Financing Cuts Upfront Geothermal Cost!
What is the biggest factor holding back geothermal heat pumps from being the most widely used heating and air conditioning systems? Upfront cost.. According to a study by the Geo-Heat Institute at the Oregon Institute of Technology, high installation cost of the ground loop is rated as the number one barrier to entry for geothermal heat pumps. While using the temperature underground to heat and cool a building is extremely efficient, it does require the additional cost to install a ground loop or heat exchanger. The indoor equipment is slightly more expensive than conventional equipment, but with government incentives and tax credits, the difference is often negligible. It is the installation of the outdoor portion, or ground loop, that is the large cost difference between geothermal and conventional systems.
While almost everyone has some type of conventional heating and air condition unit, geothermal heat pumps only make up around 1% of HVAC installations. How has a technology that has been proven to be the most efficient way to heat and cool buildings over the last 50 years struggled to make it to the tipping point? There are other factors involved, but a huge barrier to entry for geothermal has been the additional cost of the ground loop and appropriate financing. Even though the payback period for geothermal systems is far shorter than solar photovoltaic, solar has taken off in the last three to five years among homeowners. When it comes time to install solar there are many different incentives and financing options available, but these are harder to find for geothermal system.
When Scott Friedman started Greenavise, he started it as a consulting company to help real estate owners increase the energy efficiency of their buildings. He quickly realized that high upfront cost and financing where key factors holding back the renewable energy industry. Because of this, Greenavise started the GeoAccess program.
The GeoAccess program eliminates the upfront cost of a loop for homeowners purchasing a geothermal system! Interested homeowners can have Greenavise use one of their qualified contractors to install the ground loop for their geothermal system for no upfront cost. Greenavise will own and service the ground loop and the homeowner will pay a monthly fee to use it with their geothermal system. This is a great win-win situation for both the homeowner and geothermal industry as a whole.
To give the GeoAccess program some credibility, let’s do some basic math. Please note, these numbers are for illustrative purposes only and will not be representative of an actual geothermal installation for your home. If a typical geothermal installation for a 1,200 sq ft home costs $20,000 before tax credits, the loop portion may be $12,000 of that cost. If a homeowner saves $150 a month by switching to geothermal, this is positive cash flow going into their pockets. By using the GeoAccess program, the same homeowner could install the geothermal system for $8,000 instead of $20,000 and pay Greenavise to access the geothermal loop.
If the homeowner saves $150 a month by switching to geothermal and pays a loop access fee to Greenavise for $125, they are still having a positive cash flow of $25 a month for a geothermal system that only costs $8,000. The homeowner can pay zero upfront cost for the ground loop and still save money. The cost of utilities such as electricity and fossil fuels will keep increasing over time, so energy savings will increase while the loop access fee will stay the same. This means that savings will increase over time. This makes it possible to purchase a geothermal system for the same cost as a conventional heating and cooling system, and this doesn’t take into account government tax credits and other geothermal benefits!
Greenavise is offering a great service to homeowners by helping them install their geothermal loops and doing it with no upfront cost. If you are an interested homeowner, please visit their website here and contact them for more information!