GeoExchange Economic Considerations

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

2. Agenda • Basic Design Influences in Cost • Residential Financial Factors • Commercial Financial Factors

3. 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

4. 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

5. 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’

6. Ground Loop Temperature Profile 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

7. 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

12. 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?

13. 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

14. 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

15. 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

16. 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

17. 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

18. 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?

19. 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

22. 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

23. 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

24. 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…….

25. 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

26. Example of Bonus Depreciation and 5-yr MACRS

27. Case Study 1:Retrofit Feasibility Study • Existing Facility • 50,000 ft2 • Built 1970s • Current HVAC – Hodgepodge • Oil Fired Boilers • Rooftfop DX • Mini Splits

28. Case Study 1: Monthly Energy Consumption

29. Case Study 1: Monthly Energy Cost* * Worst performing building within building owner’s portfolio

30. 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:

31. Case Study 2 • PSD Facility Services Building

32. Footprint Total Number of Boreholes 8,900 ft2 18 Installed Capacity Depth 25 Tons 300’ Number of Units Total Feet of Boreholes 12 Heat Pump Units 5,400’ Case Study 1 • PSD Facility Services Building

33. Case Study 2

34. Case Study 2

35. Case Study 2

36. Case Study 2 • PSD Facility Services Building

38. Questions?