located in Dagsboro, DE. Green Energy Design 19 Goldsborough Street Easton, MD

7 (410) Contact Person: Ryk Lesser Website : Weber Well Drilling DuPont Blvd Dagsboro DE (302) geothermal@weberwelldrilling.com Website: There are other companies in Maryland and Delaware that would be qualified to do this type of work. Resources Used for Information The International Ground Source Heat Pump Association and the Geothermal Exchange Organization also have directories of accredited geothermal heat pump professionals. Maryland Clean Energy Center (MCEC): Maryland Energy Administration: U.S. Environmental Protection Agency: U.S. Department of Energy: Geothermal Energy Association: Idaho National Laboratory Geothermal Energy Program:: Page&parentid=14&mode=2 Geothermal Education Office: weber drilling and geothermal - 7

8 Green Energy Designs - Recommendations 1. The Board should hire an engineering consultant to do a feasibility study including the technical, engineering and cost analysis on options of different systems for heating, cooling and electricity consumption of the building being considered for new building, remodeling, retrofit or upgrade. 2. The Board should request proposals and qualifications for firms interested in providing geothermal and energy efficient systems for any proposed project. Since any building would be of different size and structure, specific information would be needed to determine the costs and operation and maintenance costs of the building. 3. The requested information should include the firm s qualifications with references, a pricing structure that outlines comparison of types of energy systems and a scope of work to get the most competitive, lowest cost price that benefits the objectives that are being requested. The objectives should be to have: a. A low cost construction and installation of an efficient energy system. b. A low cost energy efficient system that will keep operation and maintenance costs low over the lifetime of the structure. 4. Any new building or modified building should use the most energy efficient materials (cfl lights, insulation, doors and windows, etc.) as part of the construction. 5. Any buildings being considered for retrofits should undergo an energy audit to determine recommendations on being energy efficient to save money. 8

9 Appendix A. Case Study 2 Case Study: Geo-Thermal Systems: from There is no question that moving from a conventional heat pump unit for heating and cooling your home, to a geothermal system, will save you thousands of dollars over the lifetime of the system. A typical heat pump system installed in a home that is five years old or more, will likely be rated at 13 SEER. A new Tranquility Geothermal system from Climatemaster will be rated at a minimum of 26 SEER. This translates into a 50% reduction of that portion of your electric bill devoted to running the HVAC system. Plus, most geothermal units can be adapted to generate hot water for domestic use. In that case, you could add the savings from running your existing hot water system, to the savings geothermal returned on your HVAC bill. GEO system Pay Back Work Sheet The data below illustrates how a geothermal system proposed for this clients home, will pay for itself in just over 6 years. Scope of Work Remove existing heat pump condensers, air handlers and gas fired furnace units. Drill (8) vertical wells, trench and bury lines, plumb to manifolds and pump stations. Install (1) 5 ton and (1) 3 ton Climate Master Tranquility 27 geothermal units. Install (1) modulating propane gas furnace to the 5 ton unit and (1) 10 kw auxiliary heating unit to the 3 ton unit. All misc. materials and labor to install to existing duct work. Costs: Total Cost of the project $ 44, Less 30% Federal tax Credit. $ 13, New Subtotal $ 31, Less Maryland State Energy Grant $ 3, Net System Cost $ 28, Breakdown of Energy Savings Electrical Savings: Current, average monthly electric bill $ Portion of the electric bill consumed by existing HVAC = 2/3 s $ 600 x 66% = $ 396 /mon. (using existing 13 SEER equipment) New Geothermal units operate at 27 SEER or twice as efficient as existing Units. So, replacing existing units with geo should cut operating cost by 50% $ 396 x.50 = $ 198 / mon. electrical savings. X 12 = $ 2,376 savings / year 9

10 Propane Savings: Current, average monthly propane bill.....$ Portion of the propane bill consumed by existing hot water heater = $ (see calculations below) Typical yearly BTU requirements of a single family water heater = 16.7 million Average cost of 1 million BTU (propane) = $ 22 x 16.7 = $ = $ 30 $ $ 30 = $190 x 75% (portion of the remaining LP bill dedicated to running the furnace) = $ (the remainder of the gas bill is assigned to the stove and fireplace) $ could be saved monthly because the Geo system would provide 100% of the heat needed, 98% of the time. The $30 portion of the hot water heaters consumption could saved completely as the Geo system will make hot water for the house as a byproduct of its operation. Summary: $ 30 / mon water heater savings + $ 142 / mon. gas heating savings = $ 172 / mon $ 172 savings /mon x 12 = $ 2,064 savings/ year $ 2,064 propane savings/ year + $ 2,376 electrical savings/ yr = $ 4,440 /yearly savings Net Geo system cost $ 28,234 $ 4,440 yearly savings = 6.4 yrs to pay off. It is also worth noting that the Federal Renewable Energy Credit (30% of the total cost of the system, no cap) is good for geothermal systems purchased through