A bulletin produced by Nebraska Department of Environmental Quality's
Air Quality Division
Nebraska Department of Environmental Quality
January 2009
Geothermal Heat Pumps Save Money and Energy

Geothermal heat pumps (GHP) are similar to traditional heat pumps but utilize the earth’s temperature instead of the outside air to heat and cool the inside of a building. The earth’s temperature a few feet below the surface is constant, usually ranging from 45°F to 55°F. The geothermal or ground-source heat pump takes advantage of this by exchanging heat with the earth through a ground heat exchanger.

Types of Systems
There are four basic types of ground loop systems. Three of these—horizontal, vertical, and pond/lake—are closed-loop systems. The fourth type of system is the open-loop option. All of these can be used for residential and commercial building applications.

Horizontal Department of Energy “Consumer’s Guide To Energy Efficiency and Renewable Energy,” http://apps1.eere.energy.gov/consumer/your_home/space_heating_cooling/index.cfm/mytopic=12640, November 17, 2008.
This type of installation is generally most cost-effective for residential installations, particularly for new construction where sufficient land is available. It requires trenches at least four feet deep. The most common layouts either use two pipes, one buried at six feet, and the other at four feet, or two pipes placed side-by-side at five feet in the ground in a two-foot wide trench.

Large commercial buildings and schools often use vertical systems because the land required for horizontal loops would be prohibitive. For a vertical system, holes (approximately four inches in diameter) are drilled about 20 feet apart and 100–400 feet deep. Into these holes go two pipes that are connected at the bottom with a U-bend to form a loop. The vertical loops are connected with horizontal pipe (i.e., manifold), placed in trenches, and connected to the heat pump in the building.

If the site has an adequate water body, this may be the lowest cost option. A supply line pipe is run underground from the building to the water and coiled into circles at least eight feet under the surface to prevent freezing. The coils should only be placed in a water source that meets minimum volume, depth, and quality criteria.

Open Loop System1

This type of system uses well or surface body water as the heat exchange fluid that circulates directly through the GHP system. Once it has circulated through the system, the water returns to the ground through the well, a recharge well, or surface discharge. This option is obviously practical only where there is an adequate supply of relatively clean water, and all local codes and regulations regarding groundwater discharge are met.

The Benefits

GHPs use 25%–50% less electricity than conventional heating or cooling systems. According to the EPA, geothermal heat pumps can reduce energy consumption—and corresponding emissions—up to 44% compared to air-source heat pumps and up to 72% compared to electric resistance heating with standard air-conditioning equipment. GHPs also improve humidity control by maintaining about 50% relative indoor humidity, making GHPs very effective in humid areas.

Geothermal heat pump systems can be installed in new construction or retrofitted for existing buildings. GHP systems have relatively few moving parts and are durable and highly reliable. The underground piping often carries warranties of 25–50 years, and the heat pumps often last 20 years or more. The units are not housed outside, but are inside and are easily accessible, which increases the convenience and reduces the chance of vandalism.

Because they have no outside condensing units like air conditioners, there's no concern about noise outside the home. A two-speed GHP system is so quiet inside a house that users do not know it is operating: there are no tell-tale blasts of cold or hot air.

Geothermal heat pumps save money in operating and maintenance costs. The initial purchase price of a residential GHP system is often higher than that of a comparable gas-fired furnace and central air-conditioning system, but it is more efficient, saving money every month. GHPs are also equipped with a "desuperheater" that heats your household water, which also reduces your energy demand. In the summer, the heat that is taken from the house is used to heat the water for free. In the winter, water heating costs are reduced by about half.

Another popular way to use geothermal technology is with in-floor radiant heating, in which hot water circulates through pipes under the floor to heat the room. Some companies offer tongue and groove subfloors that include the radiant floor piping in them for retrofit applications.

Due to the GHP system’s high energy efficiency, typical annual energy savings range from 30% to 60%. The expected pay-back period for a residential GHP is 5-7 years, or sometimes less depending on available financing and incentives.

It may also be possible to include the purchase of a GHP system in an "energy-efficient mortgage" that would cover this and other energy-saving improvements to the home. Banks and mortgage companies can provide more information on these loans.
There may be a number of special financing options and incentives available to help offset the cost of adding a GHP to your home. These provisions are available from federal, state, and local governments; power providers; and banks or mortgage companies that offer energy-efficient mortgage loans for energy-saving home improvements.

To find out more about financing and incentives that are available to you, visit the Database of State Incentives for Renewable Energy (DSIRE) Web site at http://www.dsireusa.org/. The site is frequently updated with the latest incentives. You should also check with your electric utility and ask if they offer any rebates, financing, or special electric rate programs.

A new tax credit is now available for home and commercial building owners who install geothermal heating and cooling systems through the Energy Improvement and Extension Act of 2008 (H.R. 1424). H.R. 1424 offers a one-time tax credit of 30% of the total investment (maximum of $2,000 for a single residence) for all residential ground loop or ground water geothermal heat pump installations. A credit of 10% of the total investment is also available (no maximum) for a commercial system installation.

