Measuring the Costs and Benefits of Nationwide Geothermal Heat Pump Deployment

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Measuring the Costs and Benefits of

Nationwide Geothermal Heat Pump Deployment

Prepared for:

U.S. Department of Energy, Geothermal Technologies

Program under Award Number DE-EE0002741

Prepared by:

Elizabeth C. Battocletti, Bob Lawrence & Associates, Inc.

William E. Glassley, California Geothermal Energy

Collaborative, Department of Geology,

University of California, Davis

Technical Assistance Provided by:

Adam Asquith and Tucker Lance,

Energy Institute, University of California, Davis

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Me as u ring t h e Co sts and Benef it s of Nat ion w ide G eot h er mal Heat P u mp De p loym ent

Disclaimer

This report was prepared as an account of work sponsored by an agency of the United States Government. Neither the United States Government nor any agency thereof, nor any of their employees, makes any warranty, express or implied, or assumes any legal liability or

responsibility for the accuracy, completeness, or usefulness of any information, apparatus, product, or process disclosed, or represents that its use would not infringe privately owned rights. Reference herein to any specific commercial product, process, or service by trade name, trademark, manufacturer, or otherwise does not necessarily constitute or imply its

endorsement, recommendation, or favoring by the United States Government or any agency thereof. The views and opinions of authors expressed herein do not necessarily state or reflect those of the United States Government or any agency thereof.

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u ring t h e Co sts and Benef it s of Natio n w ide G eot h er mal Heat P u mp De p loym ent

Acknowledgements

We would like to thank the many people, organizations, and companies who supported our efforts over the past three years to measure the costs and benefits of nationwide geothermal heat pump deployment. In particular, we extend our gratitude to:

 Steve Kavanaugh and Lisa M. Meline, American Society of Heating, Refrigerating and

Air-Conditioning Engineers, Inc.

 Andrew Stone, American Ground Water Trust.

 Kent Kuffner, Carrier Corp.

 Paul Bony, Dee Brower, Dan Ellis, and Steve Johnson, ClimateMaster, Inc.

 Jeff Hammond and Steve Smith, Enertech Manufacturing, LLC.

 Bob Koschka and Chris Smith, FHP-Bosch Group.

 Daniel Bernstein, Gaia Geothermal, LLC.

 Ted J. Clutter, Doug Dougherty, and John Kelly, Geothermal Exchange Organization.

 Ed Lohrenz, Geo-Xergy Systems, Inc.

 Richard A. Gordon, Gordon & Associates, Inc.

 Jim Bose; Jack P. DiEnna, Jr.; and Shelly Fitzpatrick, International Ground Source Heat

Pump Association.

 Katherine Johnson, Johnson Consulting Group.

 Trisha Freeman, Barbette Howell, Kevin B. McCray, and Christine Reimer, National

Ground Water Association.

 Xiaobing Liu, Oak Ridge National Laboratory.

 Jay T. Ayers, Trane-Ingersoll Rand.

 Phil Rawlings, Trison Construction, Inc.

 Guy Nelson, Utility Energy Forum.

 Mike Albertson; Shelton Cartwright, Jr.; Tom Huntington; and Alan Niles,

WaterFurnace, International, Inc.

 Randy Manion, Western Area Power Administration.

We extend special thanks to Toni Boyd, Geo-Heat Center, Oregon Institute of Technology and Andrew Chiasson, Oregon Institute of Technology. We acknowledge the work of Adam

Asquith and Tucker Lance, Energy Institute, University of California, Davis, who contributed to the research and conducted the many simulations required in the Regional Modeling Analysis effort. We are also grateful to the program managers at the U.S. Department of Energy for their support.

Last, but certainly not least, we thank the hundreds of people in the geothermal heat pump industry across the United States who took time to respond to our numerous entreaties to complete a survey. Without their time and assistance, our work would not have been possible.

Elizabeth C. Battocletti William E. Glassley

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Me as u ring t h e Co sts and Benef it s of Natio n w ide G eot h er mal Heat P u mp De p loym ent

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Table of Figures

Figure 1. GHPsRUS Project economic survey responses by census region ... 2

Figure 2. U.S. census regions and divisions ... 4

Figure 3. Median price of installing an average residential vertical loop by census region ... 6

Figure 4. Average loop lengths by census region for residential and non-residential buildings ... 7

Figure 5. Median price/ton for residential installations by census region ... 9

Figure 6. Geothermal heat pump shipments (number of units), 1998-2012 (ARI-320, ARI-325, and ARI-330) ... 18

Figure 7. Geothermal heat pump shipments (rated capacity in tons), 1994-2010 ... 19

Figure 8. Value of shipments of air-conditioning and warm air heating equipment, 2006-2011 (millions of dollars) ... 19

Figure 9. Geothermal heat pumps as a percentage of all air-conditioning and warm air heating equipment (value of shipments), 2006-2011 ... 20

Figure 10. Major components of the U.S. geothermal heat pump industry ... 24

Figure 11. Average job multipliers by industry code and census region ... 27

Figure 12. Locations of companies that responded to a GHPsRUS Project economic survey (in orange) ... 28

Figure 13. GHPsRUS Project economic survey responses by census region... 28

Figure 14. Job breakdown by industry code ... 30

Figure 15. Outlook of U.S. geothermal heat pump industry segments ... 30

Figure 16. GHP manufacturers and OEMs that responded to the Manufacturer & OEM Survey ... 32

Figure 17. Locations of companies that responded to the Manufacturer & OEM Survey (in blue) ... 33

Figure 18. Responses to the Manufacturer & OEM Survey by census region ... 34

Figure 19. Types of geothermal heat pumps manufactured ... 34

Figure 20. U.S. geothermal heat pump market breakdown by manufacturer and OEM 35 Figure 21. Location of geothermal heat pump manufacturing facilities ... 36

Figure 22. Major components of a residential water-to-air GHP (Photo: Bosch) ... 37

Figure 23. Distribution channels for geothermal heat pump manufacturers and OEMs38 Figure 24. Geothermal heat pump shipments by destination, 2009 (rated capacity in tons) ... 39

Figure 25. Geothermal heat pump shipments by census region destination, 2009 ... 39

