As society embraces the sustainability and electrification movements, renewable energies are capturing more and more of a market traditionally dominated by fossil fuel appliances. And, with financial incentives at all levels of government and consumers looking for a cost-effective way to lower their carbon footprint, geothermal industry experts are urging HVAC contractors to train up and cash in on a technology that has seen incredible growth over the past several years.
Geo offers numerous other advantages, including resilience in the face of natural disasters and the ability to operate in any climate, all while only requiring a small indoor footprint to provide both heating and cooling. Customers are also starting to demand more accessible data from their systems to monitor energy usage, and new geo tech doing just that is hitting the market.
![Geothermal Unit.](/ext/resources/2024/03-March/Geothermal-Unit.jpg)
SMALL FOOTPRINT: Because geothermal units can do heating and cooling all out of the same body, the amount of space required for installation or a retrofit is minimal. (Courtesy of WaterFurnace)
executive director and founder
Geothermal National & International Initiative (GEO-NII)
Market Growth and Incentives
Jack DiEnna, executive director and founder of the Geothermal National & International Initiative (GEO-NII), has been in the business for over 50 years and is a nationally recognized authority on all aspects of renewable technology, specifically geothermal heat pumps, and has watched the technology and market for geo grow over his career.
DiEnna said the most recent increase in the geo market has already proven phenomenal, but it’s not done yet.
“There's never been an opportunity for the trade as there is right now,” DiEnna said. “This technology is going to provide another way for contractors to make their fortune.”
Over the past several decades, DiEnna said one major factor has stifled the growth and adoption of geo — upfront costs.
“But now with the investment tax credit, and the fact that we have people amortizing it over the course of 30 years or better, people are recognizing it's an asset that they want to own,” DiEnna said.
As for the market being hot, Tim Litton, director of marketing communications at WaterFurnace, agrees — WaterFurnace, he said, is coming off two record-breaking years, and if they keep the pace and continue to hit growth targets, this year is also looking like one for the books.
Litton said it’s hard to exactly nail down what’s causing geo’s success streak, but he said he believes a lot of it has to do with a change in the way society perceives its energy usage. Whether it’s Tesla and GM investing in electric cars or a homeowner looking to lower their carbon footprint, the bottom line is that clean energy solutions are gaining in popularity, and the HVAC industry is no different.
The enormous role tax credits are playing in the geo revolution also can’t be ignored — with a 30% uncapped federal tax and a plethora of utility rebates, people are starting to cash in. And, in some localities, these incentives go even further. New York, for example, has an additional 25% tax credit on top of the federal. In Maryland, as a way to offset pollution from utility companies, there are energy credits available that literally pay the customer to have geothermal. Depending on the size of the house, a Maryland resident could be assigned 40-to-44 credits. Using easy math with 40 credits at $100, that’s $4,000 a year a geo homeowner would get from the utility company simply for having geothermal installed.
“You'll get a quarterly check for $1,000. Every quarter. For the next 20 years,” Litton said. “It literally not only pays for itself but provides a profit — and that's not even taking into account the 30% tax credit, any utility credits, the energy savings. So in Maryland, it's a no-brainer for the customer.”
Advantages of Going GEO
As electrification continues to be one of the dominant trends in the HVAC industry and other facets of everyday life, there’s still that elephant in the room — whether or not the grid can support the additional load presented by new electric units. DiEnna said this technology is not only helping to phase out fossil fuels, but also supporting a stronger power grid by reducing total demand.
“For every ton of installed capacity of geothermal technology, you reduce peak load by 0.55 kW, which means that when one of your contractors (installs geo) in a house with 8 tons of capacity, they're reducing peak load by about 4.5 (kW),” DiEnna said.
Rob Derksen, business development manager at Enertech, also noted new advances in geo tech are allowing it to become even more efficient than previous iterations.
In a traditional hydronic system, typically there is a water-to-water heat pump feeding a buffer tank. From that buffer tank, heat energy is pumped through the house via radiant floor panels, low-temperature wall panels, radiators, etc. With these traditional systems, that buffer tank is being kept warm, which is unnecessary with modern tech. In fact, the new systems eliminate the buffer tank altogether, increasing efficiency.
“We connect the heat pump directly to the load with the variable speed pump, and we monitor the supply and return temperatures based on a heat curve,” Derksen said.
New technology has the ability to monitor the exact energy usage of the home through the use of temperature sensors, providing the ability to make adjustments exactly where they need to happen.
Variable-speed technology, for either water-to-water or air-to-water heat pumps, is expected to be the next big trend in the geo market, especially as zoning becomes more popular. If a certain zone is calling, the pump can deliver just the right amount of water to the floor or heating unit, eliminating unnecessary energy usage.
“We can modulate the equipment's heat delivery because we're connected directly to the load,” Derksen said.
