Combined heating & cooling - Heat pump - Ground-source - Residential / United States of America

Case study assignment

You are a technical representative of an electric utility in Hartford, Connecticut. You are responsible for providing homeowners with technical assistance regarding energy efficiency. Through the utility's energy efficiency promotion program, new residential buildings can receive financial incentives for adopting energy efficiency measures in the building envelope and HVAC (Heating, Ventilation and Cooling) system. Homeowners are also offered free technical assistance in the design and selection of the measures and systems to be incorporated into their new home. The HVAC system must be powered by electricity to be eligible for the subsidies and technical assistance.

A local contractor, who is planning to build a 2-story house for a client, has contacted you. The client has shown interest in the utility's program and would like to learn more about the potential energy and financial advantages of using electricity, rather than a standard oil-fired furnace with air-conditioner, for heating and cooling this new home. You must prepare a preliminary study of whether an efficient HVAC system can be a financially viable option. You decide to consider a high efficiency, closed-loop ground-source heat pump (GSHP) and you need to evaluate its potential for further discussions with the building contractor.

Site information

The house will be located in East Hampton, near Hartford, Connecticut. The available land area around the house is quite large since it is in a rural location. The new house will be a 2-story building approximately 12.2 m long by 11.3 m wide. The basement will not be heated.

The utility's energy efficiency program requires a minimum of 18 cm of glass wool insulation in the attic, 12 cm in the exterior walls and 15 cm in the unheated floor; the glass wool insulation has a thermal conductivity of 0.045 W/(m-°C). Air infiltration and mechanical ventilation estimates show an average hourly air change rate of approximately 0.3.

The soil overburden is rocky and dry. Drilling in this area is not particularly difficult, but the rocks underneath the overburden are dense, making excavation difficult. The local mean earth temperature is roughly 9 °C and the annual temperature amplitude is approximately 14 °C.

Financial information

Forty percent of the cost of the house will be mortgaged over a period of 25 years; for the first 5 years the rate has been negotiated at 9%. Additional HVAC costs will be financed through this mortgage. Inflation is expected to remain around 2%. Electricity prices have been rising slightly faster than inflation, mainly due to the growing demand for summer cooling. The present rate for electrically heated residential customers is $0.0988/kWh. The rate for customers not using electricity as the main source of heating is $0.106/kWh. The current heating oil price is about $0.50/L, but it is typically closer to $0.35/L. From your experience, the GSHP will last approximately 15 years and maintenance costs will be similar to those of conventional systems. For this house, a power vented, high efficiency oil furnace will cost around $6,000 and an air-conditioner around $1,500. The additional insulation and energy efficiency measures required to qualify for a utility subsidy will add roughly $3,500 to the cost of the house. The utility financial assistance program subsidises ground-source heat pumps at $200 per kW of installed cooling capacity and insulation/energy efficiency measures at $10 per m2 of floor area.

Prepare a RETScreen study, documenting any assumptions that you are required to make, and report on the significant conclusions from this analysis.

Solution

The worked-out solution is the data file selected from within the RETScreen Project Database. The user automatically downloads the Project Database file while downloading the RETScreen software.

Teacher's notes

• Although the building is located in the USA, all monetary figures in both the assignment and the RETScreen spreadsheet have been given in Canadian dollars. It should be noted, however, that for this project, monetary figures in US dollars would have roughly the same numeric value as the monetary figures in Canadian dollars. In this type of project, costs in different areas can be compared using tables (e.g., RS Means Mechanical Cost Data) that account not just for the exchange rate but also for differences in local costs of labour and materials. According to these tables, GSHP costs in Connecticut in US dollars can be converted to costs in most parts of Canada in Canadian dollars by multiplying by a factor of roughly CAN$1 / US$1. The electricity, heating oil, and subsidy figures given in the assignment have also been converted from Connecticut figures at this rate.
• A vertical closed-loop system has been used instead of a horizontal closed-loop system principally because of the soil type: drilling vertical boreholes is easy, but digging horizontal trenches is expensive.
• The costs and benefits of the extra insulation and other efficiency measures required by the utility should be included as part of the analysis for the GSHP: without the GSHP, the utility would offer no subsidy for the insulation costs since oil would be used for heating, and without the insulation, the GSHP would not qualify for a subsidy.
• The analysis is based on the insulation level required by the utility; note, however, that if a GSHP were not installed, the house would not qualify for utility subsidies, lower insulation levels would be used, and the heating and cooling costs would be higher. Therefore this analysis underestimates the incremental benefits of the GSHP option.
• The HVAC system will require an air handler and ducting. Since this equipment would also be required with an oil furnace and air conditioner, the net cost is zero.
• No costs were allocated for feasibility study, development and engineering. Residential projects usually do not segregate these cost items, as they are merged into the contractor's cost and overhead.