Figure 26. Geothermal heat pump shipments by destination, 2006-2009 (rated capacity in tons) ... 40

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Figure 28. Locations of companies that responded to the Geothermal Loop Survey (in

green) ... 42

Figure 29. Responses to the Geothermal Loop Survey by census region ... 43

Figure 30. Drilling methods reported in Geothermal Loop Survey ... 44

Figure 31. Loop types reported in Geothermal Loop Survey ... 45

Figure 32. Years of experience of mechanical equipment installers ... 49

Figure 33. Locations of companies that responded to the Mechanical Equipment Installation Survey (in red) ... 50

Figure 34. Responses to the Mechanical Equipment Installation Survey by census region 51 Figure 35. Responses to “Does your company design GHP systems?” ... 52

Figure 36. Responses to “Does your company use heat loss/gain load calculations?” .. 52

Figure 37. Mechanical installations by building type (Other = large residential development on a single loop) ... 53

Figure 38. Mechanical equipment installations, new or retrofit ... 54

Figure 39. Average mechanical equipment installation price by building type ... 56

Figure 40. Geothermal heat pump types installed ... 57

Figure 41. Other GHP industry members' years of experience in the GHP industry ... 61

Figure 42. Company types that responded to the Geothermal Heat Pump Industry Survey ... 62

Figure 43. Locations of companies that responded to the Geothermal Heat Pump Industry Survey (in yellow) ... 62

Figure 44. Responses to the Geothermal Heat Pump Industry Survey by census region ... 63

Figure 45. Barriers to increased GHP market penetration ... 64

Figure 46. Thirty largest U.S. metropolitan areas (listed in order of size from largest to smallest) ... 66

Figure 47. Idealized subsurface temperature profile. Temperature is indicated as a function of depth, season and soil type (modified from Glassley, 2010) ... 68

Figure 48. Schematic diagram of a geothermal heat pump, operating in heating mode (modified from Glassley, 2010) ... 69

Figure 49. Schematic diagrams of horizontal loop (left) and vertical borehole (right) systems for geothermal heat pumps ... 70

Figure 50. Thermal diffusivity (Td) as a function of thermal conductivity (Tc). The red line indicates the least squares fit to the data. The least squares fit equation is given in terms of both S.I. and British units. The “goodness of fit” (R value) is also indicated. ... 74 Figure 51. Temperature as a function of depth for six of the states within which

metropolitan areas of interest occur (Las Vegas, Nevada; New York City, New York; Portland, Oregon; Philadelphia and Pittsburgh, Pennsylvania; Dallas, Houston, and San Antonio, Texas; and Seattle, Washington). Data source: Southern Methodist University Data Base (2010). Also shown is the recommended modeling temperature for the

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Figure 52. Histogram of square footage for single-family homes built between 1999 and

2010, by U.S. Census Bureau regions ... 79

Figure 53. An example of the data input summary used to model a residential ground loop. In this case, the Baltimore, Maryland metropolitan region is considered. ... 84

Figure 54. Annual energy use for residential buildings in all 30 metropolitan regions for HVAC (vertical axis) and GHP (horizontal axis) systems. The lightly dashed lines are contours representing the indicated percentage difference in energy use for the two systems. The heavily dashed line delineates those values for which there is no difference. Points that fall above the “no difference” line represent conditions in which conventional HVAC consumes more energy than GHP systems. Ten percent error bars are shown for reference. ... 87

Figure 55. Annual kWh use for commercial buildings in all 30 metropolitan regions for HVAC (vertical axis) and GHP (horizontal axis) systems. The dashed lines and error bars are as in Figure 8. Points that fall above the “no difference” line represent conditions in which conventional HVAC consumes more energy than GHP systems. Ten percent error bars are shown for reference. ... 88

Figure 56. Total CO2 emissions (in kg) for residential buildings for HVAC (vertical axis) and GHP (horizontal axis) systems. The error bars are as in Figure 44. ... 96

Figure 57. Total CO2 emissions (in kg) for commercial buildings for HVAC (vertical axis) and GHP (horizontal axis) systems. ... 98

Figure 58. Total jobs in the GHP industry by NAICS industry code ... 102

Figure 59. Main space heating fuels for U.S. homes, 2009 ... 104

Figure 60. Fuels used for space heating in U.S. homes by census region, 2009 ... 104

Figure 61. Fuels used for water heating in U.S. homes by census region, 2009 ... 105

Figure 62. Electric air conditioning in U.S. homes by census region, 2009... 105

Figure 63. Principal building activity, 2003 ... 106

Figure 64. Energy source for space heating and cooling and water heating for all buildings, 2003 ... 107

Figure 65. Energy source for space heating and cooling and water heating for all buildings, ... 107

Figure 66. Climate Zone: 30 -year average, total floor space (million square feet) for all buildings, 2003 ... 108

Figure 67. Benefits of geothermal heat pump market penetration ... 109

Figure 68. U.S. census regions ... 111

Figure 69. Climate zone designations used by the U.S. Department of Energy Building America Program. ... 115

Figure 70. Median price of installing an average residential vertical loop by census region ... 125

Figure 71. Average loop lengths by census region for residential and non-residential buildings ... 126

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Figure 73. U.S. electric industry by electric provider type, 2010 ... 132 Figure 74. National electricity fuel mix, 2011 ... 133 Figure 75. Electric providers offering financial incentives for geothermal heat pumps 134 Figure 76. Electric providers with and without geothermal heat pump programs ... 134 Figure 77. Number of electric providers with financial incentives for geothermal heat pumps by state (white = 0, red = 1 to 5, orange = 6 to 10, yellow = 11 to 20, green = over 21) ... 135 Figure 78. Approximate costs of building and operating 91 GW and 105 GW nominal capacity of new natural gas plants (NGCC = natural gas combined cycle, CCS = carbon capture and sequestration) ... 138 Figure 79. Possible business model to reduce first cost of the geothermal loop and build market for geothermal heat pumps ... 141

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Table of Tables

Table 1. Direct, indirect, and induced jobs provided by respondents to the GHPsRUS

Project economic surveys ... 3

Table 2. Estimated total GHP industry direct, indirect, and induced jobs by industry code ... 3

