By Lee Consavage

Again sorry for the delay in updating my blog. If I didn’t already work 80 hours per week, I would be spending a lot more time updating this blog to share some very interesting renewable energy (RE) information with you, including the following discussion, where I’m actually discouraging a client from installing a ground source heat pump!

One of the great perks with working in the renewable energy (RE) field is working with really smart renewable energy experts who willing share their knowledge with me. Another perk is working with really smart clients who want RE and ask a lot of really good questions.

One of our clients is the director of a non profit organization in Southern New Hampshire. We’re working with him to determine the most efficient heating and cooling system that should be incorporated into his new, soon to be built, building. His organization provides a wonderful service of housing and feeding those who are going through a difficult time in their lives. And since he is providing housing, including showers and laundry, his facility uses a lot of hot water daily, year round. He also relies entirely on donations and grants to fund his organization.

From: CRS
To: LeeConsavage - SCE
Sent: Thursday, April 10, 2008 11:42 AM
Subject: Re: Detailed Energy Analysis Using Geothermal Heat Pumps, Solar Thermal or Microturbine

Lee-
Attached are the last numbers on heat pumps I got from you. The last answer on which system to use sounds like, “6:5 and pick ‘em” to an occasional gambler like me.

You peg the payback at 11-12 years, with qualifiers and assumptions, including a 20,000 sq ft facility.

Open questions
- cost of gas line work must already be in site work estimates?
- location of well field, impact on construction calendar
- heat pump is supposed to have lower maintenance costs - any estimates or experience with that?
- installation rebates for heat pumps available from PSNH?
- how tight is the heat pump installation price estimate?
- cost of installation of propane backup? (hot water tanks mentioned, but I don’t imagine there is space)
- I don’t know what assumptions are with air conditioning with either natural gas or heat pump
- expiration of Stranded Cost Recovery Charge not reflected in projections

I’m not looking for a “stronger visual statement of sustainability,” but if the economic choices are evenly matched, it will be easier to raise money for sustainable systems than for a natural gas boiler. Solar panels for pre-heating domestic HW seem to be an independent evaluation, unless their impact is different for various primary heating systems? I think I remember something about $10,000 install cost, which would seem to be an easy choice.

I’m not necessarily afraid of a 10-year payback, given the environmental and PR impact. I know this isn’t an exact science- but it seems too close to call, with too many open questions, to give up on it now.

Do you know anyone that regrets installing a ground source heat pump?

CRS
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The following is my email reply to CRS:

From: LeeConsavage - SCE
To: CRS
Sent: Friday, April 11, 2008 11:52 AM
Subject: Re: Detailed Energy Analysis Using Geothermal Heat Pumps, Solar Thermal or Microturbine

Hi CRS,
You’ve made some excellent points. Here’s my answer to your questions:

(1). Green House Gases:

You make an excellent point when you asked are there any dissatisfied owners of ground source heat pump systems (GSHP). And I would say “NO” - every one I met speaks highly of the performance of their system. But none of the owners of these system have a cheap, cleaner alternative to using heating oil or electricity as their fuel source. Compared with burning heat oil (which emits 0.6 lbs of CO2 per kWh), natural gas emits 30% less greenhouse gases that heating oil. The equivalent cost of oil (at $3.85 per gallon) is $2.80 per therm, which is 211% the cost of want you’re paying for natural gas.

Propane is a highly refined oil product, so it’s cost also rises with the price of oil. So that’s why the payback numbers are very good (3 to 7 years) for anyone replacing their oil, propane or electric heating system with a GSHP.

The fact that you would be using electricity instead of a fossil fuel to operate the heat pumps doesn’t result in a big savings in greenhouse gas emissions since, in general, 50% of all electricity generated in the US is from coal-fired plants, which emit 2.03 lbs of CO2 per kWh. Some of the electricity generated in NH comes from cleaner sources, such as nuclear and wood fired plants which emit no CO2. So let’s assume your electricity is generated from an average of fuels, including wood, coal, oil & nuclear with an average of 1.0 lbs of CO2 per kWh emitted at the generation plants. This average value is higher than even burning coal directly in a coal burner inside your facility. Coal emits 0.7 lbs of CO2 per kWh. The big difference results from the inefficiencies in creating electricity (25%) verses burring coal at your site (70% efficient).

The summary of the above discussion is actually why I was so excited about the possibility of a microturbine being installed at your facility. You would be using an abundant, cheap, relatively clean fuel source (natural gas) to create your own electricity at 80% efficiency (when taking into account capturing waste heat).

(2). Cost & Payback:

When I reviewed a year’s worth of your energy usage and cost, I determined you paid an average of $1.31 per therm for natural gas and $0.14 for electricity. I do expect those prices to rise proportionally to each other, so I’ll stick with those figures for now.
Also the analysis I did was for a 20,000 sq ft building. Your building has shrunk so your costs will also decrease proportionally. Payback numbers should still remain the same even with the smaller building.

(a) GSHP Cost Without Heat Smart Rate:

My original calcs showed that your space heating & water heating requirements are estimated to be 238,500 kWh (8,138 therms) per year, which equals $11,845 in natural gas costs (if using a 90% efficient boiler). If you were to instead use a GSHP system to transfer an equivalent amount of energy from the ground into your building, all pumps associated with GSHP system would require an estimated 79,300 kWh to operate, at a cost of $11,099 (at $0.14 per kWh). Which means you would save $746 more per year to go with a GSHP system instead of a natural gas system.

