Ground Heat Exchangers Market 2014

A Short Story About Energy-only two (2) chapters-The Title of the Story is:

“The GHEX and The Third Industrial Revolution (TIR)”

11/19/2014© copyright Garen N. Ewbank and Ewbank

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There are two paths to go by, but in the long run; there is still time to change the road you are on!

• Utility Incentives– Do they really do anyone good; or

just raise the price to the consumer?

• Manufacturer Rebates– Why would a manufacturer extend

discounts?

• Contractor Discounts– Is the trade (HVAC/R) that slow?

• Federal Tax Credits– Tax Credits expire at the end of

2016 for our industry!

11/19/2014 © copyright Garen N. Ewbank and Ewbank Geo Testing, LLC 2

The First Chapter:“The Engineers Explanation” using

the Big Picture


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Parameter Flow of water Flow of heat Flow of current

Quantity Volume- V (m3) Heat- Q (J) Electric charge (C)

Potential Head- ht (m) Temperature- T (K) Voltage (V)

Gradient Hydraulic- ih (unitless) Temperature- it (K/m) Electric field- E (V/m)

Flux Flow rate- Q (m3/s) Heat transfer rate- H (J/s) Current flow (C/s)

Flux density Velocity- ν (m/s) Heat flow- q (J/s.m2) Electrical flux density (C/m2)

Conductivity Hydraulic conductivity- κ (m/s) Thermal conductivity- κ (J/s.K.m)

Electrical conductivity- σ (S/m)

Storage Compressibility Specific heat- ϲ (J/kg.K) Capacitance/Inductance

Decay coefficient Coefficient of consolidation- ϲν

(m2/s)Thermal diffusivity- α (m2/s) Electrical diffusivity- D

(m2/s)

Law Darcy Fourier Ohm

Comparing Darcy’s Law (flow of water) with Fourier’s (flow of heat) and Ohm’s (flow of current)

Heat, Q, is a quantity of energy (classical) measured in Joules (N x m), (ft x lb), or BTUs. Power is the rate of usage in kW·hr or MCF (BTUs prior to combustion) per unit time {Citation: Jean-Luis Briaud, Geotechnical Engineering}

11/19/2014 5© copyright Garen N. Ewbank and Ewbank Geo Testing, LLC



What is this 3.23 increase all about?



Energy in the form of BTUs

65.4%



Energy in the form of BTUs

60%

Consider Only the Residential and Commercial Markets

• Quadrillions of BTUs by GHEXs

– Together Residentially and Commercially:

• How big is this number???? Position as Energy Storage

– Collective Energy Supply by others, i.e., site sourced and stored renewable energy, onsite power generation (fueled), Electric Utility supply

• Jeremy Rifkin? Energy Internet? The Third Industrial Revolution? The Second Great Electrification?

• Remember the 3.23 to 1 loss?

11/19/2014 9© copyright Garen N. Ewbank and Ewbank Geo Testing, LLC

11/19/2014 10© copyright Garen N. Ewbank and Ewbank

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Residential and commercial combine for a total of 19.99 Quadrillion BTUs of energy usage.

*What are Power and Electric utilities really good at? “Managing Energy” is their core competence.

*What customers really want from Power and Electric utilities is advice on “how to implement energy systems that are more efficient and use less energy”. Energy costs are eclipsing labor costs in some markets.*{Citation: Jeremy Rifkin, The Third Industrial Revolution}

What would this look like if GSHPs and GHEXs were used to meet all the space conditioning and water heating (SC&DHW) needs in Residential and Commercial Markets?


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Residential 65% of 11.4 = 7.4 for SC&DHW Leaving 4 Quads

Commercial 60 % of 8.59 = 5.15 for SC&DHW Leaving 3.44 Quads

Since a GHEX is direct use and a GSHP requires on 20% Electrical Power INPUT (with good design)……..


