Ground Source Heat Pumps: Good Enough For Queen Elizabeth So Why Not For The Northeast?

Home Heating Oilby Ryan Matley, via Rocky Mountain Institute

George W. Bush, the Queen of England, Sir Elton John, and Sir Richard Branson probably don’t have much in common, but they all have installed ground source heat pumps. And it’s not just a technology for the rich and famous. Habitat for Humanity installed heat pumps in its Oklahoma City development, Hope Crossing, because the low operating costs would help future residents save on their utility bills.

Sixteen percent of America’s 18.8 million barrel per day oil consumption is burned to heat our homes and businesses, and two-thirds of that demand is in the Northeast (New England, New York, New Jersey, and Pennsylvania). Swapping out oil consumption for electric ground source heat pumps offers a low cost, low pollution heating source that can generate $20 billion in savings and is a crucial step to achieving RMI’s Reinventing Fire vision in the Northeast.

The region spends over $14 billion every year on fuel oil—consisting of both distillate fuel oil, which is nearly identical to diesel fuel, and residual fuel oil, which is a heavy, viscous fuel also called “bunker fuel.” That means the six million residential and 450,000 commercial customers who use oil spend an annual average of $1,700 and $8,900, respectively, to heat their homes and businesses.

Along with the economic drag from using this high-priced fuel, 43,000 tons of nitrogen oxides, 69,000 tons of sulfur oxides, and 57 million tons of CO2 are added to our atmosphere every year, negatively impacting our health, air, water, and climate.

If residents and business owners in the Northeast switch entirely from oil to heat pumps they could save a total of $5.5 billion per year in heating costs, which is more than the healthcare expenditures of the entire state of Vermont. Over the lifetime of a heat pump system, each resident in the state could save $3,000 (present value), and each business could save $50,000 (present value). Emissions of NOx, SOx and CO2 would be reduced by 81 percent, 66 percent, and 81 percent, respectively. Those CO2 emissions reductions alone are equivalent to taking 8.2 million cars off the road.

How Does it Work?

A heat pump exchanges heat to and from the surrounding earth into the conditioned space of abuilding. The technology is similar to a refrigerator (an electrically-driven vapor-compression refrigeration system) that can be operated in both directions to provide heating or cooling as conditions require.

Heat pumps are cheap to operate primarily because they are able to generate three to five units of heating or cooling for each unit of electricity consumed (a 300 percent to 500 percent efficiency gain, or a 3.0–5.0 coefficient of performance in industry-speak).

And, because heat pumps are powered by electricity, they offer not only near-term emissions reductions (since the Northeast grid already emits low greenhouse gases due to its reliance primarily on natural gas and nuclear energy) but offer a pathway to low or zero emissions heating through renewable generation.

Converting from oil to heat pumps amounts to a large economic opportunity for the region. If 50 percent of oil customers were to convert to heat pumps over the next 20 years, they would generate $37 billion in direct investment that flows directly to the contractors installing these systems, helping to support local jobs. The $20 billion in net savings that investment generates can improve the balance sheets of residents and businesses while also allowing for reinvestment that further spurs economic growth. The cost to operate those heat pumps will be spent on electricity rather than oil, keeping money in the local economy instead of exporting dollars overseas.

What About Natural Gas?

Natural gas is cheap today, but even if we ignore its history of volatile prices and assume it will be cheap into the future, natural gas is not widely available in much of the Northeast. And the economics of natural gas pipeline permitting and construction mean that it likely will never be available for the rural Northeast.

In addition, an expansion into natural gas will actually make it harder for the region to reach its 80 percent greenhouse gas reduction target by 2050. Natural gas emits 27 percent less CO2 than heating oil. Yet, due to the long life of natural gas infrastructure, any expansion means that we may shut the door to renewable heating options.

Vaulting the Barriers to Widespread Adoption

The installation of ground source heat pumps is not yet widespread because there are a number of barriers that stand in the way: high upfront costs, long payback periods, lack of understanding of the technology, perceived uncertainty in performance, inexperienced designers, and a thin contractor base.

Of these barriers, high upfront costs and long payback times are the most pressing issues. The average residential system pays back its investment in 11 years, while the average commercial system pays back in 6.5 years. That leaves ample opportunity for savings over the 20-year (or more) life of the system, but most home or business owners do not know if they will be in the same building or even own their business six to 11 years from now.

There is a set of public and private financing tools well suited to address this barrier. Utilities can offer on-bill financing; pooling customers to get preferential interest rates while using customer’s payment history to reduce credit risk. The Plumas-Sierra Rural Electric Coop already provides a similar solution by offering a 30-year, zero percent financing, ground loop lease program. Cities and states can offer property-tax financing vehicles (similar to PACE bonds). Beyond providing access to low municipal financing rates, this structure ties the repayment of the loan to the building and not the occupant. The market can be opened to third-party ownership where an independent company owns the heat pump system and leases the heating or cooling output.

