VRF HVAC Market In NYC Poised for Significant Growth

American Thread VRFThe combination of new FEMA flood insurance requirements, aging chiller and cooling tower plants, fears of legionella contamination and illness, a surging real estate market and increased population density are converging to create a perfect storm for VRF growth in the New York metropolitan area and beyond. Currently, we are involved in several multi-tenant VRF projects in Manhattan including two condominium projects converting from older traditional HVAC systems. The modular nature of VRF, its efficiency at part load and the ability to install long refrigerant line lengths from rooftop mounted equipment without oil return problems has made them the new system of choice for green urban design.

New FEMA regulations are providing significant pressure to relocate mechanical rooms which have historically been relegated to basements and sub-basements. Depending upon the market value of a building and it’s relationship to construction alteration costs, many projects located within the 100 year flood plain may be required to relocate mechanicals. VRF uniquely provides a cost effective method of relocating heating and air conditioning utilities to available roof locations in low, mid and high rise buildings in these area. This combined with the plethora of indoor unit applications for surface mounted, concealed, wall, floor or horizontal locations makes VRF perfectly suited for these types of installations.

The main design criteria, besides equipment location, will be refrigerant piping riser location, access availability and ventilation index requirements. VRF units have not typically been suited to applications with high latent loads and significant fresh air ventilation requirements, but with the advent of new lines of Energy Recovery Ventilators, this problem may be solved. Combining  a VRF system with an ERV for fresh air intake requirements now makes them more suitable for schools, public spaces and applications where significant ventilation is required.

One concern in the design and planning of VRF systems is the criteria laid out in ASHRAE Standards 15 and 34. Standard 15 was created to provide guidance for safety concerns in large refrigeration plants using ammonia and other early refrigerants. Over time, the scope of the Standard has been expanded to cover most refrigerants and systems, but the technology and features inherent in VRF systems have not been specifically addressed.  The overall purpose of ASHRAE Standard 34 is “…to establish a simple means of referring to common refrigerants… It also establishes a uniform system for assigning reference numbers, safety classifications, and refrigerant concentration limits to refrigerants. The standard also identifies requirements to apply for designations and safety classifications for refrigerants. The refrigerant concentration limit, in air, determined in accordance with this standard and intended to reduce the risks of acute toxicity, asphyxiation and flammability hazards in normally occupied, enclosed spaces” 

The concentration limit for R410A has been set at 26 lb/Mcf (thousand cubic feet). Engineers need to consider this limitation when designing and submitting plans for VRF system unit locations serving smaller occupied spaces. There are several ways that the cubic area of these spaces can be enhanced and enlarged by allowing free air return, transfer grilles and door undercuts to fall within the realms of these calculations. The standard enumerates similar concerns for the refrigerant piping locations. For a further interpretation of these standards see this Mitsubishi City-multi bulletin.

As always, to keep up to date with what’s new in HVAC technology, visit our website at airideal.com and follow us on Twitter @airideal and at our Facebook page!

 

NY State Legislature Passes Geothermal Tax Credit

The New York State Assembly and Senate have passed the Geothermal Tax Credit bill A2177A (A2177A-2015). This bill allows for a 25% state income tax credit up to a maximum of $5000 for a new geothermal HVAC system. It now is before Governor Andrew Cuomo for signature and adoption or veto.

Next up is NY State Assembly Bill  A5508 for NY State Sales Tax exemption on all geothermal HVAC equipment sales ( A5508). These exemptions coupled with the already existing 30% Federal Resdiential Renewable Energy Tax Credit on geothermal systems will combine to make new geothermal installations much more competitive with fossil fuel systems for new installation and retrofits. These bills are making geothermal HVAC more affordable for New York State consumers and providing all of the same incentives available to the solar industry, which has proliferated since the inception of these incentives.

As always, to keep up to date with what’s new in HVAC technology and energy, visit our website at airideal.com and follow us on Twitter @airideal , LinkedIn and at our Facebook page!