Real project

Results

This case study is based on the real installation of a ground-source heat pump system in a new home located in East Hampton, Connecticut. The system was designed and installed by a local contractor. No consideration was given to horizontal closed-loop systems due to the cost and difficulty of digging in the rocky overburden. The construction of the house benefited from Northeast Utilities' Energy Crafted Home (ECH) Program.

An initial estimate, using J-manual sizing software, suggested that the ECH measures would result in a heating load of 14.5 kW and a cooling load of 8.9 kW. The preliminary evaluation prepared by Northeast Utilities indicated that the system would have a simple payback period of less than 1 year, compared to the oil furnace option, when including the GSHP system subsidy. Compared to gas, the payback period increased to 2 years. The owner of this house also mentioned that non-financial factors, such as comfort and environmental benefits, figured in their selection of the GSHP system.

System description

The house is heated and cooled by a 14.8 kW ground-source heat pump. The closed-loop ground heat exchanger uses two vertical 77-metre wells and 305 m of polyethylene tubing. A desuperheater preheats the domestic hot water to reduce the propane consumption of the water heater. The propane water heater can also provide back-up space heating via a hot water coil mounted in the ground-source heat pump. To ensure indoor air quality in the well insulated, sealed home, a heat recovery ventilator feeds fresh air to the air distribution side of the GSHP system.

The ground-source equipment and ductwork cost US$10,541 and the ground loop cost US$8,742. The owners received a quote of US$16,200 for an oil-fired furnace and electric central air conditioning system (ducting and air-handling system included). The house is equipped with a three-zone system served with three independent air-handlers.

The residence qualified for a rebate under Northeast Utilities' energy performance program. The rebate for the ground-source system was US$200 per kW for a total of US$2,971. The net ground-source heat pump system cost of US$16,312 is almost equivalent to the quote received for the competing oil-fired system, which would not have earned any rebates under the electric utility's program.

Lessons learned

• Rebate programs can significantly influence the financial viability of a ground-source heat pump. All investments required to qualify for rebate or subsidy programs must be taken into account (e.g., the extra insulation cost in this case).
• The cost of the conventional system can sometimes be out of typical ranges. The mechanical system in this house was more complex and costly than what would normally be expected.
• Despite its apparent high initial cost, a ground-source heat pump system was financially viable in this case. Residential systems that use relatively little energy will often lead to longer payback times for ground-source heat pump systems.
• A horizontal system may be less capital-intensive than a vertical system, but poorer performance can easily offset this initial cost advantage, especially if ground conditions present practical difficulties.

The big picture

Residential GSHP systems usually have payback periods longer than those for commercial and industrial GSHP systems. This market does not follow conventional commercial rate of return or payback period rules, however. Homeowners will often tolerate longer payback periods if other factors, such as comfort and environmental benefits, can be clearly demonstrated. The higher initial cost of GSHP systems tends to position the technology as a high end product.

Most homeowners and builders are not aware of GSHP systems and their benefits. An education effort is needed to familiarise these people with the technology. One of the main challenges for the GSHP industry will be to make the technology more accessible to the low- and medium-cost housing sectors.

Photos

House - Heat pump - Ground-source, Connecticut, United States of America - Photo 1
House - Heat pump - Ground-source, Connecticut, United States of America - Photo 2

References

• GeoExchange Residential Case Study, Energy Crafted Homes in Connecticut, Website: http://www.geoexchange.com, March 2000.
• Taylor, Marshall C., "Personal communication," Northeast Utilities, March 2000.
• Parent, Michel, "Personal communication," Technosim Inc., 2000.