Colorado Utility Efficiency Exchange Why Utilities Should Add Geothermal Heat Pumps to their Service Offerings

Transcription

1 Colorado Utility Efficiency Exchange Why Utilities Should Add Geothermal Heat Pumps to their Service Offerings October 14, 2010 Paul Bony Director of Residential Market Development

2 Colorado Utility Efficiency Exchange "There's no such thing as a free lunch Author unknown "Energy efficiency isn't just a free lunch, it's a lunch you are paid to eat." Amory Lovins, Rocky Mountain Institute

3 Colorado Utility Efficiency Exchange Geothermal heat pumps are the best efficiency lunch utilities will ever get paid to eat Paul Bony

4 Buildings Dominate U.S. Energy Use and Carbon Emissions with Heating, Cooling, and Water Heating being the Largest Contributors 43% of U.S. Carbon Emissions Industry 377 MMTC (25%) Transportation 482 MMTC (32%) Buildings 658 MMTC (43%) 39% of U.S. Primary Energy Consumption 71% of U.S. Electricity Global Pressures 53% of U.S. Natural Gas (Exxon Mobile Projection)

5 Potential of Demand-Side Efficiency Global CO 2 Emissions Outlook International Energy Association (IEA) % EE The Fruit on the Ground

6 Geothermal Heat Pumps Geothermal HVAC - Home Conventional HVAC - Home

7 Geothermal Heat Pumps What is a Ground source heat pump? Efficiency measure? Renewable energy? Both!

8 Geothermal Heat Pumps 1 kw Electrically generated Energy to power the system 4-6 kw Heat Delivered 3-5 kw of Geothermal Energy moved from the Earth % Efficient

9 14.6 In Out

10 COPs are pushing 5!

11 Geothermal Heat Pumps Geothermal Heat Pumps Are a Scalable Technology

12 Geothermal Heat Pumps 1300 Sq. Ft. Low Energy Habitat for Humanity Homes

13 Geothermal Heat Pumps Habitat for Humanity Average of 16 Homes - Total Site Energy Use in % Site Energy 2007 Savings kwh per M Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Geothermal Gas Furnace w A/C

14 Geothermal Demand Reduction Each residential heat pump linked to geothermal system can reduce peak loads in (US DOE) Summer by 1 2 KW vs. AC Winter by 4 8 KW vs. AAHP & ER Residential (Electric Program) Over 10 million residential consumers Assume just 1 KW reduction per installation 10,000 MW demand reduction

15 Geothermal Demand Reduction equest Modeling) 4 ton Geo vs. Conventional Home Peaks Denver Colorado Avg. of 2.1kw savings

16 Geothermal Heat Pumps Statue of Liberty Gift Shop ASHRAE Headquarters - Atlanta, GA Galt House Hotel - Louisville, KY Black Point Inn - Prouts Neck, ME Alta Condos, Washington DC Harvard Library Cambridge, MA French Laundry Rest.- Napa, CA Whistler Village - BC, Canada Yale Art Bld. New Haven, CT Gaillardia Offices Okla. City California University of PA Hirschfeld Towers Denver, CO Commercial Buildings

17 Garrett Office Buildings Actual Metered Annual Energy Use % Site Energy Savings kbtu per Square Foot Total Electricity Gas VAV System Geothermal

18 Garrett Office Buildings Monthly Peak Demand % Peak Demand Reduction Watts per Square Foot VAV System Geothermal Jul-06 Aug-06 Sep-06 Oct-06 Nov-06 Dec-06 Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07

19 Benefits Were Proven Long Ago: GSHP retrofit of 4000 homes at Fort Polk Evaluation showed 33% kwh savings, 43% lower summer peak kw demand, and improved load factor (0.52 to 0.62) Typical distribution feeder (16 in all) Army s existing meter Current transducers on secondary leads to existing meter New recording watt meter, modem, and phone line Buried phone line to nearest pedestal To recorder

20 Geothermal Heat Pumps Up to 3-4 times more efficient than standard natural gas & electrical HVAC systems - US Department of Energy Can cut HVAC energy demand by 50% and overall energy demand by 35% - US Department of Energy Can reduce CO2 global warming emissions by 3,454 tons and criteria pollutants by 4 tons of NO x & 11 tons of SO x per million square feet of building space - derived from GHP Consortium and USEPA data Use no water or natural gas on site 21

21 Geothermal Heat Pumps Geothermal Heat Pumps are the Most Efficient way to use Green Electricity for Heating, Cooling & Water Heating

22 Geothermal Heat Pumps Significantly reduce power demand, reducing the size needed for renewable power systems. Reducing the cost of on-site solar, wind or other renewable generation. Can provide zero-carbon space conditioning with carbon free electricity

23 Geothermal Heat Pumps GHPs were installed in 1 out of 38 new US homes in 2008 (2.6% share)

24 Geothermal Heat Pumps So if Geothermal Heat Pumps: Are a market proven technology Can be retrofitted to existing buildings/systems! Have low electric power requirements that can be provided by zero carbon sources! Can provide consumers immediate positive cash flow with conventional financing! Support dispatchable demand side management Why are they an under utilized Technology?

