GeoExchange Economic
Considerations
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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
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Operational Considerations• Efficiencies of COP and EER are
dependent of EWT from Loop Field
• EWT typically range from 30°F to 100°F
• Typical Operation Pressures are 25 psig to 60 psig
• P/T ports are critical for diagnosis & troubleshooting
• Use qualified/certified professionals for design and/or installation
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Profile Definition
• Both Peak (Btu/hr) and Cumulative (Btu) are required to size commercial systems
• Residential systems can be sized with peak load calculation and bin data
• Must use hourly simulation program– TRACE 700– eQUEST– HAP– Right Suite
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Building Design Consideration• Understanding the daily, monthly,
and annual loading profile– Hotel (5-10pm) – 80% occp 5 days– Residence (5-10pm)- 80% occp 7 day– Office (7:30-6:00)- 5 days
• Resulting Energy Load to GHEX (5000sqft)– 7550’– 8100’– 9200’
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Ground Loop Temperature Profile
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Tfluid = 9600’
Tideal = 32,960’
COPfluid @ 45°F EWT = 3.3
COPideal @ 60°F EWT = 4
EERfluid @ 95°F EWT = 14.1
EERideal @ 70°F EWT = 19.6
Borefield Input Information• Perform Thermal Conductivity Test to
obtain:– Primary:
• Local Ground Temperature• Formation Thermal Conductivity
– Secondary:• Formation Thermal Diffusivity
• Not Necessary on all projects; generally:– Systems >20,000 ft2 or >30 tons– Can save 15-25% on installation cost
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Site Feasibility
• Do vertical structures interfere with layout?
• Can the GHEX be phased?• Future expansion needs?• What happens if local ground
thermal characteristics are not known?
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Economic Feasibility
• Simple Payback versus Life Cycle Payback– What are the differences?– Simple is net installation cost
divided by the first year utility cost savings
– Life Cycle accounts for several factors over a specific period of time, typically 20 years resulting is more accurate and realistic results
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Economic Feasibility
• Life Cycle Cost Analysis is best way to account for all variables. What are they?– Installation Costs– Maintenance Costs– Utility Rates– Escalation Factors– Cost of Capital– Depreciation 14
Economic Feasibility
• GHEX installation cost is often 90-100% of installation cost differential
• If TC Test is completed, use information to obtain preliminary installation cost of GHEX
• Eliminate Rule of Thumb when possible
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Integration with Renewables• Integration with other
renewable technologies, mostly:– Solar
Photovoltaic/Geothermal/Wind/Biomass
– Solar Thermal• Enhancing and merging
technologies to maximize performance and reduce combined economic impacts 16
Residential Economics
• Rebates/Tax Credits – Depend on local utilities
• Special Schedules/Tariffs• Direct Financing Options
– 30% Federal Tax Credit on “System” cost• Must be Energy Star Rated list @
– www.engergystar.gov
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2007 IGSHPA Technical Conference
& Expo
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Project Considerations
• Be aware of Electrical Requirements– GSHP projects typically need more
service• Go from standard 200 amp to 325
amp or 400 amp service• Critical to coordinate with GC or EC• Is 3 phase available, it may reduce
needed amp service?• Is PV integrated into system?
2007 IGSHPA Technical Conference
& Expo
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Project Considerations
• Know the Equipment Functionality– Water-to-Water– Water-to-Air– Single or 2 Stage– Combination Units
• W-to-W and W-to-A• W-to-A w/dedicated DHW• Multi-Circuit
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Residential Economic Feasibility• Post-ARRA of 2009 LCCA
– Installation cost ranges $12.00 to $22.00 / ft2
• Ducted systems vs. Radiant systems can significantly impact installation cost
• Accessories such as a zone control system, air filtration, etc. can also affect total cost
– Operating costs $0.25 to $0.85 /ft2-yr • Paybacks Average: 2-5 years• Can be immediate to 2 years• Some systems are 6-10 years
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Commercial Economics
• Prefer Life Cycle Analysis over Simple Payback
• Look for 3rd Party Financing Partners for Tax Credits of Non-profit entities– Utilities, ESCOs, Investment firms, or
some Geothermal Companies direct• Natural Gas Prices currently make a
difficult choice on straight energy savings vs. payback – consider other factors
• Can still be competitive for New Construction
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Economic Feasibility
• Installation cost ranges $18.00 to $24.00 / ft2
– Operating costs $0.45 to $0.85 /ft2-yr • Paybacks Average: 7-11 years• Can be immediate to 4 years• Some systems were 12+ years
• Rebates/Tax Credits – Depend on local utilities- special
utility rates– 10% Commercial…..plus…….