Table 3. Loop types reported by number ... 5

Table 4. Median loop installation prices by loop type and census region ... 5

Table 5. Average loop lengths for residential and non-residential buildings by census region (feet) ... 6

Table 6. Mechanical equipment installation by census region and building type ... 7

Table 7. Median mechanical equipment installation prices by building type and census region ... 8

Table 8. Annual energy savings and average emissions offsets for three scenarios of GHP market penetration ... 11

Table 9. Job intensity ... 12

Table 10. National average median geothermal loop and mechanical equipment installation prices and loop lengths... 13

Table 11. Estimated price of national deployment of GHPs ... 13

Table 12. GHPsRUS Project Economic Surveys ... 23

Table 13. Direct, indirect, and induced jobs provided by respondents to GHPsRUS Project economic surveys ... 25

Table 14. North American Industry Classification System (NAICS) and industry codes by company type ... 26

Table 15. Average job multipliers by industry code and census region ... 27

Table 16. Direct, indirect, and induced jobs by census region ... 29

Table 17. Direct, indirect, and induced jobs by state ... 29

Table 18. Results of Manufacturer and OEM Survey ... 32

Table 19. Responses to the Manufacturer & OEM Survey by state ... 33

Table 20. Suppliers of major geothermal heat pump components ... 37

Table 21. Results of Geothermal Loop Survey ... 41

Table 22. Job data provided in response to the Geothermal Loop Survey by state ... 43

Table 23. Drilling method prices ... 44

Table 24. Summary of all geothermal loops ... 45

Table 25. Summary of vertical loops ... 46

Table 26. Levelized loop installation price by census region ... 47

Table 27. Levelized loop installation price by state ... 47

Table 28. Results of Mechanical Equipment Installation Survey ... 48

Table 29. Job data provided in response to the Mechanical Equipment Installation Survey by state ... 51

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Table 30. Mechanical equipment installations ... 53

Table 31. Mechanical equipment installations ... 54

Table 32. Average mechanical equipment installation price by building type... 56

Table 33. Average mechanical equipment installation prices by GHP type ... 57

Table 34. Levelized mechanical equipment installation price by census region ... 58

Table 35. Levelized mechanical equipment installation price by state ... 58

Table 36. Results of the Geothermal Heat Pump Industry Survey ... 61

Table 37. Responses received to the Geothermal Heat Pump Industry Loop Survey by state ... 63

Table 38. Computed Thermal Diffusivities ... 74

Table 39. Residential and Commercial building properties used to calculate heating and cooling loads ... 80

Table 40. Residential energy use. ... 89

Table 41. Commercial energy use ... 90

Table 42. Emissions factors for electricity generation for the respective metropolitan areas, in English and metric units. ... 92

Table 43. Emissions factors for heating using natural gas, oil and propane ... 93

Table 44. Emissions for residential buildings, by metropolitan area. NG – natural gas; Pro. – propane; GHP – geothermal heat pump system. ... 94

Table 45. Emissions for commercial buildings, by metropolitan area. NG – natural gas; Pro. – propane; GHP – geothermal heat pump system. ... 97

Table 46. Estimated total GHP industry direct, indirect, and induced jobs by industry code ... 102

Table 47. Total square footage of U.S. homes by census region and heating and cooling characteristics, 2009 ... 103

Table 48. Number of buildings and floor space for all buildings ... 106

Table 49. Residential and commercial energy savings and emissions offsets, Scenario 1 ... 112

Table 50. Average residential energy savings by census region ... 112

Table 51. Average annual residential energy savings and emissions offsets, Scenario 1 ... 112

Table 52. Average commercial energy savings by census region ... 113

Table 53. Average annual commercial energy savings and emissions offsets, Scenario 1 ... 113

Table 54. Average residential energy savings by Building America climate zone ... 115

Table 55. Residential energy savings and emissions offsets by Building America climate zone ... 116

Table 56. Average annual residential energy savings and emissions offsets, Scenario 2 ... 116

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Table 58. Average annual residential energy savings and emissions offsets, Scenario 3

... 118

Table 59. Average annual commercial energy savings and emissions offsets, Scenario 3 ... 119

Table 60. Data for GHP and HVAC Industries for 2010... 122

Table 61. Job intensity ... 122

Table 62. Loop types reported by number ... 123

Table 63. Median loop installation prices by loop type and census region ... 123

Table 64. Average loop lengths for residential and non-residential buildings by census region ... 125

Table 65. Mechanical equipment installation by census region and building type ... 126

Table 66. Median mechanical equipment installation prices by building type and census region ... 127

Table 67. National average median geothermal loop and mechanical equipment installation prices and loop lengths... 129

Table 68. Estimated price of national deployment of GHPs ... 129

Table 69. Reasons electric providers created geothermal heat pump incentive programs ... 136

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u ring t h e Co sts and Benef it s of Natio n w ide G eot h er mal Heat P u mp De p loym ent

Executive Summary

While the technology has existed since the late 1940s, geothermal heat pumps (GHPs), also known as ground-source heat pumps and GeoExchange®, currently account for only 2% of the total U.S. heating and cooling market. To evaluate the consequences of broader deployment of GHPs, Bob Lawrence & Associates, Inc. and the California Geothermal Energy Collaborative conducted a national cost-benefit analysis for 30 metropolitan regions. Known as the GHPsRUS Project (“geothermal heat pumps are U.S.”), the three-year effort was supported by the United States Department of Energy Geothermal Technologies Program through the American Recovery and Reinvestment Act of 2009.1

The GHPsRUS Project directly responds to a 2008 Oak Ridge National Laboratory (ORNL) study2 which examined the barriers to increased GHP use in the United States.

ORNL determined that the two most significant actions that could be taken to increase GHP use in the U.S. were to:

1. Assemble independent, hard data on costs and benefits.

2. Independently assess the national benefits of GHP deployment.

The objectives of the GHPsRUS Project are to:

 Evaluate and quantify the economic, environmental, and social benefits resulting from various degrees of GHP market penetration.

 Examine the relationship of geographic location to installation cost (geothermal loop and mechanical equipment) in the 30 largest U.S. metropolitan areas. The GHPsRUS Project is composed of three components: (1) Market Analysis, (2) Regional Modeling Analysis, and (3) National Analysis.

