New York State Poised to Make Geothermal Heat Pumps Tax Exempt

Closed -LoopPress release from the Long Island Geothermal Energy Organization (LI-Geo.org):

The New York State Senate and Assembly have proposed new legislation related to geothermal heating and cooling installations.

On January 9, 2013, New York State Senator Maziarz introduced a bill to amend the tax law to exempt both sellers and purchasers of geothermal systems from sales and use taxes for materials.

The same day, New York State Assembly Member Jaffee introduced an identical bill to the Assembly.

This legislation will make geothermal heating and cooling systems more affordable and thus more economically attractive to all NYers. Please write to your NYS representatives to show your support for these bills.

The proposed bills are to amend the tax law to exempt both sellers and purchasers of geothermal systems from sales and use taxes for materials. (Sales and use taxes for the labor involved in capital improvements, such as these installations, are already exempt.). This is similar to the sales and use tax exemption that has aided the solar PV industry in New York State to prosper.

This change in the law will help the in-state geothermal industry—geothermal engineers, installers, designers, service providers, equipment distributors and manufacturers—be both more competitively priced and profitable.

Please write or e-mail your Senator, asking him or her to support this bill. We have a sample letter prepared on our web site for you to sign. Please feel free to customize the letter. If you do not know who your senator is, you can click here to find him or her.

You can also leave a comment about the bill for the Senate at the bottom of the page.

Please also write or e-mail your Assembly Member, asking him or her to support this bill. We have a sample letter prepared on our web site for you to sign. Please feel free to customize the letter. If you do not know who your assembly member is, you can click here to find him or her.

The bills are available for reading at the following links:

Senate Bill S01343

Assembly Bill A01411

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!

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The Election and the Fate of Renewable Energy Tax Credits.

A recent article in the New York Times echoed the death knell of the wind power industry as the result of both the new glut of shale gas and the sunset of wind turbine tax credits on December 31st. Of late, 10,000 wind turbine jobs have evaporated in an industry that relies on those credits and the high cost of fossil fuels to remain competitive. Whether or not the renewal of this credit will ever be considered will surely depend upon the outcome of the election not only of the next President, but also in the House and Senate. Mr. Romney has said that one of the priorities of his administration will be to clear the way for the Keystone XL pipeline, shale hydrofracture exploration and eliminate tax burdens created by renewable energy tax credits.

If this is indeed the case, the future of both the solar and geothermal industries then is in the hands of the electorate. Of course, it would take a majority of the House and Senate to renew such tax credits, but without them, both the Solar and Geothermal industries will go the way of Wind. Right now, with the glut of cheap natural gas created by stockpiles from fracking, geothermal HVAC is a very hard sell against gas. Based upon ROI projections, payback periods in the northeast versus fuel oil can be any where in the 3 to 6 year range with the inclusion of a 30% Federal Tax Credit. Natural gas, however, has plummeted in cost per therm over the past 3 years and now can get extended out past 10 years, making it hard to compete against. Without the the Tax Credits, the growth of the geothermal industry would sputter. These tax credits expire in 2016, so the jury is out on what will happen to them, but certainly Solar and Geothermal cannot compete without incentives. The Romney energy plan focuses mainly on oil, gas, coal and nuclear energy, which together meet 91% of current US primary energy demand. Little has been said about Federal Tax Credits for consumer energy efficiency in Romney’s energy policy prospectus, although he has called upon the expiration of the wind tax credits. The Romney and GOP platform focuses almost entirely on exploiting America’s vast fossil-fuel resources. This 21 page white paper takes some in-depth reading, but does not specifically call for the end to all renewable energy tax credits.

Romney’s paper say only that his policy is to , “Ensure that policies for expanding energy development apply broadly to energy sources, from oil and gas exploration, to coal mining, to the siting of wind, solar, hydroelectric, and other renewable energy facilities”. In criticizing the current administration’s policy on renewables, the paper goes on to say that “President Obama’s poor understanding of the private sector has spilled directly into his energy policy, as he sought to have government play venture capitalist and spend billions of dollars subsidizing his chosen companies and technologies.”

But the most revealing statement that Romney has issued in his policy that may project the end of renewable subsidies is as follows:

“Instead of distorting the playing field, the government should be ensuring that it remains level. The same policies that will open access to land for oil, gas, and coal development can also open access for the construction of wind, solar, and hydropower facilities. Strengthening and streamlining regulations and permitting processes will benefit the development of both traditional and alternative energy sources, and encourage the use of a diverse range of fuels including natural gas in transportation. Instead of defining success as providing enough subsidies for an uncompetitive technology to survive in the market, success should be defined as eliminating any barriers that might prevent the best technologies from succeeding on their own.”

I asked, Geoffrey Styles, a noted energy industry consultant and strategist for his view on what a GOP victory would mean for the renewable tax credits:
“Repeal would be hard, but developers and manufacturers should certainly plan on the basis that 12/31/16 represents true sunset for the renewable investment tax credit.

