GeoExchange Economic Considerations

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GeoExchange Economic Considerations. Presented by : Warren (Trey) Austin, PE, CEM, CGD, LEED-AP Geo-Energy Services, LLC. Agenda. Basic Design Influences in Cost Residential Financial Factors Commercial Financial Factors. Operational Considerations. - PowerPoint PPT Presentation

Text of GeoExchange Economic Considerations

GeoExchange Economic Considerations

GeoExchange Economic Considerations

1Presented by:Warren (Trey) Austin,PE, CEM, CGD, LEED-AP Geo-Energy Services, LLC

1AgendaBasic Design Influences in CostResidential Financial FactorsCommercial Financial Factors22Operational ConsiderationsEfficiencies of COP and EER are dependent of EWT from Loop FieldEWT typically range from 30F to 100FTypical Operation Pressures are 25 psig to 60 psigP/T ports are critical for diagnosis & troubleshootingUse qualified/certified professionals for design and/or installation

33Profile DefinitionBoth Peak (Btu/hr) and Cumulative (Btu) are required to size commercial systemsResidential systems can be sized with peak load calculation and bin dataMust use hourly simulation programTRACE 700eQUESTHAPRight Suite44Building Design ConsiderationUnderstanding the daily, monthly, and annual loading profileHotel (5-10pm) 80% occp 5 daysResidence (5-10pm)- 80% occp 7 dayOffice (7:30-6:00)- 5 daysResulting Energy Load to GHEX (5000sqft)755081009200

55Ground Loop Temperature Profile

6Tfluid = 9600Tideal = 32,960COPfluid @ 45F EWT = 3.3COPideal @ 60F EWT = 4EERfluid @ 95F EWT = 14.1EERideal @ 70F EWT = 19.66Borefield Input InformationPerform Thermal Conductivity Test to obtain: Primary:Local Ground TemperatureFormation Thermal ConductivitySecondary:Formation Thermal DiffusivityNot Necessary on all projects; generally:Systems >20,000 ft2 or >30 tonsCan save 15-25% on installation cost

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1111Site FeasibilityDo vertical structures interfere with layout?Can the GHEX be phased?Future expansion needs?What happens if local ground thermal characteristics are not known?1212Economic FeasibilitySimple Payback versus Life Cycle PaybackWhat are the differences?Simple is net installation cost divided by the first year utility cost savingsLife Cycle accounts for several factors over a specific period of time, typically 20 years resulting is more accurate and realistic results1313Economic FeasibilityLife Cycle Cost Analysis is best way to account for all variables. What are they?Installation CostsMaintenance CostsUtility RatesEscalation FactorsCost of CapitalDepreciation1414Economic FeasibilityGHEX installation cost is often 90-100% of installation cost differential If TC Test is completed, use information to obtain preliminary installation cost of GHEXEliminate Rule of Thumb when possible

1515Integration with RenewablesIntegration with other renewable technologies, mostly:Solar Photovoltaic/Geothermal/Wind/BiomassSolar ThermalEnhancing and merging technologies to maximize performance and reduce combined economic impacts1616Residential EconomicsRebates/Tax Credits Depend on local utilitiesSpecial Schedules/TariffsDirect Financing Options 30% Federal Tax Credit on System costMust be Energy Star Rated list @www.engergystar.gov

17172007 IGSHPA Technical Conference & Expo18Project ConsiderationsBe aware of Electrical RequirementsGSHP projects typically need more serviceGo from standard 200 amp to 325 amp or 400 amp serviceCritical to coordinate with GC or ECIs 3 phase available, it may reduce needed amp service?Is PV integrated into system?182007 IGSHPA Technical Conference & Expo19Project ConsiderationsKnow the Equipment FunctionalityWater-to-WaterWater-to-AirSingle or 2 StageCombination UnitsW-to-W and W-to-AW-to-A w/dedicated DHWMulti-Circuit

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21Residential Economic FeasibilityPost-ARRA of 2009 LCCAInstallation cost ranges $12.00 to $22.00 / ft2Ducted systems vs. Radiant systems can significantly impact installation costAccessories such as a zone control system, air filtration, etc. can also affect total costOperating costs $0.25 to $0.85 /ft2-yr Paybacks Average: 2-5 yearsCan be immediate to 2 yearsSome systems are 6-10 years

2222Commercial EconomicsPrefer Life Cycle Analysis over Simple PaybackLook for 3rd Party Financing Partners for Tax Credits of Non-profit entitiesUtilities, ESCOs, Investment firms, or some Geothermal Companies directNatural Gas Prices currently make a difficult choice on straight energy savings vs. payback consider other factorsCan still be competitive for New Construction2323Economic FeasibilityInstallation cost ranges $18.00 to $24.00 / ft2Operating costs $0.45 to $0.85 /ft2-yr Paybacks Average: 7-11 yearsCan be immediate to 4 yearsSome systems were 12+ yearsRebates/Tax Credits Depend on local utilities- special utility rates10% Commercial..plus.