Market Analysis

The market analysis was an ambitious attempt to establish a realistic baseline of all components of the U.S. GHP industry. The market analysis was conducted primarily through four surveys distributed to all segments of the GHP industry including GHP manufacturers and Original Equipment Manufacturers (OEMs), geothermal loop installers, mechanical equipment installers, and other companies involved in the GHP

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industry. Previous market analyses have focused solely on GHP manufacturers and OEMs; this analysis attempted to quantify the entire GHP industry—from

manufacturing to design to installation. Responses were received from companies in 47 states and the District of Columbia and Canada. Only 3 states were not represented: Hawaii, New Mexico, and Wyoming.

Companies in the Midwest accounted for 36% of all responses, followed by the South with 31% (Figure 1).

Figure 1. GHPsRUS Project economic survey responses by census region

Three hundred and sixty-seven (367) companies accounted for 24,102 direct, indirect, and induced jobs (Table 1). Indirect and induced jobs were calculated using the Bureau of Economic Analysis’s Regional Input-Output Modeling System (RIMS II).3 Assuming

that this base represents 10% of the total number of companies working in the U.S. GHP industry, approximately 3,670 companies provide 241,030 direct, indirect, and induced jobs manufacturing, designing, and installing GHP systems in the United States (Table 2).

3 _{The Regional Input‐Output Modeling System (RIMS II), a regional economic model, is a tool used by investors, planners,}

and elected officials to objectively assess the potential economic impacts of various projects. This model produces multipliers that are used in economic impact studies to estimate the total impact of a project on a region. BEA : Regional Input-Output Modeling System (RIMS II), http://bea.gov/regional/rims/. The BEA does not endorse any resulting estimates and/or conclusions about the economic impact of a proposed change on an area.

Midwest 36% Northeast 19% South 31% West 14%

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Table 1. Direct, indirect, and induced jobs provided by respondents to the GHPsRUS Project economic surveys

Company type Number

reporting Direct full-time Jobs Direct part-time jobs Architect 2 1,800 0 Builder/Developer 4 6 0 Contractor 2 1 7 Dealer 2 18 3 Distributor 34 2,049 246 Driller/loop installer 135 1,163 259 Engineer 9 102 40

Geothermal system designer 6 18 7

GHP manufacturer/OEM 23 2,918 80

Government official (local, state, federal) 3 37 0

HVAC company 2 503 0

Manufacturer, other 9 108 9

Mechanical equipment and loop installer 8 54 16

Mechanical equipment installer 93 466 101

Other 1 1 0

Professional, other 6 7 9

Software company 1 4 0

Supplier 10 217 40

Supplier, pump 1 50 50

Thermal testing firm 1 6 0

Trade association/industry advocate 10 31 15

Utility/electric provider 5 11 47

Totals 367 9,570 929

Total direct jobs 10,499

Total direct, indirect, and induced jobs 24,102

Table 2. Estimated total GHP industry direct, indirect, and induced jobs by industry code

Industry code Total direct, indirect, and induced jobs

6 - Utilities 1,600

7 - Construction 50,520

12 - Machinery manufacturing 93,210

27 - Wholesale trade 53,100

37 - Publishing industries, except Internet 60 48 - Professional, scientific, and technical services 41,860

61 - Other services 680

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Me as u ring t h e Co sts and Benef it s of Nat ion w ide G eot h er mal Heat P u mp De p loym ent Installation prices

Geothermal loop and mechanical equipment installers were asked to provide their price4 (not cost) for recent installations. All prices were levelized using the March 2012

Cost of Living Index by zip code.5 Analyses for both loop and mechanical equipment

installation prices were done by census region (Figure 2).

Figure 2. U.S. census regions and divisions

4 _{While this report is titled “Measuring the Costs and Benefits of Nationwide Geothermal Heat Pump Deployment,” as it}

was unlikely that installers would provide their costs, prices were instead requested in the surveys and are analyzed here.

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Geothermal loop installation prices

Loop installation data were collected for 123 loops—86 vertical, 19 horizontal trenching, 10 horizontal drilling, 4 direct exchange, and 2 each open and pond/lake (Table 3).

Table 3. Loop types reported by number

Loop type Number

Vertical 86 Horizontal trenching 19 Horizontal drilling 10 Direct exchange 4 Open 2 Pond/lake 2 Total 123

Table 4 shows the median loop installation prices by loop type and census region, as well as the average loop length for residential installations and the price of an average residential loop. The average loop length was determined through regional modeling.

Table 4. Median loop installation prices by loop type and census region

Census

region Loop type

Number reported

Median price/ft

Average loop length, residential (ft)

Price/average loop

Midwest Vertical 31 $12.99 1,529 $19,857

Midwest Horizontal trenching 11 $12.12 1,529 $18,533

Midwest Horizontal drilling 5 $7.13 1,529 $10,895

Midwest Pond/lake 1 $2.39 1,529 $3,649

Subtotal Midwest 48

Northeast Vertical 21 $16.03 1,320 $21,162

Northeast Direct exchange 1 $3.00 1,320 $3,958

Northeast Horizontal trenching 1 $2.33 1,320 $3,073

Northeast Open 1 $13.88 1,320 $18,317

Northeast Pond/lake 1 $2.32 1,320 $3,059

Subtotal Northeast 25

South Vertical 26 $14.94 1,310 $19,575

South Direct exchange 2 $8.36 1,310 $10,950

South Horizontal drilling 3 $12.47 1,310 $16,341

South Horizontal trenching 3 $9.24 1,310 $12,102

Subtotal South 34

West Vertical 8 $14.64 1,047 $15,333

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Me as u ring t h e Co sts and Benef it s of Nat ion w ide G eot h er mal Heat P u mp De p loym ent Census

region Loop type

Number reported

Median price/ft

Average loop length, residential (ft) Price/average loop West Open 1 $44.69 1,047 $46,793 Subtotal West 16 Total 123

Figure 3 compares the price of installing an average residential vertical loop in the four census regions based on the data received. The highest median loop price was found in the Northeast, the lowest in the West. It is important to note that loop installation prices were reported for only 8 vertical loops in the West while 31, 21, and 26 vertical loop prices were reported in the Midwest, Northeast, and South, respectively.