Your cooling requirements are estimated to be 58,200 kWh per year, which equals $8,142 in electricity costs for a standard air conditioner. If you were to instead use a GSHP system to transfer an equivalent amount of energy from the ground into your building, all pumps associated with GSHP system would require an estimated 14,800 kWh to operate, at a cost of $2,079 (at $0.14 per kWh). Which means you would save $6,063 per year to go with a GSHP system instead of a natural gas system.

So your net savings is about $7,000 per year. I estimated the premium paid for the GSHP system to be $127,000 (since you still need a back-up natural gas or propane heating system installed).

Under this scenario, your payback is 18 years.

(b) GSHP Cost With Heat Smart Rate offered by PSNH for GSHP:

My original calcs showed that your space heating & water heating requirements are estimated to be 238,500 kWh (8,138 therms) per year, which equals $11,845 in natural gas costs. If you were to instead use a GSHP system to transfer an equivalent amount of energy from the ground into your building, all pumps associated with GSHP system would require an estimated 79,300 kWh to operate, at a cost of $8,324 (at $0.105 per kWh). Which means you’ll save $3,521 per year to go with a GSHP system instead of a natural gas system.

Your cooling requirements are estimated to be 58,200 kWh per year, which equals $8,142 in electricity costs for a standard air conditioner. If you were to instead use a GSHP system to transfer an equivalent amount of energy from the ground into your building, all pumps associated with GSHP system would require an estimated 14,800 kWh to operate, at a cost of $1,559 (at $0.105 per kWh). Which means you would save $6,583 per year to go with a GSHP system instead of a natural gas system.

So your net savings is about $10,100 per year. I estimated the premium paid for the GSHP system to be $127,000 (since you still need a back-up natural gas or propane heating system installed.

Under this scenario, your payback is 12.5 years.

If you where replacing oil with a “heat smart” GSHP, the payback is 7.5 years. If you where replacing electric heat with a “heat smart” GSHP, the payback is 4.5 years.

(3) Positives & Negatives:

(a) Positives

As you can see by the scenarios above, you greatest savings realized from using a GSHP occurs when using the GSHP in place of air conditioning. This saving is obvious when you consider that cool ground temperatures are being transferred into the building. The GSHP is very efficient in this mode (since it doesn’t work as hard as it does in the heating mode) In fact it is 400% more efficient to use a GSHP for cooling instead of an air conditioner that uses electricity.

(b) Negatives

As you can see by the scenarios above, you greatest savings realized from using a GSHP occurs when using the GSHP in place of air conditioning. The savings are not that great operating the GSHP in the heating mode since the GSHP has to work very hard to transfer enough 50 deg F ground water to suck out 10 to 12 deg F from that water before returning it to the ground at 38 to 40 deg F.

In all cases that I know of that have GSHP operating very well (schools, banks, homes, Audubon facility), the buildings do not have access to natural gas and the cooling requirements are greater than the heating requirements. In fact, in all these cases, the heat pumps were sized to meet the cooling requirements so the cooling savings are substantial.
In your case, your space heating and hot water heating requirements are 400% larger than your cooling requirements. So your the heat pumps are sized to the heating load. And as shown above, you just about break even when using a GSHP for heating in place of natural gas. Another reason why the microturbine was being considered.

Another big negative is that in order to qualify for the Heat Smart rate, you need to have a back-up heating source and you can’t use (cheap) natural gas that’s already piped to your property as your back-up heating fuel. You may use propane or wood as your back-up source. Which means installing a propane tank on the property. Propane is more expensive than natural gas and since natural gas is no longer an option in your building, your kitchen equipment will need to use the more expensive electricity or propane for cooking.

Of course, you could decide to keep natural gas as your back-up fuel and go with the standard electricity rate instead of the heat smart rate. If you do this however, your payback increases to about 20 years, which is about the life of the equipment.

The maintenance costs are higher with the GSHP since you’ll have a lot of motors and pumps transferring large amounts to water through your building, as opposed to just an natural gas boiler that needs to be cleaned once a year.

PSNH does not offer any incentives to install a GSHP.

(4) Solar Thermal:

The reason why I’m suggesting a small solar thermal system for you is because it is affordable (as low as $10K) and you may add to it in $10K chunks. The system is 100% renewable and is therefore not subject to energy price fluctuations. It would be highly visible so you would not have to announce your “green” credentials. Everyone can see it.

Also, I think it will be easier to convince possible donors to open their wallets to support your green intentions. Maybe you could get donors to “support a collector” at $3,500 per collector. So for every 3 donors, you could install a $10.5K three collector system including a 120 gallon storage tank and all associated piping, heat exchanger and controllers.

Your payback would be long (20+ years) if you purchased the system yourself since you don’t qualify for any incentives. Businesses qualify for up to 60% incentives. Even homeowners qualify for a $2K federal solar tax incentive. Of course if you receive donations to purchase the system, your payback is immediate.

(5) Conclusions:

So after evaluating the energy production & cost of installing a 30 kW microturbine for about $130K, a GSHP system for about $130K and a solar thermal system for about $10K to $130K, I’ve determined that you’ll probably just about break even concerning payback, no matter which system you choose. In my humble opinion (and if it were my building), I would lean towards the 100% renewable energy system that is completely independent of energy fluctuations.
Let me know if you have any questions.

Lee
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Also, the cost estimates and paybacks listed on this website are rough estimates only. Please consult with your state rebate program, with certifier installers and with your CPA before investing in a renewable energy system.