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That is a total of 12.55 Quads for SC&DHW from Ground Source HVAC/R

What would this look like if GSHPs and GHEXs were used to meet all the space conditioning and water heating (SC&DHW) needs in Residential and Commercial Markets?

Since a GHEX is direct use and a GSHP requires on 20% Electrical Power INPUT from utility generation or on-site solar PV or wind kW……..

65% of 11.4 = 7.4 x 80% =5.92 direct supplied Leaving 7.4-5.92 = 2.2 Quads inputs by electric powering GSHPs

60 % of 8.59 = 5.15 x 80% = 4.12 direct supplied Leaving 5.15-4.12 = 1.03 Quads inputs by electric powering GSHPs


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Since a GHEX is direct use and a GSHP requires only 20% Electrical Power INPUT from generation or solar PV……..

65% of 11.4 = 7.4 x 80% =5.92 direct supplied Leaving 4 + (7.4-5.92) or 5.48 Quads for the utilities

60 % of 8.59 = 5.15 x 80% = 4.12 direct supplied Leaving 3.44 + (5.15-4.12) = 4.47 Quads for utilities


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Since a GHEX is direct use and a GSHP requires on 20% Electrical Power INPUT from generation or solar PV or wind kW……..

65% of 11.4 = 7.4 x 80% =5.92 supplied by GHEX Leaving 7.4-5.92 = 1.48 Quads by Utility; Plus the 11.4-7.4 = 4, + 1.48 or 5.48 Quads for the Utility (up from the 4.75 originally supplied and without customer fuel switching; a year round customer)

60 % of 8.59 = 5.15 x 80% = 4.12 supplied by GHEX Leaving 5.15-4.12 = 1.03 Quads by Utility; Plus the 8.59-5.15 = 3.44, + 1.03 or 4.47 Quads for the Utility (from the 4.57 originally supplied and without customer fuel switching; a year round customer)

A real opportunity for electric utilities by switching to renewablesto increase customer market share, revenue, and reduce CO2e and particulates emissions


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Since a GHEX is direct use and a GSHP requires on 20% Electrical Power INPUT from generation or solar PV or wind kW……..

A real opportunity for electric utilities--To increase market share, revenue, investment, and reduce CO2e and particulate emissions and this DOES NOT address the reduction in REJECTED energy!


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A real opportunity for electric utilities:To increase market share, revenue, investment, and reduce CO2e and particulate emissions and this DOES NOT address the reduction in REJECTED energy! And guess where the market battle is--renewables are taking utilities market growth and share with site sourced and stored energy (consider in Oklahoma SB 1456)


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So Where has the Proceeding Taken the Market?

Maevelle Energy, Scott Emery, 18th November 2014


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http://geothermal-news.com/2014/11/energy-star-shipment-reports-geoexchange-reality-check-incomplete-data-set/


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The Second Chapter:“Positioning and Marketing for Ground

Source Systems”--ADVOCACY--


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First Cost Barrier

Currently only those capable to purchase Ground Sourced systems do

How do we make it “affordable”? How do those with a modest income

get a GSHP system?


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First Cost Barrier

• Would you invest in the following?

• None of the heat pump manufacturers are using their federal tax dollars to invest in GHEXs; or their employees 401Ks.


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The 10% commercial ITC and depreciation are only available to commercial entities when they

install Ground Source Heat Pump (GSHP) Energy Property in buildings they own or in buildings

owned by others *if* the installation is done in such a way that the commercial entity is considered

the owner, for tax purposes, by the IRS.

In order to establish "tax ownership" of the property, the actual (tax) owner must establish that the

installed equipment has a market value to someone other than the owner of the building for which it

is installed.


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There are a number of ways to accomplish this:

•If the equipment is either shared between, or might be shared between, multiple buildings with distinct

owners, (for instance, in a mini-district heating or mini-thermal grid scheme), the equipment will not be

considered "limited use property." This would be uncommon.