Figure 3. Median price of installing an average residential vertical loop by census region

Table 5 and Figure 4 show average loop lengths, which were determined through

regional modeling, by building type (residential and non-residential) and census region. The longest average loop length was for a non-residential building in the South, the shortest for a residential building in the West.

Table 5. Average loop lengths for residential and non-residential buildings by census region (feet)

Building type Midwest Northeast South West National average

Residential 1,529 1,320 1,310 1,047 1,302

Non-residential 1,995 1,455 3,475 1,989 2,229

Climate zone average 1,762 1,388 2,393 1,518 1,765 $19,857 $21,162 _$19,575

$15,333

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Figure 4. Average loop lengths by census region for residential and non-residential buildings

Mechanical equipment installation prices

To maximize participation in the survey, mechanical equipment installers were asked to include only the price for installing the mechanical equipment inside the building. They were not asked to detail what the installation price included (e.g., controls; desuperheater; ductwork; electric; humidification system; interior piping, pumps, and fittings; ventilation, heat recovery; etc.).

Mechanical equipment installation data were collected for 141 installations—130 residential and 11 non-residential (commercial, educations, government, medical, and other) (Table 6).

Table 6. Mechanical equipment installation by census region and building type

Census region Building type Number Residential Non-residential

Midwest Residential 48 Midwest Commercial 2 Midwest Government 1 Subtotal Midwest 51 48 3 Northeast Residential 28 Northeast Medical 1 Northeast Educational 1 Northeast Government 1 Northeast Other 1 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000

Midwest Northeast South West

Fee

t

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Census region Building type Number Residential Non-residential

South Commercial 3 South Educational 1 Subtotal South 45 41 4 West Residential 13 Subtotal West 13 13 0 Totals 141 130 11

Table 7 shows the median mechanical equipment installation prices by building type and census region, as well as the national averages.

Table 7. Median mechanical equipment installation prices by building type and census region

Census region Building type Number Median price/sq ft Median price/ton

Midwest Residential 48 $7.93 $4,773 Midwest Non-residential 3 $9.52 $3,661 Northeast Residential 28 $10.20 $6,046 Northeast Non-residential 4 $15.46 $8,215 South Residential 41 $8.99 $6,077 South Non-residential 4 $7.36 $4,752 West Residential 13 $12.20 $6,116

West Non-residential 0 No data received No data received

Average $10.24 $5,663

Figure 5 compares median mechanical equipment installation price per ton for residential installations by census region based on the data received. The highest median residential installation price/ton was found in the West, the lowest in the Midwest. It is important to note that mechanical equipment installation prices were reported for only 13 residential installations in the West while 48, 28, and 41 mechanical equipment installation prices were reported in the Midwest, Northeast, and South, respectively.

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Figure 5. Median price/ton for residential installations by census region

Market barriers

Respondents to each of the four surveys were asked “What do you see as the greatest barrier to increasing your company’s GHP business?” The high cost of installation (41%) was the most common named barrier followed by consumer knowledge or awareness (24%) and untrained or poorly trained designers and installers (19%).

Regional Modeling Analysis

To examine in more detail the costs and benefits of GHP deployment, we undertook an approach based on the properties of the 30 largest metropolitan areas in the U.S. We modeled a standard, single-family residence as well as a standard commercial building. We also used the specific climate characteristics of each metropolitan area, thus making the modeling more site-specific. In addition, rather than assume a fixed value for

thermal conductivity (Tc) and thermal diffusivity (Td), we modeled the GHP system characteristics for each metropolitan area for a range of Tc and Td values, thus taking into account the variability imposed by geological characteristics within each region. We compared energy consumption by considering yearly kilowatt hour (kWh) use for conventional heating, ventilation, and air conditioning (HVAC) and vertical loop GHP systems. The energy use estimates for the conventional HVAC systems were obtained using load modeling software, which provides an analysis of this variable on a yearly basis for both heating and cooling (non-electrical energy consumption was converted to kWh).

$4,773

$6,046 $6,077 $6,116

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Building load calculations were conducted using the software package ESim (version 2011-03-30) for the residential building and EnergyPlus for the commercial building. ESim is a building load simulator developed by K. Kissock at the University of Dayton.6

Energy Plus software, funded by the U.S. Department of Energy’s (DOE) Energy Efficiency and Renewable Energy (EERE) division and developed and maintained by the National Renewable Energy Laboratories (NREL) along with numerous

development partners, calculates loads primarily intended for commercial building use, rather than residential use. Loop designs were developed using the commercial GLD Premium software package from Gaia Systems.

The results of the simulations for loop designs for residential and commercial buildings indicate that, within a 10% uncertainty envelope, energy savings would be realized in 29 of 30 metropolitan areas. For commercial building designs, energy savings are realized for 25 of 30 metropolitan areas. Given that none of the designs were optimized for specific site conditions, it is highly likely that energy savings would be realized in all metropolitan areas if site-specific conditions were considered and designs developed that employ recognized optimization strategies (e.g., energy conservation building features, strategic deployment of shade trees and shrubbery, timed internal lighting, etc.).

The overall magnitude of energy savings will depend on the extent to which GHP systems displace conventional HVAC systems in any given metropolitan region. Assuming GHP systems were evenly distributed in all metropolitan regions, the national average energy savings for HVAC energy consumption would be

approximately 49% for residential applications and 30% for commercial applications. It is clear that use of GHP systems would result in substantial reductions in carbon dioxide (CO2) emissions, especially in those regions in which the heating load is a

significant contributor to energy demand. Although the absolute values are different, similar relative results are obtained if one considers sulfur dioxide (SO2) or nitrogen

oxide (NOx) emissions.

The impact on national energy use scenarios depends upon the extent of market penetration in any particular region. The greatest impacts would be achieved if GHP deployment were most extensive in those regions dominated by high heating loads. It should be noted that, separate from the energy savings and emissions reductions GHP systems could provide, there is the additional benefit of economic stability. Since GHP systems rely exclusively on electricity, their use in buildings would remove price volatility that is often associated with portable fuels. These systems would thus provide greater economic security than conventional systems allow.