2424Economic FeasibilityRebates/Tax Credits 5-yr Modified Accelerated Cost-Recovery System (MACRS)Bonus Depreciation 50% for 2013 (Renewed)Stipulations and criterion must be metwww.dsireusa.org/incentives/?State=US&ee=1&re=1 Click on Corporate Incentives2525Example of Bonus Depreciation and 5-yr MACRSGeneral ContractorGeothermal HVAC Economics - with 50% Bonus Depreciation (2013)5,000 Sq. Ft. Class A Office Building - 15 Tons50002/5/2013$/sqftGeothermal HVAC Cost: $ 100,000 20Conventional HVAC Cost: $ 50,000 10Additional Cost: $ 50,000 Rebate $ - estNet Additional Cost: $ 50,000 Income Tax Rate:40%total of federal and stateEnergy Credit:10%Annual Energy Cost Savings: $ 2,500 $0.50 per square foot in energy and maintenanceEnergy Inflation:3%Bonus5 Yr MACRBonus5 Yr MACRAdded CashEnergy CreditDepreciationEnergyAnnualCumulativeYearDeprec %Deprec %Deprec $Deprec $OutlayTax BenefitTax BenefitCost SavedCash FlowCash Flow201350%20.00% $ 47,500 $ 9,500 $ (50,000) $ 10,000 $ 22,800 $ 2,500 $ (14,700) $ (14,700)201432.00% $ 15,200 $ 6,080 $ 2,575 $ 8,655 $ (6,045)201519.20% $ 9,120 $ 3,648 $ 2,652 $ 6,300 $ 255 201611.52% $ 5,472 $ 2,189 $ 2,732 $ 4,921 $ 5,176 201711.52% $ 5,472 $ 2,189 $ 2,814 $ 5,003 $ 10,178 20185.76% $ 2,736 $ 1,094 $ 2,898 $ 3,993 $ 14,171 2019 $ 2,985 $ 2,985 $ 17,156 2020 $ 3,075 $ 3,075 $ 20,231 2021 $ 3,167 $ 3,167 $ 23,398 2022 $ 3,262 $ 3,262 $ 26,660 2023 $ 3,360 $ 3,360 $ 30,019 Notes:Simple Payback:2.0YrGeothermal HVAC system is classified as "Energy Property," which is eligible for bonus and 5 yr MACR depreciationIRR:39%Conventional HVAC generally has 39 yr straightline depreciation under tax code and no bonus depreciationAnalysis assumes end of 2013 Geothermal HVAC substantial completion dateIRR = Internal Rate of Return on Investment2626Case Study 1:Retrofit Feasibility StudyExisting Facility50,000 ft2Built 1970sCurrent HVAC Hodgepodge Oil Fired BoilersRooftfop DXMini Splits2727Case Study 1: Monthly Energy Consumption

2828Case Study 1: Monthly Energy Cost*

29* Worst performing building within building owners portfolio29Case Study 1: SummaryFirst Cost Difference: $650,000Life Cycle Cost Savings: $735,000 (20yr)Simple Payback: 3.9 yrsLife Cycle Payback: 5.2 (10% Cost of Cap.)IRR: 25.3%Eco Impact:30BaselineGeoExchangeCO2 MM lbm/yr2820SO2 kg/yr6546NOx kg/yr563930Case Study 2PSD Facility Services Building31

31Case Study 1PSD Facility Services Building32

12 Heat Pump UnitsNumber of Units25 TonsInstalled Capacity8,900 ft2Footprint5,400Total Feet of Boreholes300Depth18Total Number of Boreholes32Case Study 2

3333Case Study 2

34Case Study 2

35Case Study 2PSD Facility Services Building36Operation and Performance E-Star BenchmarkActualScore7599Energy Intensity:Site (kBtu/ft2-yr)Source (kBtu/ft2-yr)471352570Emissions:CO2 (1000 lbm/yr)SO2 (1000 lbm/yr)NOx (1000 lbm/yr)5683329521Energy Cost:Annual ($)Annual ($/ft2-yr)$6,519.89$0.77$3,391.58$0.40*36

372007 IGSHPA Technical Conference & Expo38Questions?38Assumption that GeoExchange will always have a higher 1st costNo desire to learn something new, and prefer to keep designing the same thing over and over.Tendency to over design often will kill a system on cost aloneLack of qualified design professionalsLack of properly trained installation contractorsImproper preliminary evaluations rarely consider equivalent issues when comparing systemsDo not make assumptions during the design processInexperienced engineers and design/build contractors need to explore proper due diligence before they should form an opinion.The GSHP industry needs to stress to inexperienced design personnel that residential design criteria rarely work for commercial applications or extrapolation from one project to anotherChart16545359565.866544.713595636544.04359561.326545.16359561.946548.96359563.456555.14359566.346561.34359567.636568.12359569.656569.08359569.546567.66359569.056562.94359567.016557.8359564.466554.18359563.196551.91359563.026550.02359561.386550.33359562.026553.56359563.536559.3359566.426565.17359567.76571.7359569.716572.42359569.66570.77359569.126565.81359567.076560.46359564.516556.66359563.246554.22359563.076552.2359561.436552.4359562.066555.54359563.576561.2359566.466567.02359567.746573.51359569.756574.19359569.646572.47359569.156567.43359567.16561.99359564.546558.12359563.276555.63359563.16553.54359561.466553.7359562.096556.84359563.66562.59359566.496568.55359567.766575.26359569.776576.13359569.666574.54359569.176569.54359567.126564.07359564.566560.14359563.296557.59359563.126555.44359561.486555.55359562.116558.67359563.616564.39359566.56570.35359567.786577.06359569.796577.92359569.686576.3359569.196571.24359567.146565.71359564.586561.74359563.316559.14359563.136556.95359561.496557.03359562.126560.13359563.636565.85359566.526571.8359567.86578.52359569.816579.38359569.696577.74359569.26572.64359567.156567.07359564.596563.05359563.326560.42359563.156558.21359561.56558.27359562.136561.36359563.646567.09359566.536573.09359567.816579.88359569.826580