How Sandy and Flood-Resistant Codes Impact HVAC in NYC (and Beyond)

The reverberations from construction code revisions as a result of Hurricane Sandy are now being felt for HVAC installations in New York City. Have you tried to file for installation of an HVAC system in lower Manhattan lately?  If so, you may have been pulled for audit to assure compliance with Appendix G – Flood Resistant Construction if your installation cost is greater than $40,000 and/or considered a substantial improvement to the property.

“Every alteration application in a special flood hazard area that is not classified as substantially damaged or as a substantial improvement, and has an estimated cost of over $40,000, must include calculations of buildings’ market value and relevant documentation. For more information, see 1 RCNY 3606-01, FEMA’s Substantial Improvement/Substantial Damage Desk Reference and/or FEMA’s Substantial Damage Estimator Tool.

The vast majority of properties in lower Manhattan below Canal St. are in affected flood zones. The City has thrown an additional wad of red tape into the permit application process to ferret out any buildings that do not comply with FEMA’s new flood standards in order to compel them to bring themselves in line with new flood-resistant construction codes that call for the relocation of any utilities (HVAC included) that are located below the new flood map’s Base Flood Elevation (BFE). For most buildings, this will not be a problem as long as the cumulative construction costs are less than 50% of the market value of the building:

“Substantial Improvement: The applicant must compare the cumulative construction cost of the alteration work, regardless of the time necessary to complete the work, and all other alterations and repairs during this timeframe, to the market value of the building prior to Hurricane Sandy (calculated per 1 RCNY 3606-01). If the cumulative construction costs equal or exceed 50 percent of the market value of the building, then the building MUST comply with the flood zone regulations for new buildings in Appendix G, even if the owner does not want to elevate the building.”

However, this does not relieve the applicant and/or contractor from providing the additional plans showing the flood zone location, the additional calculations to show that the work does not exceed the 50% rule, and mechanical plans showing that all equipment being installed is above the DFE (Design Flood Elevation), which in some instances is the BFE + 2 feet. Those who replace HVAC equipment located in basements in lower Manhattan and other designated flood zone areas do so at their own peril. Machinery and equipment servicing a building must be elevated to or above the base flood elevation in many designated flood zones. To find out if your building or home is in a designated flood zone and find out what your Base Flood Elevation is, refer to FEMA’s BFE Address Look-up Tool. For more information on flood zone construction filing requirements in New York City, see the NYC Department of Buildings Bulletin for Architects and Engineers. As always, to keep up to date with what’s new in HVAC technology and energy, visit our website at airideal.com and follow us on Twitter @airideal , LinkedIn and at our Facebook page!

Consumer Beware – Geothermal Hacks Abound

Unfortunately, as this News 12 expose’ reveals, not all geothermal HVAC installers are looking out for their customers’ best interests.  Geothermal HVAC Installer Scams Consumers

We have received a spate of phone calls from potential customers regarding the alleged unscrupulous activities of a competitor whose prices and promised incentives seemed to be too good to be true. Unfortunately, downpayments were not held in escrow, as per local consumer affairs laws, and many trusting, green-minded consumers have been left with nothing to show for their investment. Even worse, some who have had there installations started now have no recourse because their projects were started and now the contractor in question is reported to be in bankruptcy proceedings.

Although we have received numerous calls asking us to take over installations in progress, it is a difficult decision for us. Although we want to help consumers who may have been duped, in many instances they have no record of what has been installed. There are no plans and no detailed proposal or specifications. As a result, we have no idea what has been installed as a ground loop heat exchanger. Without knowledge of the bore depths, piping size and material, manifold sizing or grout used, it is impossible for us to determine whether or not what has been installed can be used for its intended purpose. Simply connecting to terminated piping isn’t an option since we have no idea what capacity could be achieved, what Reynolds numbers are involved, what the pressure drop for pumping requirements is and what thermal conductivity was figured. Not only does this open up the potential for liability and future warranty issues, it also leaves concern for potential environmental impact.