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In addition, GHP system lifetimes are generally much greater than conventional HVAC components. This reflects, in part, the lower thermal load experienced by GHP

components, and the smaller fluctuation in temperatures during their operation. As a result, these systems have higher overall reliability, thus allowing for a greater

confidence that the return on investment can be realized.

The results of the regional modeling analysis effort unequivocally document the

profound energy savings and significant emissions reductions that could be achieved if GHP systems replaced conventional HVAC systems for heating and cooling in

buildings.

National Analysis

Three scenarios of market penetration

In the national analysis we calculated estimated benefits based on three hypothetical scenarios of GHP market penetration using data collected in the market and regional modeling analyses. The three scenarios are:

 Scenario 1: Market penetration linked to energy savings by census region for residential and commercial buildings.

 Scenario 2: Market penetration linked to energy savings by climate zone for residential buildings.

 Scenario 3: Maximum market penetration by census region for residential and commercial buildings.

The calculations assume that the energy generated (and hence saved) comes from one fuel type only. So, the emissions offsets will be some combination (unknown) of natural gas, oil, and propane, plus coal. In Table 8, the annual emissions offset shown is the average of offsets for natural gas, oil, and propane.

Table 8. Annual energy savings and average emissions offsets for three scenarios of GHP market penetration

Annual energy savings(GWh/yr)

Annual emissions offsets (kg/yr, billions)

Scenario 1 583,834 64.3

Scenario 2 884,998 0.67

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12

Job impacts of national deployment of GHPs

Table 9 compares the job intensity of installing GHP and conventional HVAC systems. Results show that deployment of GHP systems results in more jobs, per installed ton of equipment, than for comparable sized jobs for conventional HVAC equipment. The same conclusion is reached if one considers the cost of installed equipment.

These results indicate that significant job growth in the HVAC industry, in general, will occur as GHP installations increase in proportion to overall installed heating and

cooling equipment. This relationship is linear with respect to number of units installed. Hence, in new construction, for every ton of conventional HVAC equipment that is replaced by GHP equipment, an improvement in job creation by about 50% will result.

Table 9. Job intensity

Category Intensity

{Jobs/ton GHP}/{Jobs/ton HVAC} 1.54

{Jobs/$1,000 GHP}/{Jobs/$1,000 HVAC} 3.51

Costs of national deployment of GHPs

We estimated the costs associated with installing GHPs in every building in the United States. There are approximately 118.5 million buildings in the U.S. covering 258 billion square feet. Number of buildings (millions) Square footage (billions) Tons heating Tons cooling

Residential 113.6 187 8.99E+7 1.60E+7

Commercial 4.9 72 2.23E+7 4.96E+6

Total 118.5 258

Using data collected through the market and regional modeling analyses (Table 10), the total price (not cost) of deploying GHPs in every residential and commercial building in the United States is approximately $2.3 trillion (Table 11).

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Table 10. National average median geothermal loop and mechanical equipment installation prices and loop lengths

Geothermal loop installation

National average median price/ft $11.34 Average loop, residential (ft) 1,302 Average loop, commercial (ft) 2,229

Mechanical equipment installation National average median price/sq ft $10.24

National average median price/ton $5,663

Table 11. Estimated price of national deployment of GHPs Number of

buildings Tons (maximum) Loop install

Mechanical equipment install

Residential 113,600,000 8.99E+07 $1,677,333,102,337 $509,099,513,767

Commercial 4,859,000 4.96E+06 $122,844,679,496 $28,088,249,035

118,459,000 9.49E+07 $1,800,177,781,833 $537,187,762,802

Total installation price $2,337,365,544,636

Conclusion and Recommendations

The results of this study confirm and extend those of previous studies7_{in which the}

value of greatly expanding deployment of GHP systems has been outlined. In

particular, this study enhances those results by documenting the energy use patterns and emissions offsets for the 30 largest U.S. metropolitan areas. In so doing, specific impacts that are regionally relevant are identified. These results indicate where the greatest benefits can be realized, in terms of reducing energy consumption, improving economic impacts, reducing emissions and encouraging job growth.

Although it is evident from these results that the net impact will vary from one region to another, we emphasize that every location considered in this study would realize positive consequences provided designs are optimized and carefully deployed. As a strategy is developed for managing energy in the United States and reducing

atmospheric emissions, it is abundantly clear that GHP deployment must be an integral part of the HVAC component.

The following recommendations, based on the results of this study, have the potential to increase GHP deployment nationwide. These recommendations are developed from the perspective that improving the visibility and performance of GHP systems will provide the strongest basis upon which sustainable market penetration can be built.

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14

 Consider GHPs for installation in all new residential and non-residential construction.

 Focus efforts to bring the interior mechanical costs of GHPs down to equal the total costs for equivalent air-source heat pumps.

 Initiate a competitive, highly publicized program among equipment

manufacturers to develop high efficiency, moderate cost water-to-air heat pumps (and related GHP equipment) that meets the needs of schools and

middle-America homes. The “needs” would be defined by a select group of school maintenance personnel and informed homeowners.

 Develop design standards that fully integrate building energy performance and GHP loop design. Assure that these standards are based on local and regional attributes, including climate, vegetation, soil properties, and energy sources.

 Establish a national research program to acquire, catalogue, maintain, and

disseminate appropriate subsurface data for use in GHP loop design calculations. The most critical data that such a database would contain would be temperature, thermal conductivity, and thermal diffusivity at high spatial resolution.

 Establish a research program to develop measurement tools that would acquire high resolution temperature, thermal conductivity and diffusivity data at a low cost.

 Develop and require training programs and standards for GHP designers and installers to assure high quality applications.

 Establish openly accessible programs for monitoring the performance of

components of installed GHP systems. The purpose of such a program would be to provide a database useful for evaluating where key improvements in

efficiencies could be made, and to provide documentation of the benefits of such systems, compared to conventional HVAC equipment.

 Support an education and outreach effort that would aggressively disseminate information regarding the economic and environmental benefits of GHP systems. To be most successful, this effort would necessarily address, directly and

unapologetically, how the initial costs of GHP systems are balanced by the significant, proven, and measurable benefits such systems provide.

 Develop incentive programs, similar to those that have been put in place for wind and solar systems, or for GHPs deployment in other countries including Sweden, which would encourage deployment of GHP systems.