25 Market Barriers High(er) Cost of Installation Lack of HVAC Dealer Interest Lack of HVAC Dealer Expertise Limited Consumer Education No Viable Long Term Financing Not a need for rebates or other rate based incentives Geothermal systems provide consumers with positive cash flows in today s market

26 Aggregate 30 Year System Operating Cost Comparison of Heat Pump Operating and GeoLoop System Financing Costs versus Natural Gas/AC Operating Cost $47,100 $27,637 $24,516 $24,000 $0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,000 $45,000 $50,000 Cash purchase of geothermal loop 60 month financing of geo loop 360 month financing of geothermal loop Natural gas system

27 Oak Ridge National Labs U.S. DOE December 2008 The primary GHP market failure is the expectation that building owners should finance the GHP infrastructure, or outside-the-building ground heat exchanger. GHP infrastructure will outlive the building and many generations of heat pumps, and is akin to utility infrastructure (poles and wires, and underground natural gas piping).

28 Oak Ridge National Labs U.S. DOE This begs the question: Why do we expect building owners to finance GHP infrastructure on their own credit, but not other utility infrastructure?

29 Oak Ridge National Labs U.S. DOE And, when am I going to talk about that lunch utilities will be paid to eat?

30 The Utility Geothermal Lunch DOE Industry Roadmap Growth Goal - 1 Million GHPs Annually by 2017 Results in 3.3 million installations by MMT annual CO2 reduction 520 MMT lifecycle CO2 reduction over 20 yr GHP life Creates up to 100,000 new jobs (The conventional A/C and heat pump market is 6 to 8 million units annually)

31 The Utility Geothermal Lunch Residential Geo Federal Income Tax Credit: 30% of total GHP system cost No cap on maximum credit Can be used to offset AMT tax Can be combined with other tax credits Can be used in more than one year Eligibility: Includes houses, cooperatives, condos, mobile homes Does not have to be your main home GHP must meet Energy Star requirements Placed in service before 2017 After January 1, 2011, Geo will be the only HVAC technology with tax credits

32 The Utility Geothermal Lunch Federal Commercial Geo Income Tax Credit: 10% of total GHP system cost No cap on maximum credit Can be used to offset AMT tax Can be used in combination with subsidized financing Can be used in more than one year Accelerated Depreciation: 5 year MACR depreciation for entire GHP system Eligibility: Original use begins with taxpayer Placed in service before 2017 Can be used by regulated utilities Must be claimed by the owner of the property (effects non-taxable) Covers Up to 50% of project cost!

33 The Utility Geothermal Lunch Qualified Energy Conservation Bonds QECBs Capital expenditures for: Reducing energy consumption in publicly-owned buildings by at least 20% Implementing green community programs Mass community facilities to reduce energy consumption Public education campaigns to provide energy efficiency

34 The Utility Geothermal Lunch H.R Food and Energy Security Act of 2007 (Engrossed Amendment as Agreed to by Senate) SEC ELECTRIC LOANS TO RURAL ELECTRIC COOPERATIVES. The committee notes that assistance is authorized for renewable energy including geothermal ground loops 35 year funds at around 4%

35 The Utility Geothermal Lunch HR-4785 (Rural Star) introduced This bill (now incorporated in the Climate Bill) will create a $4.9 billion consumer loan program administered by the nation's rural electric cooperatives. The cooperatives would borrow the funds at 0% interest Then make the money available at no more than 3% for up to 10 years for energy efficiency upgrades. Enabling the co-ops to combine 35 year loop financing with 10 year GSHP equipment retrofits and home efficiency improvements Consumers get a 30% tax credit on the GSHP Equipment

36 The Utility Geothermal Lunch PACE financing OPT-IN special tax district to secure financing to a property, not the individual Powerful tool for municipal utility GSHP program implementation. Consumer gets 30% tax credit on the entire GSHP system (once Scrooge gets out of the way)

37 The Utility Geothermal Lunch Pennsylvania s goal - make money & save energy They offer unsecured, fixed-rate 3, 5, or 10 year loans up to $15, % rate for Energy Star qualified heating, cooling, windows or insulation improvements 5.99% for heating, cooling, closed loop geothermal and insulation improvements that exceed Energy Star standards. 4.99% rate for whole-house improvements suggested by a certified energy auditor that will yield an efficiency improvement of at least 15%.