•If the installer can show that the equipment can be removed at the end of any lease or contact and

still retain sufficient economic value, this is enough. Note: This may work for the actual heat pumps but

won't work for the ground heat exchanger since it typically can't be removed. (i.e. it is a hole in the

ground.)

•If the installer can demonstrate that at the end of a lease, contract or whatever, the equipment will

have value to someone other than the owner of the building in which it is installed, the need is

satisfied... Do this:

First, obtain a permanent easement of record for the ground in which the heat exchanger is

installed. (This gives you a real property interest, distinct from the building owner's, in which to

install the heat exchanger.)

Second, ensure that the contract with the building owner allows for ownership of the equipment

and/or easement to be transferred and also that on non-payment or end of contract, the building

is not permitted to use the equipment or interfere with the easement until a new contract is

accepted.

Third, provide "energy services" to the building, not a capital lease on the equipment. (i.e. sell a

Power Purchase Agreement (PPA). Do not "finance" the gear.) Also, assert that there are other

companies who might be willing to purchase the equipment and easement in order to provide the

same "energy services" to the building in the future. (Not difficult since there are many ESCOs

and property management firms that would be willing to do so.) This establishes a market for the

equipment that includes someone other than the building owner. As such, the tax ownership of

the equipment remains with the actual owner.


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If the equipment is installed in such a way that the installer/owner of the

equipment is not considered the owner for tax purposes, the building owner,

not the equipment owner, will receive the tax incentives. (10% ITC + 5 yr

MACRS on remaining 90% if commercial; 30% ITC if residential). In some

cases, third-party installers who haven't done it "right" have insisted that the

building owners pay them amounts equivalent to the tax incentives the building

owners receive. In this rather cumbersome manner, they "capture" some of the

tax benefits as taxable income.

First Cost Barrier• Just pay for the GHEX if you are capable, and what is the payback?• Incentives

– Utility Incentives• Do they really do anyone good; or just raise the price to the consumer?

– Manufacturer Rebates• Why would a manufacturer extend discounts?

– Contractor Discounts• Is the trade (HVAC/R) that slow?

– Federal Tax Credits• Tax Credits expire at the end of 2016 for our industry!?

• On-Bill financing by Utility• On-Bill payments through Utility• Utility Tariff for the GHEX (AEEOK is ready to help, NESI, others?)• 3rd Party financing for the GHEX (requires sophisticated financiers)

– PACE (FHFA removed their objections (Investor Confidence Project))– Debt– Operating lease– Capital lease– Thermal Services Agreements, PPA– LPs, MLPs, REITs (the GHEX is essential to space conditioning water heating)– Rural Electric Coops using USDA Energy Efficiency and Loan Program


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http://www.eeperformance.org/blog/residential-pace-is-back-fhfa-drops-opposition

The Plan

• How to differentiate between “capable”, “affordable”, and “best” (should be our playbook—remember IGSHPA Tulsa in 2008?)

• Earth Storage, a GHEX, the best of all batteries and/or storage, BTU to BTU, no kW or MCF conversions

• Turn Neighbor Hoods into Geo Hoods using 3rd

party financing

• Energy Internet (TIR? SGE?)


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The Plan is to Join theThird Industrial Revolution (TIR) by Participating in the

“The Second Great Electrification (SGE)”1. Get the OSU Spears School of Business, the marketing

types, not the accountants, to write the “GHEX play book within the TIR and SGE” (what is a GHEX worth in 10 yrs?)

2. Demonstrate, with the grant from the DoE (DoE Grant), the idea of turning a neighborhood into a “GeoHood”

3. Use Energy Wise (Energy Wise Partners ) to capture “big data” from the GeoHood

4. Engage a “Google” to explain the GeoHood’s “energy value to an energy internet” from the big data

5. Partner with a sophisticated financier


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http://energy.gov/eere/articles/energy-department-announces-5-million-residential-building-energy-efficiency-research

http://ewpllc.com/