States may need to change regulations that stand in the way, such as requiring those third parties to be treated as utilities, but many have already taken this step to open the market to solar photovoltaic third-party ownership structures. Finally, states can allow for utility ownership of the ground loops. Since those assets often have a 40 to 50 year lifetime, utilities could invest in the system and sell the heating and cooling services to home and business owners no matter who occupies the building. States should adopt policies to unlock financing solutions and help jump-start the heat pump market. Heat pump systems are eligible for a 30 percent federal investment tax credit through 2016, so first mover states stand to benefit even more.

There is precedent for this type of transition. Sweden has moved from being entirely dependent on oil heating in 1970 to using a mix of biomass, district heating, and ground source heat pumps today (with only a small amount of oil remaining). Heat pumps now make up 40 percent of their heating market, but this transition took Sweden 40 years.

Can it be done more quickly here in the Northeast? Probably, but the time to start is now and targeted interventions by states can help speed the process. The region must not keep burning oil for heat simply because it has always been done that way.

Inaction is a choice, but the better choice is to take concrete steps to support growth in heat pumps.

Ryan Matley is a Consultant with RMI’s electricity practice, where he focuses on the implementation of demand side management programs, including analyzing new business models and program approaches to improve uptake. This piece was originally published at RMI’s Outlet blog and was reprinted with permission.

16 Responses to Ground Source Heat Pumps: Good Enough For Queen Elizabeth So Why Not For The Northeast?

  1. Omega Centauri says:

    There are also air source ductless heat pumps. These don’t have as high efficiency, as the sink is outside air, rather than groundwater at near average annual temperature. But the capital cost is much lower, and they can be added incrementally to take over partial heating needs. The efficency of air source heat pumps does go down with lower outside air temps, so in the colder regions, a backup heat source for use on the coldest days is advisable.

  2. peter whitehead says:

    The Queen also has a hydro scheme on the Thames which provides electricity to Windsor Castle:

    I think this was pushed by Prince Charles

  3. GSHPs provide a number of benefits in addition to energy savings. For example, maintenance costs for GSHP systems are on average about 50% lower than those for conventional systems. Also, when a commercial cooling tower-based cooling system is replaced with a GSHP system, potentially millions of gallons of water are saved. These are just two examples.

    The design, engineering and installation skills necessary to create a high performance and sustainable geothermal systems are in short supply. Engineering and HVAC schools in the NE (and everywhere) should integrate GSHP systems into their curriculum so that the next generation of decision makers, designers and insatllers doesn’t think “I didn’t learn about these in school. They must not be very good.”

  4. Brooks Bridges says:

    Read ‘Reinventing Fire’ cover to cover. But:

    My payback period for a ground source unit would now be about 50 years (explained below).

    1) I would, instead, love to hear more about how how big improvements in home/business insulation/infiltration could be applied to large numbers of structures. This would not require concomitant trashing of millions of existing heat/cooling units but would allow subsequent replacements to be sized significantly smaller.

    Heating and cooling bills in our house are now 1/3 of what we paid the first two years – even though we now use the large attic space for wife’s studio daily. Our 1920, balloon construction had no wind proofing, much less insulation. Foam in walls and attic rafters plus much caulking did the most. A more efficient gas furnace and A/C helped. Highest A/C bill was $73 this year and we’re near Wash. DC and keep thermostat at 78 deg to 80. We also went from two A/C’s and two furnaces to one each and A/C is only 2-ton. Finally, house is much quieter and drafts are gone.

    2) New air source heat pumps are coming on the market offering heat pump efficiencies as low as 0 deg F.

    3) Not only is ground source expensive, there are many homes/apt/buildings for which it cannot be used.

  5. RobLL says:

    Some ground source heat pump issues.

    In more temperate climates air source are very efficient.

    One home magazine some years ago reported on ground source which used a 3 foot diameter drilled hole maybe 20 foot deep, into which a unit was installed. Anything new on this?

    Through design, ducting, or split systems houses really should be heated to various temperatures. Entries, bedrooms, sunroom, etc. kept at lower temperatures, central living space, old peoples rooms warmer.

  6. Kudos to Ryan Matley and RMI for referring to ground-source heat pump technology appropriately, so as to help build broad public understanding.

  7. Artful Dodger says:

    Thank you for this article, Ryan. It’s always bothered me that heat pumps are powered by electricity, often coal-generated at that. In fact, several people I know have abandoned plans to convert their homes to geo-thermal heat pumps because of the increase in electricity use (which is coal-fired locally) vs staying with Natural Gas.

    So Ryan, tell me if it’s possible to power the heat pump with a green alternative. Perhaps a Sterling engine driven by the underground heat source itself? Is that feasible, or else what other options are available?

    Thanks again for the excellent article.