To qualify, the systems must meet or exceed EnergyStar requirements and be installed after December 31, 2007. Owners can file for the credit by completing the Renewable Energy Credits subsection on their tax return forms for 2008. For taxpayers that are subject to the Alternative Minimum Tax, they can claim the credit on their taxes for the following year. The tax credit is available from October 3, 2008 through December 31, 2016. For more information, visit http://thomas.loc.gov or contact your local tax professional.WaterFurnace website, http://www.waterfurnace.com/tax_credits.aspx, November 17, 2008.

Case Studies
There are various studies available documenting the benefits of GHP. The two case studies provided represent situations in or near Lincoln, Nebraska.

New, Residential Construction
This example features a home built in 2007. It is an all-brick ranch with 1,500 square feet on the main floor and an additional 1,500 square feet in the daylight basement (unfinished). Two adults reside in the home that is operated solely on electricity. Energy efficient Energy Star® windows and compact fluorescent lights have been installed throughout the house. The roof is insulated to an R50 factor. The thermostat is maintained between 66°F and 68°F during the winter months and 78°F in the summer time.

This home utilizes a closed loop system with vertical wells. Three vertical wells were dug for the 3-ton GHP. A desuperheater was also installed to supplement the hot water heater. The cost of the system was $19,000, which included the GHP unit, air handling system, duct work, well drilling, and labor costs. The cost of a high efficiency air-source heat pump system for this house, including labor and duct work, would have been approximately $14,000.

Norris Public Power District provided a $300 rebate on the system, along with a monthly hot water load management credit of $2.00 -$4.00, depending on the time of year. Norris customers can have a load management device placed on their water heater or their water heater & cooling system at no cost to the customer. Monitoring equipment located throughout Norris Public Power District's service area will detect when demand exceeds a pre-set limit and will signal a group of load management devices to turn off power to water heaters. The use of load management devices lowers Norris Public Power District’s monthly peaks, which in turn allows Norris Public Power District to keep electric rates as low as possible. There were no noticeable differences to the available hot water when the load control was used.

The average cost of the electric bill from October 19, 2007 – October 31, 2007 was $55 per month, with the highest months of December 2007 and January 2008 costing approximately $70.

Lincoln Public Schools
With cooperation between Lincoln Electric System and Lincoln Public Schools, four elementary schools installed GHP systems in Lincoln in 1995. Vertical-bore, ground-coupled GHP systems were installed at four new elementary schools. The schools have identical floor plans, each with 69,000 square feet of area dedicated to classrooms, offices, meeting rooms, a cafeteria, and a gymnasium. Approximately 500 students attend each school. The performance of these installations is documented by electric and gas utility data energy management system data.

Studies by the Department of Energy found that the heating and cooling costs are about $144,000 a year less (for 1996–1997) than they would have been if those schools had installed more traditional heating and cooling systems. On average, the GHP schools use 26% less source energy per square foot per year than the non-GHP new schools. These energy savings will reach about $3.8 million over just 20 years, allowing for other capital improvements to be realized.

Compared to natural gas HVAC systems (air-cooled, variable air volume systems) that were installed in two other schools at the same time, the schools had a total energy cost savings of 57%. There were also 42% and 20% reductions in electrical demand and electrical energy consumption, respectively.

Not only will there be substantial energy savings over the next 20 years, but the GHPs also help reduce peak energy demand. “Geothermal Heat Pumps in K-12 Schools – A Case Study in Lincoln, Nebraska Schools.” Oak Ridge National Laboratories – Managed by UT-BATELLE for the Department of Energy (2000). www.ornl.gov/femp/pdfs/ghpsinschools.pdf. Due to the cost savings realized from the four new schools in Lincoln, approximately 50% of the public schools in Lincoln have since been retrofitted with GHP heating and cooling systems. As funding becomes available the Lincoln Public Schools will retrofit the remaining HVAC systems. Additionally, three new schools are currently under construction and all three of them are designed to include a GHP heating and cooling system.

For more information on geothermal heat pumps, contact your local utility office or the Nebraska Energy Office (http://www.neo.ne.gov/). The Department of Energy’s Energy Efficiency and Renewable Energy website also has helpful information at http://www.eere.energy.gov/.

1 Department of Energy “Consumer’s Guide To Energy Efficiency and Renewable Energy,” http://apps1.eere.energy.gov/consumer/your_home/space_heating_cooling/index.cfm/mytopic=12640, November 17, 2008.

2WaterFurnace website, http://www.waterfurnace.com/tax_credits.aspx, November 17, 2008.

3 “Geothermal Heat Pumps in K-12 Schools – A Case Study in Lincoln, Nebraska Schools.” Oak Ridge National Laboratories – Managed by UT-BATELLE for the Department of Energy (2000). www.ornl.gov/femp/pdfs/ghpsinschools.pdf.

For more information, contact

Nebraska Department of Environmental Quality
1200 "N" Street, Suite 400
P.O. Box 98922
Lincoln, Nebraska 68509
(402) 471-2186 FAX (402) 471-2909