Here’s one reason why:
Assume 5,000 MW of solar installed per year @$2/W by then. That’s $3B/yr in tax credits–roughly equal to the entire current oil & gas tax incentives–for an energy stream equivalent to about 30,000 bbl/day of oil, but less flexible.”

The New York Times summary of the two candidates views on Clean Energy:

Romney: Opposes government spending on clean energy projects. Uses failure of government-backed solar company Solyndra LLC to illustrate argument against government trying to pick winners in the energy sector.

Opposes renewal of production tax credit, worth about $1 billion a year to wind power producers.

Obama: Included $90 billion in 2009 economic stimulus package for energy projects including solar and wind power, energy efficiency and bolstering the electric grid.

Defends the $16 billion in loan guarantees for 26 clean energy projects as necessary given lack of private financing and competition from China.

Supports renewal of the 20-year-old production tax credit for wind power.

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!

The Benefits of Combining VRF and Geothermal Technologies

Two of my favorite (and most efficient) technologies can actually be combined to form an uber-efficient HVAC system. Both Mitsubishi and Daikin have provided water-cooled condensing units as part of their US line-up for several years. However, only recently has this technology been refined through plate and frame heat exchangers and control logic to perform optimally with geothermal ground loop heat exchangers. Mitubishi’s WR2 series (heat recovery) and WY series (heat pump) along with Daikin’s VRV-WIII series can combine the benefits of variable speed inverter compressor technology and geothermal heat pump efficiency. Add to this the additional benefit of being able to install multiple types of ductless, ducted and concealed indoor evaporators and you have one of the most flexible and highly efficient solutions for a green building project. Because of the system’s flexibility, it can be designed into new building and retrofit mechanical schemes (see Mitsubishi schematic).

Unfortunately, as these systems are only available in larger sizes of 6 tons and up and only available in 3 phase, they are not yet a viable option for single family homes. However, we are seeing these systems specified on multiple dwelling residential projects like apartment buildings and condominiums. For the most part, this is really primarily a commercial option that can deliver added points for LEED buildings and deliver the ultimate in sustainable design. Existing ground source heat pumps on the market provide dual speed for their premium models (like the WaterFurnace Envision line), but there has not been a variable speed inverter compressor option available to the market. In redeveloping their water-cooled condensing unit lines to accommodate the geothermal market, these VRF/VRV manufacturer’s have provided a significant boost in efficiency. Based upon an energy modeling study for assisted living facilities in various cities across the country, it was proven that this type of hybrid VRF-Geothermal installation provides on average a 37% efficiency increase over VRF air-cooled heat pumps. Although VRF/Geothermal is still a costly initial installation versus established fossil fuel and air-cooled systems, emerging energy efficiency technology experts are now touting ground-source variable refrigerant flow heat pumps as an affordable energy option.

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!

Innovations to Reduce the Cost of the Closed Loop Ground Heat Exchanger

Although we advocate installing closed loop systems for the reasons stated in my previous post, this does make it difficult for us to be competitive with the majority of other contractors who cling to “pump and dump” (open loops) in order to install geothermal heat pumps for the least cost. Unfortunately, in recessionary times like these, consumers are less concerned with life cycle and environmental costs than they are with initial installed cost. It makes no matter if their open loop system may have half the life span of a closed loop, if installing an open loop system at two thirds (or even half) the cost will get them the same utility rebates and government incentives. As I am not the greatest salesperson and have yet to find a program that shows me ROI of closed loops vs. open loops, I find myself losing these jobs more often than not. Despite all of the benefits, most potential residential geothermal consumers are unwilling to pay the additional price tag of a properly designed and installed closed loop system. This is why we need to find more significant ways to reduce the cost of the ground loop heat exchanger.

By far the largest cost component of the GHEX (ground heat exchanger) is bore drilling. In our area, typical costs to drill and install the GHEX can be anywhere from $17 to $20 per foot. At a typical bore depth of 180-200 feet per ton of cooling, a cost of $3000 to $4000 per ton for just the ground loop can send most consumers back towards open loops or conventional fossil fuel/electric systems. That is why it is essential to do a proper Manual J load analysis with all of the relevant envelope information to make sure that you are not over-sizing the equipment and pushing folks away. Another factor, at least in the metro New York area, is how relatively few certified ground loop installers and drillers there are. Fortunately, these costs are coming down as more drilling contractors get IGSHPA certified and familiar with installing closed loops as an additional revenue stream as compared to standard domestic water and geothermal wells. However, with the renewable energy tax credit sun setting in 2016, do we have time for this economy of scale to happen without some technology push? Probably not.