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 Allow electric providers to earn credits for GHPs under all renewable portfolio standards.

 Reinstate and expand the annual “Geothermal Heat Pump Manufacturing Activities” report published by the U.S. Energy Information Administration (EIA). Terminated in Fiscal Year 2011, the EIA’s annual report is the only

publically available source of data on GHP manufacturers and OEMs. While not inclusive of the entire GHP industry, the report establishes a baseline for

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16 Introduction

Geothermal heat pumps (GHPs)8 deliver reliable, cost effective, and energy efficient

heating and cooling. Among the most efficient heating and cooling technologies available, GHPs use the relatively constant temperature of the earth to heat and cool buildings. GHPs may also provide domestic hot water (DHW). GHPs use 25-50% less electricity than conventional heating or cooling systems. About 70% of the total energy used in a GHP system is renewable from the ground.9

According to the U.S. Environmental Protection Agency (EPA), GHPs can reduce energy consumption—and corresponding greenhouse gas (GHG) emissions—by up to 44% compared to air-source heat pumps and by up to 72% compared to electric

resistance heating with standard air-conditioning equipment.10

A 2008 Oak Ridge National Laboratory (ORNL) study11 which examined the barriers to

increased GHP use in the United States found that, although the U.S. was once the world leader in GHP technology and market development, Europe now installs two to three times more GHPs than the U.S. And, the GHP market is growing faster in Europe, China, South Korea, and Canada than in the United States. While the U.S. has the

greatest number of GHP units installed overall, on a per capita basis it has fallen behind many European countries.

The ORNL study concluded that:

 “If the federal government set a goal for the U.S. buildings sector to use no more nonrenewable primary energy in 2030 than it did in 2008…it is estimated that 35-40% of this goal, or a savings of 3.4 to 3.9 quads annually, could be achieved through aggressive deployment of GHPs.”

 GHPs could avoid the need to build 91 to 105 GW of electricity generation capacity, or 42-48 % of the 218 gigawatts (GW) of net new capacity additions projected to be needed nationwide by 2030.

8 _{Geothermal heat pumps are also called ground-source heat pumps, GeoExchange®, water-source heat pumps, and}

earth-coupled heat pumps. They will be called geothermal heat pumps (GHPs) in this report.

9 _{“Geothermal Heat Pumps,” GeoExchange®,}_{http://www.geoexchange.org/}_.

10 _{“Benefits of Geothermal Heat Pump Systems,” U.S. Department of Energy,}

http://www.energysavers.gov/your_home/space_heating_cooling/.

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 Aggressive deployment of GHPs could result in $33 to $38 billion annually in reduced utility bills (at 2006 rates).

ORNL determined that the two most significant actions that could be taken to increase GHP use in the U.S. were to:

1. Assemble independent, hard data on costs and benefits, and 2. Independently assess the national benefits of GHP deployment.

According to a 2011 Priority Metrics Group report12, the U.S. market for GHPs in 2009

exceeded $3.4 billion. Equipment accounted for $1 billion of the total (installation accounted for the balance). GHP shipments (as measured by tons of capacity) are projected to grow at a Compound Annual Growth Rate (CAGR) of 23% from 2010 to 2014. By 2014, the U.S. GHP market is expected to exceed $12.5 billion.

The collapse of the residential new construction market and lack of consumer financing, however, slammed the heating, ventilation, and air conditioning (HVAC) industry during the 2008-2009 recession; sales were down to levels not seen since 1970.13

Following the deep drop in housing starts, GHP shipments began declining in 2008, the first decrease since 1994. GHP shipments in 2012 were down 30% from the high in 2007. Industry insiders assert that the 30% federal tax credit for GHPs installed after 200814

saved the GHP industry following the recession and was a tremendous boost for the retrofit market.

Figure 6 shows GHP shipments by number of units from 1998 through 2012. Figure 7 shows GHP shipments by rated capacity in tons from 1994, when the U.S. Energy

Information Administration (EIA) first began surveying the industry, through 2010. No survey was conducted in 2001. Funding for EIA’s annual “Geothermal Heat Pump Manufacturing Activities” report was terminated in the Fiscal Year 2011 budget. Data for 2010 came from the GHPsRUS Project Manufacturer & OEM Survey. Tonnage data were not available for 2011.

12 _{Priority Metrics Group, “The Global Geothermal Heat Pump Market: Energy Beneath the Backyard” (2011).}

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18

Figure 8 shows the value of shipments of GHPs in relation to all HVAC equipment from 2006 through 2011.15,16_{Figure 9 shows GHPs as a percentage of all air-conditioning and}

warm air heating equipment shipments from 2006 through 2011.

Figure 6. Geothermal heat pump shipments (number of units), 1998-2012 (320, 325, and ARI-330)

15 _{“Refrigeration, Air-Conditioning, and Warm Air Heating Equipment-2010,” MA333M(10), U.S. Census Bureau, 2011,}

http://www.census.gov/manufacturing/cir/historical_data/ma333m/index.html.

16 _{"Annual Survey of Manufactures: Value of Products Shipments: Value of Shipments for Product Classes: 2011 and 2010,”}

U.S. Census Bureau, Manufacturing & Construction Division, November 2012. 0 50,000 100,000 150,000 200,000 250,000 1998 2000 2002 2004 2006 2008 2010 2012 Nu m b er of u n its

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Figure 7. Geothermal heat pump shipments (rated capacity in tons), 1994-2010

Figure 8. Value of shipments of air-conditioning and warm air heating equipment, 2006-2011 (millions of dollars) 1,000,000,000 2,000,000,000 3,000,000,000 4,000,000,000 5,000,000,000 6,000,000,000 1994 1996 1998 2000 2002 2004 2006 2008 2010 B tu s p e r h o u r Year 198 266 295 319 315 345 17,686 17,980 16,672 15,053 14,935 15,898 2006 2007 2008 2009 2010 2011

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20

Figure 9. Geothermal heat pumps as a percentage of all air-conditioning and warm air heating equipment (value of shipments), 2006-2011

While the technology has been in use since the late 1940s, GHPs currently account for only 2.2% of the total U.S. heating and cooling market. In 2011, in terms of value of equipment shipments, GHPs made up $345 million of the $16 billion U.S. HVAC market. In comparison, $1.7 billion of air-source heat pumps (ASHPs), or 10.9% of all HVAC equipment, was shipped in 2011.17

But, what if the numbers were higher? How would a nationwide deployment of GHPs benefit the country economically, environmentally, and socially? And, what would the costs of such a deployment be?