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Economic Feasibility
• Rebates/Tax Credits – 5-yr Modified Accelerated Cost-
Recovery System (MACRS)– Bonus Depreciation
• 50% for 2013 (Renewed)• Stipulations and criterion must be met
– www.dsireusa.org/incentives/?State=US&ee=1&re=1
– Click on Corporate Incentives
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Example of Bonus Depreciation and 5-yr MACRSGeneral Contractor
Geothermal HVAC Economics - with 50% Bonus Depreciation (2013)
5,000 Sq. Ft. Class A Office Building - 15 Tons
5000
2/5/2013
$/sqft
Geothermal HVAC Cost: $ 100,000 20
Conventional HVAC Cost: $ 50,000 10
Additional Cost: $ 50,000
Rebate $ - est
Net Additional Cost: $ 50,000
Income Tax Rate: 40% total of federal and state
Energy Credit: 10%
Annual Energy Cost Savings: $ 2,500 $0.50 per square foot in energy and maintenance
Energy Inflation: 3%
Bonus 5 Yr MACR Bonus 5 Yr MACR Added Cash Energy Credit Depreciation Energy Annual Cumulative
Year Deprec % Deprec % Deprec $ Deprec $ Outlay Tax Benefit Tax Benefit Cost Saved Cash Flow Cash Flow
2013 50% 20.00% $ 47,500 $ 9,500 $ (50,000) $ 10,000 $ 22,800 $ 2,500 $ (14,700) $ (14,700)
2014 32.00% $ 15,200 $ 6,080 $ 2,575 $ 8,655 $ (6,045)
2015 19.20% $ 9,120 $ 3,648 $ 2,652 $ 6,300 $ 255
2016 11.52% $ 5,472 $ 2,189 $ 2,732 $ 4,921 $ 5,176
2017 11.52% $ 5,472 $ 2,189 $ 2,814 $ 5,003 $ 10,178
2018 5.76% $ 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: 2.0 Yr
Geothermal HVAC system is classified as "Energy Property," which is eligible for bonus and 5 yr MACR depreciation IRR: 39%
Conventional HVAC generally has 39 yr straightline depreciation under tax code and no bonus depreciation
Analysis assumes end of 2013 Geothermal HVAC substantial completion date IRR = Internal Rate of Return on Investment
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Case Study 1:Retrofit Feasibility Study• Existing Facility
– 50,000 ft2
– Built 1970s– Current HVAC – Hodgepodge
• Oil Fired Boilers• Rooftfop DX• Mini Splits
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Case Study 1: Monthly Energy
Consumption
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Case Study 1: Monthly Energy Cost*
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* Worst performing building within building owner’s portfolio
Case Study 1: Summary
• First Cost Difference: $650,000• Life Cycle Cost Savings: $735,000
(20yr)• Simple Payback: 3.9 yrs• Life Cycle Payback: 5.2 (10% Cost
of Cap.)• IRR: 25.3%• Eco Impact:
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Baseline GeoExchange
CO2 MM lbm/yr 28 20
SO2 kg/yr 65 46
NOx kg/yr 56 39
Case Study 2
• PSD Facility Services Building
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Case Study 1
• PSD Facility Services Building
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12 Heat Pump Units
Number of Units
25 TonsInstalled Capacity
8,900 ft2Footprint
5,400’Total Feet of Boreholes
300’Depth
18Total Number of Boreholes
Case Study 2
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Case Study 2
Case Study 2
Case Study 2
• PSD Facility Services Building
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Operation and Performance E-Star Benchmark Actual
Score 75 99Energy Intensity:
Site (kBtu/ft2-yr)Source (kBtu/ft2-yr)
47135
2570
Emissions:CO2 (1000 lbm/yr)
SO2 (1000 lbm/yr)
NOx (1000 lbm/yr)
56833
29521
Energy Cost:Annual ($)
Annual ($/ft2-yr)$6,519.89
$0.77$3,391.58
$0.40*
2007 IGSHPA Technical Conference
& Expo
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Questions?