This also creates a massive public relations problem for our industry and a proven technology. It is our hope that these consumers can find relief and that we can find a way to help them. However, this does reinforce the fact that consumers need to do their homework and check with the Department of Consumer Affairs and /or the Better Business Bureau before doing business with any home improvement contractor.

As always, to keep up to date with what’s new in HVAC technology and energy, visit our website at airideal.com and follow us on Twitter @airideal and at our Facebook page!

IRS Deals Major Blow to Geothermal Market

Here in the northeast, the recent price erosion of natural gas due to hydrofracturing has made it more difficult to sell geothermal by ROI payback analysis alone. It was still a home run against oil comparisons when including the 30% Federal Renewable Energy Tax Credit. In a major blow to the industry, the IRS recently issued “Notice 2013-70 titled “Q&A on Tax Credits for Sections 25C and 25D“. This notice serves to clarify certain parameters and questions regarding the 25C and 25D Renewable Energy Tax Credits. Specifically, the following passages effectively reduce the Section 25D tax credits to a point where geothermal systems cannot be sold by the financial benefits alone using many of the financial formulas currently in use:

Geothermal Heat Pump Property.

Q-31: A taxpayer contacts a seller to inquire about the installation of a geothermal heat
pump to heat his home. The seller/installer informs the taxpayer that the following items
must be installed in addition to the geothermal heat pump: heat exchange equipment in
the ground outside of the house, a distribution system for the home, and a back-up
emergency heating or cooling system. Which of these costs, if any, are eligible for the
§ 25D credit?

A-31: Only the cost of the heat exchange equipment in the ground outside the house
can be eligible for the § 25D credit. The costs for the distribution system for the home
and a back-up emergency heating or cooling system are not eligible for the credit
because they are not incurred for qualified geothermal heat pump property. Section
25D(d)(5)(B) defines qualified geothermal heat pump property as any equipment that (1)
uses the ground or ground water as a thermal energy source to heat the dwelling unit or – 12 –
as a thermal energy sink to cool such dwelling unit, and (2) meets the requirements of
the Energy Star program in effect at the time that the expenditure for such equipment is
made. Section 25D(e)(1) provides that expenditures for piping and wiring to
interconnect qualified property to a dwelling unit are eligible for the § 25D credit.
However, nothing in § 25D extends the credit to other auxiliary equipment such as
distribution systems within the dwelling unit or backup emergency heating and cooling
systems.

Rebates.

Rebates generally represent a reduction in the purchase price or
cost of property, and the taxpayer must exclude the amount of the rebate from the
amount of the qualified expenditure on which the taxpayer calculates the tax credit. In
general, in order for a receipt of funds to be considered a nontaxable rebate, the rebate
must be based on or related to the cost of the property; the rebate must be received
from someone having a reasonable nexus to the sale of the property, for example, the
manufacturer, distributor, or seller/installer; and the rebate must not represent payment
or compensation for services.

So, not only is the IRS taking away the ability to take a tax credit on the duct distribution system installed as a necessary part of the majority of geothermal heat pump installations, it appears to also eliminate radiant floor distribution systems as well. Depending upon your interpretation here, only the ground loop, connecting primary loop, geothermal heat pump and electrical wiring for the system actually qualify for the tax credit. To add insult injury, Utility Rebates must also be figured against the tax credit value.

Until now, I don’t know of a residential customer who has not claimed these items via Form 5695. How the IRS plans to enforce this determination and/or clarification moving forward is another story. You can easily foresee inflated ground loop and equipment installation segments with a $1.00 ductwork marketing special from contractors looking to bend the rules or create loopholes. A major and essential component for the operation of  any energy efficient system has apparently been eliminated from consideration. Unfortunately, this may be a serious job for the tax lawyers and lobbyists to try to reverse which may have to high a price tag for a burgeoning industry represented by IGSHPA and the Geothermal Exchange Organization. Between these two organizations there is neither the staff nor the PAC fund necessary to mount the political backlash necessary to reverse such a decision. Perhaps if they were to join forces with ACCA, ASHRAE and other industry organizations that are affected, there might be the necessary political clout to quash such a narrow interpretation.

