Is Geothermal Always Worth It?

26 Oct

Earlier this year, I wrote a post on the Pros and Cons of Geothermal Heat Pumps (GHP). As it turns out, there is more to the story. I am in the process of evaluating HVAC systems for an existing home that is getting an addition. The addition is almost the size of the existing home; a new HVAC system is required as you can imagine.

After looking into several HVAC options with a focus on GHP, the consensus is to first focus on “tightening” the envelope of the existing home while considering the most effective methods of building an energy efficient addition. And, do this before worrying about your HVAC considerations. For my wife and I, it comes down to “first things first.” And, first on our agenda is “air infiltration” and insulation.

We are currently building an addition to an existing 1930s home. Understanding the energy use in the existing home and the addition we are building (or the home/addition you plan to build) is, IMHO, by far the most important aspect of HVAC considerations that come later. A “tight” home requires less energy to heat and cool, which in turn requires a significantly smaller HVAC system. And, what that means is a much lower overall energy bill.

It is important to note that lower overall energy use “increases” the “pay back time” required to recover the additional capital costs of a geothermal system.

Paying to “save energy” by investing in better windows, doors, and stopping air infiltration (conditioning your attic and crawl-space, for example), gives you the highest ROI (return on your investment). But, investing in “energy efficiency” leaves you with less money in the overall project budget. So, you need to consider this, is it better to invest in a GHP system or first invest in energy efficiency?

Cutting a big energy bill in half saves you a lot more money than cutting a relative small energy bill in half (basic math). For example, a poorly insulated home may have a $400/month energy bill on average, cut that in half and it saves you $200/month ($2,400/year). But, a “tight” home of the same size (sq. ft.) may only have a $150/month energy bill; cutting that in half only saves $75/month ($900/year).

Over the course of 1-year, the difference is $1,500/year and $15,000 over 10-years. My point here is if you have a well insulated home (SIPs, conditioned attic and crawl-space, great windows and doors, etc.), the initial capital cost of geothermal systems (GHP) requires a lot more time to “pay you back” because your overall energy use is low and so is your savings, in the short-run.

Say you have or plan to build a tight, energy efficient home and your monthly utility bill with a traditional HVAC system is projected to be the $150/month  example above. Say installing a GHP cuts that in half to $75/month. If the GHP system costs you $15,000 more to install than it takes over 10-years to “break-even” (I’m assuming the $15,000 in the bank would be worth more 10-years from now; maybe $20,000).

What I have concluded after a significant amount of research is this; a home that uses significantly less energy because it was built or remodeled to be very energy efficient may not benefit “financially” all that much from a GHP system due to the initial capital cost involved.

Unless you have a huge McMansion or you are using the GHP to also heat a pool, etc., may I suggest you run the numbers for your project? And, definitely consider the best solution of all, invest in cutting your total energy use by “tightening” up the home and stopping all possible avenues of air infiltration.

In short, first take a hard look at the energy efficiency of your home or project before considering any of the possible HVAC systems. There are several new HVAC technologies (mini-splits, high efficiency heat-pumps using air – traditional type systems) that are making GHP a hard sell for energy efficient homes of say 4,000 t0 5,000 sq. ft. or less.

Energy Management Important to Healthcare Leaders

17 Dec

Energy efficiency, Wind MillWe tend to either love or hate the current healthcare industry. Rising insurance costs and outrageous healthcare bills upset us all. But, it appears the industry leaders are taking energy management seriously. According to a recent survey, energy management is more important to healthcare leaders than to executives in other industry sectors.

According to new research from the American Society for Healthcare Engineering and Johnson Controls, energy efficiency continues to grow in importance in the healthcare sector as organizations do more than ever to “go green.” (SOURCE: Johnson Controls Institute for Building Efficiency)


In March 2010, Johnson Controls’ Institute for Building Efficiency, the International Facility Management Association (IFMA), and the American Society for Healthcare Engineering (ASHE) conducted a survey of
executives and managers responsible for making investments and managing energy use in commercial buildings across the world. As part of the Energy Efficiency Indicator (EEI) broad survey to look at the trends in energy efficiency throughout the worldwide business community, Johnson Controls wanted to include a separate analysis of responses from organizations in the healthcare industry. Of the 2,882 respondents polled worldwide, 288 operated in the healthcare industry, and 246 were ASHE members.

The EEI survey examines what healthcare organizations are doing in response to rising energy costs, what factors are motivating efficiency improvements, how many organizations are planning to make investments, what payback they expect on energy efficiency investments, and what technologies and practices they have been implementing in their facilities.The Johnson Controls Institute for Building Efficiency, the International Facility Management Association and the American Society for Healthcare Engineering conducted an online survey of decision-makers responsible for managing energy. The Energy Efficiency Indicator survey results included a separate analysis of responses from healthcare organizations. (SOURCE: 2010 Energy Efficiency Indicator – Healthcare Sector Report, Oct. 2010)

Here’s an excerpt of the findings reported by the Johnson Controls Institute for Building Efficiency:

The survey looked at issues such as what organizations are doing in response to rising energy costs, what factors are driving efficiency improvements, what payback they expect on projects, and what technologies and practices they are applying. Highlights of the survey include:

  • 59% of healthcare organizations believe energy management is extremely or very important, compared to 52% of respondents across all industries.
  • 66% of healthcare respondents are paying more attention to energy efficiency than they were a year ago.
  • Cost savings is the biggest factor driving energy efficiency investments in healthcare; enhancing image and taking advantage of government or utility incentives are next.
  • Nearly 50% of healthcare respondents cited energy efficiency in buildings as their top strategy for reducing greenhouse gas emissions.
  • The average maximum allowable payback period for energy efficiency investments in healthcare is 3.3 years, down from 4.2 years in 2008.
  • The top barriers to capture of potential energy savings are lack of internal capital and inability to identify projects with sufficient ROI.

Click here to visit the Institute for Building Efficiency and read or download the complete survey report.