Aside from heating a home, Derksen said they can do up to 100% of domestic hot water with their systems, which is another big selling point for homeowners. Since these systems don’t require stealing indoor air someone has already paid to heat, geo is an incredibly efficient option for providing hot water due to the simple physics of using heat from the ground. Geo is also measured using an EER (energy efficiency ratio) versus a SEER (seasonal energy efficiency ratio) because the ground temperature is the same all year round, regardless of geographic location, meaning fluctuating seasonal temperatures don’t impact its efficiency.
Capitalizing on Cost Savings
In almost every circumstance, customers will be getting a system with a lengthy lifespan.
![Ground Loop Installation.](/ext/resources/2024/03-March/Ground-Loop-Installation.jpg)
LONGTERM INVESTMENT: Given there are no mechanical or chemical fasteners in geothermal loops because everything is fused by heat, the ground infrastructure will be reliable for years and could even outlast the house it is supplying. (Courtesy of Getty Images)
“When you look at the average life of geothermal, it's 24 to 25 years,” Litton said. “You have to replace it less often and, when you do go to replace it, you only have to replace the interior equipment — the outdoor loop will probably outlast your house, honestly.”
Loop problems are also exceedingly rare, Litton added, as there are no chemical or fastener-held joints that can fail — everything is done with heat-fuse HDPE piping.
The Electric Bill
The consumer wants to see they made a good investment, and while these new units are certainly highly efficient, that’s not always the impression homeowners are getting. Because these units are electric, naturally the electrical segment of the utility bill is going to increase. Even though the natural gas bill may no longer exist, all the homeowner is seeing is the higher electrical bill, and the only difference is they now have a new geo system.
“It's a matter of just getting out there and making sure that as we pitch geothermal, we're keeping (higher electricity bills) in the forefront and letting people know, ‘Hey, your electric bill may go up a little bit, because we're moving you from heating with a fossil fuel to heating now with electricity and geothermal,’” Litton said.
The industry is also looking at other creative ways to use technology to combat this misconception. Derksen said new monitors will track the unit’s exact energy consumption, so there is direct proof of what the unit is using. Enertech is also rolling out a new energy monitoring interface system, called Epic Controls, which will soon be in all of their models, that will allow homeowners to track how much energy the system is consuming, as well as track historical data, loop temperatures, kilowatt hours consumption, etc.
“It also gives our contractors access to any kind of fault indication, so they will be able to be pre-emptive in knowing if there was a system malfunction or failure,” Derksen said. “They would get alerts and notifications at the same time the homeowner does.”
How Contractors Cash In
DiEnna said making the leap to geo isn’t that difficult and recommends that anyone who wants to diversify their offerings undergo training. The GEO-NII website offers plenty of resources for those interested.
“You can find a niche market where you're better than your competitor because you've got better technology,” DiEnna said. “Or better yet, you recognize that there are five K-12 school buildings in your area, and they all need upgrades.”
There are around 136,000 K-12 schools in the United States. An estimated 52,000 of them have failing HVAC systems. Given there are tax credits and incentives available, DiEnna said this presents a once-in-a-lifetime business opportunity for those bold enough to chase it.
Tax credits and geothermal have a storied history — while there was typically some sort of incentive available, a lot of that went away in 2017, and along with it, a lot of contractors offering geo installation.
“The industry, by and large, had kind of gotten used to selling on a tax credit and not as much on the benefits of geothermal because geothermal in most parts of the country pencils out whether it has tax credits or not,” Litton said. “So they had gotten a little bit too used to selling on the tax credit when it went away.”
But with this renewed push for clean energy, Litton said contractors are looking to diversify their offerings again and want to get back in the geo game.
“Demand is higher than we've ever seen it before, and society is moving towards (renewables),” Litton said. “For those that aren't familiar with geothermal, now's a great time to get involved, because it's only going to get better, the technology is only going to advance, and adoption is only going to get higher. So we think geothermal is a tremendous incentive for contractors — it's a high margin, good way to differentiate your business and make money while you're doing it.”
Litton also noted these new tax credits are now available to entities that were previously ignored, creating another new market.
“Now, there's a direct pay option with the tax credits so that even churches, schools, municipalities that don't have a tax liability, it will now be treated as almost as an overpayment of taxes so you'll get a check for the full amount of the 30% tax credit, even if you're one of those entities,” Litton said.
For those interested in offering geo, Litton said most contractors already have a good deal of familiarity with the equipment and skill involved. After all, at its core, it’s basically a heat pump.
“If you're comfortable working on heat pumps, you're halfway there, the loop is the main difference in some of the technology that separates us,” Litton said.
To start, Litton suggests getting familiarized with loop and sizing, along with making sure there are enough BTUs for the house. For nailing down more specifics, there are numerous training opportunities, a lot of them from the manufacturers themselves, and some, like Waterfurnace, even require it.
“Personally, we make our contractors complete geothermal training before we sell them equipment; we're a little unique in that way,” Litton said. “We really want to protect the integrity and the reputation of the industry — because every single bad installation gives the technology a bad name, even though it's not the technology that's at fault.”