As always, to keep up to date with what’s new in HVAC technology and energy, visit our website at airideal.com and follow us on Twitter @airideal and at our Facebook page!

Can the US Become Energy Independent?

Despite whatever your views may be on the various topics of fossil fuels, fracking and renewable energy, it is obvious that the major US push towards developing energy production in all forms is bearing fruits in several ways. The US Energy Information Administration announced today that for the first time in nearly two decades the United States produced more oil than it imported from foreign sources.  There was a time when the thought of the US producing more crude oil than it imports was inconceivable, but the reduction of energy usage from demand-side programs and the uptick in the efficiency of vehicles, power production, appliances and heating systems has helped reduce demand. At the same time, hydro-fracturing techniques have opened up vast new reserves of both natural gas and oil that before were thought to be unrecoverable. Domestic oil production is at a 24 year high, but this does not mean that crude oil prices will fall very much. You have probably noticed that gas prices have fallen at the pump, but they are not expected to fall past $3.15 per gallon, according to an NPR report. US refining capabilities have their limitations and Americans are driving less often.

On the renewable side, the first major utility scale solar thermal power plants are just now coming on-line in the Southwest deserts. According to the EIA,  this will increase solar thermal production to 1257 MW and will more than double the US solar thermal electric generating capacity in 2014. A further 3.9 GW of utility-scale projects are currently under construction. This combined with the ongoing decrease in photo-voltaic cell production costs leads industry analysts to predict that “new annual installations of solar PV will double from 35.9 gigawatts (GW) new capacity in 2013 to 73.4GW in 2020” world wide. Since 2000, more than 1,460 megawatts of residential solar installations have been installed across the US, and more than 80 percent of that capacity was added in the past four years.

Does all of this mean that the US will gain energy independence in the near future?  That’s not likely, but we are becoming “energy secure”, meaning that we will be able to survive and prosper by consuming our own energy production and that imported from neighboring allies like Canada, Mexico and Brazil. By not relying on oil imports from the Middle East, our energy prices should become more stable and secure and less vulnerable to oil cartel manipulations. If current and future political administrations continue to support production and R&D for both domestic fuel sources and renewable energy, we will no longer be at the mercy of volatile foreign imports.

As always, to keep up to date with what’s new in HVAC technology and energy, visit our website at airideal.com and follow us on Twitter @airideal and at our Facebook page!

Major Natural Gas Expansion Underway in New York Metro Region

There will be a significant increase in the volume of natural gas being brought to the New York Metro region as a result of multiple pipeline expansion projects from the Marcellus shale region. Several distribution pipelines will be put into service this winter.  According to the US Energy Information Administration, the pipelines will bring “3.5 billion cubic feet per day (Bcf/d) of additional capacity to New York/New Jersey and Mid-Atlantic markets”. In addition to this, the Federal Energy Regulatory Commission granted permission to Spectra Energy to put into service a new pipeline that has been run to Manhattan from New Jersey to bring additional natural gas from Marcellus to the city. The expansion will provide enough energy for Con Edison to heat about 2 million additional homes.

National Grid also appears to be expanding its gas distribution on Long Island. For the fiscal year 2013, which ended March 31, the utility added 8,815 new commercial and residential customers. Because of the lack of natural gas main expansion on Long Island, only about 43 percent of Long Island businesses and residents use natural gas as a primary fuel. As demand continues to grow, the utility has undertaken an $83 million expansion project that will install 1.6 miles of new pipeline under the Rockaway Inlet, connecting parts of Queens, Brooklyn and Long Island to existing natural gas lines. “We’re making large infrastructure investments,” said Kenneth Daly, president of National Grid New York. “You have to build out the network, which we’re doing.”

As always, to keep up to date with what’s new in HVAC technology, visit our website at airideal.com and follow us on Twitter @airideal and at our Facebook page!