38 The Utility Geothermal Lunch Clean Energy Works Portland operates an on-bill financing program that offers a 20-year loan term with 5.99% interest rate on weatherization, space heating and water heating upgrades, or a 3.99% rate on all upgrades for income-qualified homeowners. So far, the average loan is around $10,700. The city is providing the capital: $2.5 million via ARRA, supplemented by foundation money from ShoreBank Enterprise Cascadia, the fund manager. Three utilities are participating.

39 The Utility Geothermal Lunch

40 Final Comments Pay Go Arizona Republic, Aug. 20, 2010 Corporation Commission Chairwoman Kris Mayes agreed there is a problem with the rebate system. "Certainly, we need to put a stop to the stopand-start that's been occurring in the programs," Mayes said. "But it's important to keep in mind the solar industry wouldn't even exist without these rebates"

41 The Utility Geothermal Lunch In the early days, widespread utility support was provided to the GHP industry because the systems provided Lower peak demands and higher annual load factors The electric industry restructuring frenzy that came in the early 90s (remember Enron) cut the electric utility focus on DSM programs Now demand-side activities to shave peak loads and achieve higher load factors are on the upswing.

42 So if not a free lunch for utilities, at least as good as a very big free beer!

43 Additional Resources Geothermal.html s_area/tools.

44 Thank You For Your Attention! Questions? If you ever need a hand you can reach me at: Paul Bony paulsbony@yahoo.com

45 The Ground Loop Utility The Utility Loop Concept Utility owns and recovers the cost of the loop, interest expense, program costs, and profit or operating margin. Utility installs or contracts out loop construction. Controls system design and installation quality Electric utilities get improved load factor & incremental kwh revenue. System load factor is even better with load control. Future carbon credits may stay with the utility Consumers Get: Lower total energy bills. Utility grade service and reliability

46 Geothermal Heat Pumps The sun stores almost half of the energy it delivers in ground.

47 This solar energy can be harvested using geothermal heat pumps A geothermal heat pump is connected to a sealed water piping loop buried in the earth near the building Insulating layer of earth When the warm or cold water exiting the heat pump is pumped through the loop, it is naturally cooled or warmed by the earth surrounding it 60 F

48 The Ground Loop Utility

49 Time for Geo Another form of utility plant for delivering renewable energy supplies to the load 1 kwh of energy from the grid Plus: 3-5 kwh of energy from the earth Yields: 4-6 kwh of energy for the building

50 Utility/ Customer interface

51 The Ground Loop Utility ric/engineering/2006/en-in- 06.pdf

52 Geothermal Heat Pumps Over 1 million geothermal heat pumps have been installed in the United States & Canada.

53 North American Geothermal Industry Shipments 100,000 90,000 80,000 GHP up 16% 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0,

54 The Geothermal Utility 1- Water/Sewer 2- Electricity 3- Natural gas 4- Telephone 5- Cable TV 6- Energy efficiency

55 The Geothermal Utility Business Offering: REnU Bringing Solar to Your Home. Citizenrē launches the pilot phase of its REnU Offering for the residential sector. Packaged Approach Utility Price Parity Fixed-Rate Performance Guarantee No Investment Risk

56 The Geothermal Utility SunEdison (commercial & government) real savings no up front costs

57 Geothermal Heat Pumps

58 State of Colorado - PUC Law One possible alternative mechanism for further supporting GSHP technology would be to allow third-party developers to own and operate GSHP systems for consumers who would pay for metered thermal energy The Geothermal Heat Suppliers Act, passed in 1984, is a little known statute that gives suppliers of geothermal heat an exclusion from the certificated utility s exclusive territory rights.

59 Geothermal Market Barriers Federal Income Tax Credit: 30% of total GHP system cost No cap on maximum credit Can be used to offset AMT tax Can be combined with other tax credits Can be used in more than one year Eligibility: Includes houses, cooperatives, condos, mobile homes Does not have to be your main home GHP must meet Energy Star requirements Placed in service before 2017 After January 1, 2011 Geo is the only HVAC with tax credits! Also commercial tax credits (up to 50% of project cost)

60 Geothermal Heat Pumps ClimateMaster is working with the Utility Geothermal Working Group and Oak ridge National Lab to develop a GSHP demand and energy savings map using equest (DOE 2) modeling for utility program managers. Austin TX model results