With support from the U.S. Department of Energy Geothermal Technologies Program through the American Recovery and Reinvestment Act of 200918, Bob Lawrence &

Associates, Inc. (BL&A) and the California Geothermal Energy Collaborative (CGEC) conducted a three-year study to help determine the answers to these questions. The three-year effort is known as the GHPsRUS Project (“geothermal heat pumps are U.S.”) (http://ghpsrus.com).

17 _{“Annual Survey of Manufactures: Value of Products Shipments: Value of Shipments for Product Classes: 2011 and 2010,”}

U.S. Census Bureau, 8 November 2012.

18 _{This report is based upon work supported by the U.S. Department of Energy under Award Number DE-EE0002741.} 1.1%

1.5%

1.8%

2.1% 2.1% 2.2%

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The objectives of the GHPsRUS Project are to:

 Evaluate and quantify the economic, environmental, and social benefits resulting from various degrees of GHP market penetration.

 Examine the relationship of geographic location to installation cost (geothermal loop and mechanical equipment) in the 30 largest U.S. metropolitan areas. The GHPsRUS Project is composed of three components:

1. Market Analysis.

2. Regional Modeling Analysis. 3. National Analysis.

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22 Market Analysis

The GHPsRUS Project market analysis was an ambitious attempt to establish a realistic baseline of all components of the U.S. GHP industry in order to forecast the benefits and costs of varying degrees of market penetration. Previous market analyses have focused solely on GHP manufacturers and Original Equipment Manufacturers (OEMs). This analysis attempted to quantify the entire GHP industry—from manufacturing to design to installation (Figure 10).

We divided the GHP industry into four segments:

1. Manufacturers, OEMs, and suppliers. 2. Geothermal loop installers.

3. Mechanical equipment installers. 4. Other.

The GHPsRUS Project created and widely disseminated four surveys to collect economic data from the four segments of the U.S. GHP industry:

 Manufacturer & OEM Survey.

 Geothermal Loop Survey.

 Mechanical Equipment Installation Survey.

 Geothermal Heat Pump Industry Survey.

To maximize industry buy-in, increase credibility, and ensure that the data collected was as relevant as possible, each survey was carefully designed in close collaboration with GHP industry members. To encourage participation, respondents were assured that all information provided would be kept completely confidential and used only in the aggregate.

Survey Monkey (https://www.surveymonkey.com) was selected to create and publish the surveys and collect and analyze data. Survey Monkey was chosen for its ability to create and disseminate both online and PDF surveys which are easy to complete, as well as for its data collection and analysis tools.

Throughout the three-year period, we worked closely with relevant organizations including the American Ground Water Trust (AGWT); American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE); Geothermal Energy Association (GEA); Geothermal Exchange Organization, Inc. (GEO); Geothermal Resources Council (GRC); International Ground Source Heat Pump Association

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(IGSHPA)19; the National Ground Water Association (NGWA); and others to publicize

the project and engage their members.

The four surveys are summarized in Table 12. Each survey was open for at least 12 months; all four were closed on 8 November 2012. The surveys were widely publicized through the organizations named above, numerous email blasts, several conference presentations, and webinars.

Table 12. GHPsRUS Project Economic Surveys

Survey Target audience Objective Launch

date Number of responses received Geothermal Loop Survey Geothermal loop installers  To collect economic and geological data.  To determine drilling price per linear foot by zip code. 23 March 2011 156 Manufacturer & OEM Survey Companies which manufacture GHP units or purchase, rebrand, and sell GHP units  To collect economic data including location, jobs, plans for expansion, etc. 23 June 2011 23 Mechanical Equipment Installation Survey Companies which install the mechanical equipment inside the building  To collect economic data.  To determine equipment installation price by zip code. 11 November 2011 105 Geothermal Heat Pump Industry Survey

All other members of the U.S. GHP industry  To collect economic data including location, jobs, plans for expansion, etc. 21 November 2011 114 Total 398

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24

Figure 10. Major components of the U.S. geothermal heat pump industry

C o m p re s s o r C o m p re s s o r C a b in e t C a b in e t W a te r c o il W a te r c o il A ir c o il A ir c o il D ri ll ri g s & b it s D ri ll ri g s & b it s L o o p h e a d e rs & v a u lt s L o o p h e a d e rs & v a u lt s G ro u t & m a c h in e s , d ri lli n g f lu id s G ro u t & m a c h in e s , d ri lli n g f lu id s H D P E & P E X a p ip e , fi tt in g s , fu s io n m a c h in e s H D P E & P E X a p ip e , fi tt in g s , fu s io n m a c h in e s A n ti fr e e z e A n ti fr e e z e D e a le r/ In s ta lle r D e a le r/ In s ta lle r L o o p p u m p m o d u le s , F lo w c e n te rs L o o p p u m p m o d u le s , F lo w c e n te rs R e s id e n ti a l D ri lle r/ L o o p in s ta lle r D ri lle r/ L o o p in s ta lle r D is tr ib u to r D is tr ib u to r D is tr ib u to r D is tr ib u to r D e s ig n s o ft w a re D e s ig n s o ft w a re S y s te m d e s ig n e r/ In s ta lle r S y s te m d e s ig n e r/ In s ta lle r C o m m e rc ia l T h e rm a l te s ti n g fi rm T h e rm a l te s ti n g fi rm H e a d e r in s ta lle r H e a d e r in s ta lle r G H P m a n u fa c tu re r/ O E M G H P m a n u fa c tu re r/ O E M C o n tr o l s y s te m C o n tr o l s y s te m B u ild in g a u to m a ti o n s y s te m P e rf o rm a n c e m o n it o ri n g & c o n tr o l T ra d e a s s o c ia ti o n / In d u s tr y a d v o c a te U ti lit y /E le c tr ic p ro v id e r

Measuring the Costs and Benefits of Nationwide Geothermal Heat Pump Deployment