Federal tax credit boosts home owners’ interest in geothermal energy

Digging for Energy

NORTHAMPTON - For the first time in years, Doreen Weinberger and Claire Huttlinger can turn on the heat in their expansive Florence home and not think about money leaking from their wallets.

The Turkey Hill Road residents have ditched the oil tank in favor of a new geothermal system that harnesses the Earth's natural temperature for heating, cooling and hot water.

Instead of thousands of dollars in heating costs each winter, Weinberger and Huttlinger are projecting expenses in the hundreds. Plus, it gives them peace of mind to know that they're helping the environment by reducing their family's energy consumption.

"We are motivated to a great extent by the fact that we just don't want to use oil anymore," said Weinberger.

The Florence residents are among a growing number of people turning to their property's soil as a source of home heating and cooling.

While geothermal hasn't received the same attention as other types of alternative energy systems, such as solar or wind, interest spiked this year thanks to the introduction of a 30-percent tax credit as part of President Barack Obama's stimulus package.

The federal tax credit is good through 2016.

Since the announcement of the credit, business has been brisk at Terraclime Geothermal, a Florence company that installs geothermal systems for homes and businesses.

The company has projects under way in Florence, Southampton, Amherst and across a multistate region, said Sam Johnston, program manager.

The tax incentive made it easier for Amherst resident John McCarran to pull the trigger on geothermal for his Carriage Lane home, an idea he'd been contemplating for a decade.

The limited technology and the expense - systems can average between $20,000 and $30,000, although it will cost McCarran $46,000 to retrofit his home with ductwork - has kept many on the sidelines.

McCarran, who also hopes to install solar in his backyard, is driven by more than the money he'll save on energy expenses.

"At this point, this is the most efficient system going," he said. "It seems like a good investment in the future."

How it works

Johnston, who has been installing geothermal systems for years, describes geothermal as an "ill-understood concept."

Geothermal systems use the Earth's constant temperature to pump heat in the winter and expel heat in the summer. Temperatures below the Earth's surface hold constant around 50 degrees Fahrenheit, meaning that they are usually warmer than the air in winter and cooler than the air in summer.

"It's analogous to the refrigerator in your kitchen," Johnston said. "Few people understand how that works, but geothermal is exactly like that."

In the winter, a heat exchange system in the house pumps geothermal antifreeze and water through a looped pipe that's installed a few hundred feet below the surface of the ground. Water circulating in the pipe absorbs the Earth's heat and carries it back to the heat exchanger in the house, where the water is compressed to a higher temperature. The heat from this process is sent as warm air to a blower for distribution in the home.

In the summer months, the system reverses and expels heat to the cooler earth through the same closed loop system.

"We're not burning anything," said Johnston. "We're just moving more energy from the Earth. We're using the Earth like a big battery."

A thermostat controls the home's temperature in the same manner as a conventional system and in many cases a home's existing network of ducts are used to distribute the heat.

Johnston said that a geothermal system is 600 percent more efficient than oil, although it does take electricity to run the heat exchanger, which is about one-fifth the size of a typical furnace.

High upfront costs

Geothermal's steep installation cost is an issue for many people.

Williamsburg resident Nicolas Boillot, for example, said the initial cost of around $30,000 to convert his Colonial home made the decision difficult. But the 30 percent tax credit and tax-free loans softened the financial blow, he said.

"It's expensive; that did give us pause," he said. "But we're going to spend extremely little for heating and cooling."

After studying the concept and interviewing several local companies over the course of six months, he hired Terraclime because the company will oversee every step of the project from installation to performance. It also offered a performance guarantee.

Boillot is confident that it will be a wise investment in the long run. He estimates it will take between six and eight years to pay off the system with the energy savings.

While every home is different, the payback, depending on oil prices, for new homes is about three years and five to six years for older homes, Johnston said.

Homes that need some type of retrofit will likely pay more upfront and have a longer payback period. That's exactly what happened in the case of Weinberger and Huttlinger, whose Florence home for years has been heated by oil with baseboard radiators.

To make the geothermal system work, however, ducts had to be installed throughout the house - an expensive endeavor that upped the system's overall price to $40,000.

In the end, the federal tax credit and a few other factors, including advancing technology and last summer's heat wave, were enough to convince the Florence homeowners to go ahead with the project. They and others who have bought the system say they are particularly excited to be able to have a cheap source air conditioning during summer months.

Weinberger is reserving final judgement on the system until they use it for a while - it went live this month - but so far she is happy.

"The house is perfectly comfortable at this point," she said.

Aesthetically, Weinberger said they had to sacrifice space in the basement for the ducts, but the installation throughout the rest of the home is "minimally visible."

The oil heating system remains in place as a backup.

Like others, Boillot says the system is not just about the money he'll save.

"To dramatically reduce oil consumption is the right thing for me and for the country," he said.