Rygan HPGX

Enter the entrepreneur who finds ways to wring more thermal performance and BTUs per foot out of a GHEX through innovation. Take, for example, the Thermonexus HPGX by Rygan and the Kelix Thermacouple, two GHEX innovations developed to reduce required bore depths and increase thermal performance. With a 300′, 6″ round bore, Kelix claims that their Thermacouple “supports heat transfer rates of up to 5 tons (60,000 BTUhr) with deep Earth environments rich in aquifers”. While Rygan makes no specific claim on thermal performance, they do say, “HPGX® advanced materials offer the toughest and highest yielding thermal performance of any closed geoexchange system”. The real question is, how much actual cost will installing these high thermal performance GHEX systems save the contractor and consumer? Also, how can we estimate thermal performance for these systems in different regions.

This link will take you to a data logging site that shows the live performance of three types of ground loop heat exchangers operating now. The top system is a 5 ton Earthlinked DX system (refrigerant) which we have not discussed here. The second system is a WaterFurnace Envision system operating on 2- 500′ standard U loop bores. The third system is apparently a Carrier 5 ton water source heat pump operating on a Kelix 300′ Thermacouple.

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!

NPR on Closed Loop Geothermal Systems

Congress may be looking to de-fund public television and National Public Radio, but these are two media outlets that have always provided interesting insight into the world of green energy. Recently, this “All Things Considered” program ran a story on the benefits of closed loop geothermal systems called “Tapping the Earth For Energy Savings”. Read the story or give it a listen here and become a convert.

Of course, there are also those who are less concerned about the environmental benefits of geothermal and much more concerned about the cost and potential tax advantages. In this PBS parody of the “Iron Chef” called “Iron Accountant”, a team of tax experts competes to see who can get their client the highest deduction. And the winner is…IRS Form 5695 for Energy Efficiency Tax Credits of 30% for the installation of a geothermal heat pump system. So, if your subchapter S corporation had a good year, the best thing you can do to keep your money is to install a geothermal heat pump or solar photovoltaics.

New York Times Touts Benefits of Geothermal

Most of the testimony we read regarding the benefits and costs of a geothermal heating and air conditioning system come from the mid-west. However, if you are a local Long Islander considering going “geothermal”, this recent article in the NY Times Science section should help you with your cost/benefit analysis. It is interesting to note that Ms. Kreahling sites in her article the lack of qualified designers and installers in our area, as well as one-stop responsibility. You need a qualified, IGSHPA accredited designer and installer that will handle both the important work in the ground AND the HVAC system inside. Without that, you are asking for trouble and finger pointing by contracting yourself to several different vendors for drilling, excavating, loop installation and HVAC installation. However, you need look no further for a successful designer and installer of entire closed-loop geothermal HVAC systems.

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!

The Great Debate: Pressurized vs. Non-Pressurized Geothermal Ground Loops

When walking into another contractor’s installation, it never ceases to amaze me how differently installers approach things. This can be attributed to the lack of serious construction standards for ground source heat pump systems, the lack of qualified contractors willing to get proper accreditation and an ever-changing product landscape. Once we determined that closed ground loops were the best alternative for our equipment and our local environment (see this link), one of our other dilemmas as installers was whether to install pressurized or non-pressurized ground loops and flow centers (pumps). Most of the non-pressurized systems we had seen were installed by contractors trying to shave installation costs by using PVC for their indoor circuits. Most of these that I have seen were leaking after a year or two. Nothing beats good old HDPE fused piping to avoid closed loop leaks.

Ultimately, we decided that pressurized loops and flow centers were the best alternative for to meet our needs and those of our customers. However, there are varying opinions depending upon your perspective. I did some research and surveyed several other accredited installers and here is a summary of the potential advantages and disadvantages of each:
Non-Pressurized Loop Advantages:
• Lower installed cost than pressurized loops in HDPE or copper.
• All loops can be manifolded inside the mechanical room to aid in isolating loop blockages by using shut-off valves and the equipment to purge entrained air.
• Open loops allow the customer to check and add fluid himself (not sure if this is an advantage)
• Allows for contraction and expansion.
Non-Pressurized Loop Disadvantages:
• Potential leak of fluid if done in PVC or if customer constantly removing cap to check fluid level.
• Safety concern for customers exposed to methanol or antifreeze and its potential flammability.
• Higher potential for bacterial growth.
• Potential for the dilution of anti-freeze concentration by customers adding water to systems.
• Potential for system damage during flushing or purging if done incorrectly.
• Aesthetically not as pleasing as to piping configuration.
• Vertical lift limitations for any compresserized unit mounted above the flow center.
Pressurized Loop Advantages:
• Neater installation
• Less chance of anti-freeze dilution.
• No exposure for customer to flammable anti-freeze or fumes.
• Two flow center connections vs. three
• Easier to flush out dirt with flush cart at 6 ft. per second
• Less potential for damage to flow center
Pressurized Loop Disadvantages:
• Higher installed cost
• Potential for system loops to “go flat” over time due to temperature change and loop expansion and contraction that requires simple re-pressurization
• More difficult to isolate individual loop problems without interior manifold

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!