By Pete Lee, Co-Founder, President & CEO
Here in the North Rockies (Jackson Hole, Wyoming & Big Sky, Montana) we have “significant” winters (another way of saying l-o-o-o-o-n-g heating seasons!). The plus side: a lot of great skiing. The downside: conventional home heating bills are often high enough to drive a chill up your spine.
But the downside can be avoided by installing a geothermal heating system (also called “ground source heat” or “geo-exchange heat”). Geothermal is a great way to mitigate your heating costs and has become much more affordable & popular.
This is true for three primary reasons:
- Uncle Sam gives a 30% tax credit to encourage use of this low-carbon, green energy;
- The technology has been making steady improvement and now boasts COPs (see below) of 4.5 to 5.0;
- The local heating community has embraced the new technology.
The alternative energy tax credits return 30% of the system costs to our clients. In effect through 2016, the credits are reducing time to recapture your investment from 10 years to an economically viable seven  years. Read on, and you’ll see that in some cases, THB Energy Solutions has done even better; one of our systems will pay for itself in 4.2 years—a 24% Return On Investment! Regardless of your political persuasion, you gotta appreciate Uncle Sam helping us wean ourselves off foreign fossil fuels.
Now couple those tax breaks with technological improvements and things get exciting. 10 years ago, a heat pump COP (coefficient of performance) of 3.0 was considered good. Fast forward to today, and units are clocking in at a COP of 5.0. This is huge because the technology has crossed the tipping point of efficiency and cost effectiveness.
Let’s take efficiency first. Geothermal uses grid electricity. So to fairly compare its carbon footprint to fossil fuels (like propane and heating oil) you have to account for delivery. Historically, grid electricity loses about 70% of the fuel energy burned by the time it gets to a delivery point (i.e. your house) due to line loss. In essense, a geothermal heat pump that delivers a COP of 3 has about a 90% efficiency of the actual fuel consumed ((100%-70%=30% efficiency) x 3 COP = 90% actual efficiency). Well, this is comparable to high efficiency boilers burning propane or heating oil. Now, with the improvements, that actual efficiency can push 150% (30% x 5 COP = 150%). There is no way for propane and heating oil to compete and your carbon footprint has been reduced!
Next, let’s think about cost effectiveness. We recently completed a geothermal energy retrofit on a 8,600 square foot house that produced a heating bill of $284 last month. Two years ago, the same bill was over $1,750. The savings for the year will be $11,000; the system will pay for itself in a little over 4 years (a 24% return on investment). Now, that’s cost effectiveness!
Okay, that covers two of the three legs of the stool: finance and technology. The last one is service. And today, that is well represented in the Rocky Mountains. Generally, the Rocky Mountain mechanical community was slow to learn about geothermal heat, but they have caught up quickly. In the last five years, many mechanics have learned all about the systems and there is a wealth of knowledge to tap into (especially out of the Midwest).
All the reasons are here to use geothermal heat in your next Rocky Mountain home. Not only will you be pleased with how small your heating bill is, but it is a good return on investment. And to top it off you can rest assured that you will be well taken care of and that you will be doing your part to help planet Earth.