  8. Rabid Doomsayer says:

    What about solar air heating? Most of what I have seen has been home built.

  9. mikkel says:

    The temperature differential won’t be anywhere close enough to get good output from a heat engine. Even if the differential was high, the size of the stirling engine needed would be immense.

    I was going to be blithe about not switching to geothermal, but this wikipedia link shows that electricity generation in the US is so bad that it is worse to switch from NG. That said, have those people also calculated the reduction in electricity they’d use over the summer due?

  10. mikkel says:

    Are you comparing the difference between costs of air source to ground source and then factoring in the saved energy to create your 50 year payback?

    I personally wouldn’t think that ground source would be that much of an improvement in your location, so I guess that makes sense.

  11. Mark E says:

    When city sewer systems are separated (so the sewage half does not overflow into the storm half during big precip events), they tear up streets and excavate to the gates of Hades, or so it seemed in my town.

    Why not take advantage of all that dirt work to also lay geothermal heat pump lines for nearby structures at the same time?

  12. Paul Klinkman says:

    I’ve been reinventing solar air heat.

    Active solar air has been tried, and it had several major problems in the 1970s.

    1. Moisture from houses (steam from dishwater, from showers, even evaporating sweat from people) was blown into cold rockbed heat storage boxes in summer. The moisture grew mold, and then house air became unhealthy to people. Solution: keep the moisture out.

    2. One or more tons of granite rock can give off radon gas, which can build up inside a sealed house in winter. Solution: don’t bring that particular contaminated air inside.

    3. This is a theoretical argument against air vs. water. By volume, air is about 1/500th as efficient at moving heat as is water. I say theoretical because I use extremely short air ducts and so the ducts aren’t a major expense.

    4. One installation saved $300 worth of oil a month, but spent $300 in electricity each month forcing the heated air through the rockbed. This problem can be fixed too.

    Benefits: air is maintenance-free.

  13. A.J. says:

    Presumably that’s the main reason air source heat pumps haven’t been that popular in cold regions, because historically they haven’t paid for themselves in any reasonable amount of time. Wonder how much that has changed in recent years with air source. Here in the PNW, they’ve been adopted much more quickly as power rates have risen, because of generally mild temperatures.

  14. A.J. says:

    If the effective efficiency of GS systems is 300-500%, then presumably it would make sense over gas in several regions that have less than the ‘national average’ of electric emissions intensity. That is, assuming the up-front costs are manageable/the financing is there.

  15. daniel bernstein says:

    Regarding C02 emissions from a ground source system vs a natural gas boiler:

    1) When one thinks about a geo system, one must think about heating and cooling. It is inappropriate to compare GSHP system emissions to those from a furnace because it is an apples to oranges comparison. A furnace is only heat. A geosystem is heating and cooling. To do an analysis (C02 or otherwise), one must look at for example a geo system vs a furnace/air conditioner combo.

    2) In addition, one has to understand the heating and cooling needs for a particular project. The heating and cooling loads as well as the balance between the two are critical in determining installation costs, performance, operational costs and emissions. Note that nearly all commercial systems are cooling dominated systems. Therefore, since geo and conventional cooling all are using electricity (and geo will generally provide a higher performance) for cooling, in most commercial projects, regardless of the energy mix, well designed geo systems should pretty much always result in reduced C02 emissions.

    3) In general, even heating dominated geothermal systems will result in reduced emissions. To perform the calculation, one needs to know the total predicted energy consumption of the system, the efficiency of the system and the C02 emissions factors (lbs of C02/kWh generated, lbs of C02/therm combusted, etc). The higher performance that geo systems provide (for example, an average COP of 3.8 va a 95% efficiency natural gas furnance) even with high electricity emissions factors almost always results in a net reduction in C02 emissions. Sometimes the savings can be pretty small but it is still there. And eventually when the grid is cleaned up, the C02 emissions from the geo system will just drop and drop and drop.

    I teach engineers how to design geothermal systems and I always stress that one needs to spend time and treasure performing a somewhat detailed analysis to determine if geo will work for a particular project. Geo is simple conceptually but the lack of engineering knowhow about the details and the blanket statements made both in favor of and against geo result in problems for the industry, and ultimately the future for all of us.

    First remember that GSHPs are heating and cooling systems. If a building has heating and cooling, one must compare the carbon footprint from the total system and not just the heating system. Since pretty much all cooling systems are electrically-driven, a high EER (energy efficiency ratio) geo system will produce quite

    Even if the electricity has an emissions factor (lbs C02 emitted per kWh generated)

  16. AA says:

    There are natural gas fired chillers available and I’ve seen references to reversible units which you could use for heating as well as cooling. These units use an absorption cycle rather than a mechanical compressor and have a lower efficiency than their electrical counterparts.

    These things are really for niche applications, so If you want to use a setup like this for space heat you’re going to be heading out into uncharted waters.