Big tax credit makes geothermal affordable: Interest surges in Detroit Lakes area
For the past several years, the federal government has been offering a federal income tax credit of up to 30 percent of the total installed cost of a new geothermal system -- with no cap on the total cost allowed to be included in the tax credit.
"With the federal income tax credit and the rise in fuel and utility costs, interest has dramatically increased," said Modern Heating & Plumbing owner Rick Michaelson. "And that (tax credit) program will remain in effect through 2016.
"We probably install three or four new systems a year now," he added.
Another factor in the increased interest has been the energy rebates offered by local utility companies.
"All the electric utilities in the area offer a substantial rebate for installing a geothermal system," Michaelson said.
As a side benefit, the system will also provide up to 70 percent of a person's domestic water heating needs if a heat pump is installed that has the capability to do so, he added.
Not only that, but a geothermal heating and cooling system is "in excess of 300 percent energy efficient, year round" as compared with standard residential heating and cooling systems, Michaelson said.
"That means it (a geothermal system) generates up to three times as much heat per dollar invested as any type of resistance electric heat," he explained.
Yet another factor in the increased interest in geothermal energy among Minnesota residents is that a recent study released by the Natural Resources Research Institute at the University of Minnesota-Duluth and researchers from the University of North Dakota shows that Minnesota has more geothermal heat possibilities than previously thought.
So why isn't everyone getting a geothermal system? It's simple: The up front cost of installing a new geothermal system can be many thousands of dollars, so if your existing system is working well, the initial cost may not be worth the potential energy savings. "It's not for everyone --it's still a substantial investment," Michaelson said. "But there is a real return on that investment."
Depending on the type of system a person has installed, the potential savings in energy costs could be as high as 14 or 15 percent, he added.
Besides that, "it's a very green system," Michaelson said. "You're not burning gas or propane fuel, so you're not putting those products of (furnace) combustion into the atmosphere."
In fact, most geothermal systems use only water as the medium for distributing heat energy, which comes from the ground itself.
"The earth absorbs heat energy from the sun," Michaelson explained. "In a geothermal system, a heat pump transfers the BTUs (British thermal units, a method of measuring heat energy) from the ground into your home."
Water is the most common medium used to absorb the heat from the ground and pump it into the house.
Conversely, the same system can be used to cool a home, by transferring the heat energy from inside the residence back into the ground.
There are two main types of geothermal systems, Michaelson said: Closed loop, and open loop.
An open loop system can take water from a nearby well of adequate size and pipe it directly into a home. Once the water has been run through the system, however, it must be dumped out into a nearby river or stream.
"There is typically a lower cost for installation (with an open loop system)," said Michaelson. "The problem is you have to have a place to put that water (after it's been used), so you need to live near a stream or lake."
Another factor to take into account when installing an open loop system is that there is a somewhat higher maintenance cost.
"The system typically has to be cleaned at least annually," Michaelson said, whereas a closed loop system, which is enclosed and not exposed to outside elements, requires minimal maintenance.
If a large pond or water body exists within 200 feet of the home where a geothermal system is to be installed, a pond loop system is another option to be considered.
A half-acre, eight-foot deep pond is usually sufficient for the average home, according to information provided by "The Conservation Way," a newsletter published by Water Furnace International, Inc.
The pond loop system uses coils of pipe, 300-500 feet in length, which are placed in and anchored to the bottom of the pond or water body.
A closed loop system, meanwhile, is pretty much just what it sounds like; it involves a closed loop of coiled pipes. The coiled loops may either be installed horizontally, or vertically.
A horizontal closed loop system is only practical in areas where adequate land is available to install them. Horizontal trenches of about 8-10 feet in depth are dug using a backhoe or chain trencher, and polyethylene pipes are inserted, after which the trenches are backfilled. Each trench can vary in length between 100-300 feet, depending on the system design.
A vertical closed loop system is used when space is limited -- such as in an urban residential area -- or where soil conditions make horizontal loops impractical. Approximately 10 holes, typically 100-250 feet deep (depending on soil type), are drilled at 10-foot space intervals, and a double pipe is inserted into each hole, which is then filled with grout to provide good contact around the pipe, and to seal the hole.
The capacity of a vertical loop system is based on how much pipe has been installed underground, and the overall thermal conductivity of the bore hole.
The vertical loop system has made it possible to install geothermal systems in both urban residential and rural areas, Michaelson noted.
"You don't need a lot of room (to install a geothermal system)," he said. "We've installed them within the city limits, and in the country."
They can also be installed in both new and existing homes, Michaelson added.
"Geothermal systems are available that can operate with either a forced air or radiant floor heat system," he said.
Geothermal systems are also becoming increasingly popular for commercial businesses as well.
The new Lake-Park Audubon High School in Lake Park, which is set to open this fall, has incorporated geothermal floor heat into its construction, and officials at Grace Lutheran Church in Detroit Lakes also opted to incorporate a geothermal heat system into the new 8,000 square foot addition that was built onto the church in 2006.
"The higher your energy costs, the more savings you will realize" from converting to geothermal heat, Michaelson said.