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

Case study assignment

You are the technical director of a 1,100-student high school, constructed in 1971. The 15,000 m² building is heated by electric resistance heaters and cooled by a two-pipe chilled water system with centrifugal chiller. This heating, ventilation, and air-conditioning (HVAC) system needs to be replaced; you are in charge of determining what type of system will replace it. All options under consideration are based on hydronic loops. You have seen geothermal ground-source heat pump installations for schools in your area; these appear to be quite efficient. With the help of your local utility representative, you have narrowed down the options to:

• a water-loop heat pump system (WLHP) with gas boiler and cooling tower; or
• a WLHP with a closed-loop ground-source heat pump (GSHP) system.

You need to determine which system will lead to the best return on investment for the school board. The board is committed to sound economical decisions, but environmental and energy concerns make life-cycle cost analysis the primary basis for their decisions. You must present a preliminary study that will help the board choose a direction that will be further studied.

Site information

The school is located in Johnson City, Tennessee. The weather in Johnson City is most closely related to that of Bristol, Tennessee. The mean earth temperature is roughly 16.1 °C and the annual earth temperature amplitude is estimated at 11.7 °C. Humidity levels are moderate during the time of the year when the school is occupied. One encounters light rock when digging in the area. There is an unused plot of land, 2,000 m² in area, adjacent to the school.

The school HVAC system serves the entire building including classrooms, kitchen, cafeteria, auditorium and a gymnasium. The peak cooling load is estimated to be 800 kW and the peak heating load is estimated at 350 kW. Using a WLHP system, you evaluated from past measurements that the annual net heating-energy is approximately 520 MWh while the net cooling-energy demand is 550 MWh. The cooling energy use accounts for summer vacation during which cooling needs are minimal. The single-story school building has low insulation levels and relatively low internal heat gains.

Financial information
The school has a budget which would cover the cost of the conventional system. The local utility offers a subsidy of $104,000 for the GSHP system. All additional costs would be entirely financed through a 20 year loan at an interest rate of 8%. The school board accountant suggested using a discount rate of 9%, an inflation rate of 2.5% and a fuel cost escalation rate of 2.5%.

The average total electric energy use for the school is 3,481 MWh for an average cost of $209,000 per year. The demand charge is approximately $9/kW per month after the initial 50 kW of subscribed demand. Natural gas rate is, on average, $0.25/m³.

The conventional system to which the ground-source heat pump is being compared would consist of a conventional (not extended range) water source heat pump (costing $184/kW), a boiler ($35,000), a cooling tower ($20,000), circulating pumps ($14,000) and a plateframe heat exchanger ($35,000).

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 Tennessee in US dollars can be converted to costs in most parts of Canada in Canadian dollars by multiplying by a factor of roughly 1 CAN$/US$. The electricity, natural gas, and subsidy figures given in the assignment have also been converted from Tennessee figures at this rate.
• A vertical, rather than horizontal, closed-loop system has been selected because of the soil conditions, relatively large size of the system, and limited land available.
• The credits under feasibility study, development, and engineering account for the costs of those activities for the base case (conventional) system. This is justified since this analysis examines the profitability of the incremental costs of the GSHP system compared to the conventional system.
• The initial contingencies are minimal. A higher, thus safer, contingency budget would reduce the viability of the project. It is interesting to note, however, that the actual project had a $100,000 cost overrun on the ground heat exchanger drilling due to additional borehole casing requirements.
• No contingencies are accounted for in the annual costs because these would be roughly the same for the GSHP and the conventional system.
• The debt ratio has been selected to set the project equity equal to the subsidy of $104,000. In this way, all costs in excess of the sum of the subsidy and the cost of the conventional system are covered by a loan, as indicated in the assignment.
• The payback period is longer than the payback expected for the real project. The payback is only an estimate, however, as maintenance cost reductions have not yet been fully verified.
• The assumption of light rock instead of heavy rock greatly affects the financial analysis. This illustrates the importance of accurate determination of the ground characteristics.
• Care must be exercised in the interpretation of the internal rate of return (IRR). The IRR calculated here is that of the additional investment in excess of the conventional system cost. The first $104,000 of this additional cost is paid for by a subsidy. The rest is covered by a loan. Since there is no "real" equity included in this additional investment, any project with debt service coverage of 1 or greater-a desirable project characteristic that could be required by some organisations - results in an infinite IRR! In complicated situations such as this, an unambiguous measure of the project's financial viability is its net present value (NPV).
• Although none of the additional investment takes the form of equity (it is all subsidy and debt), the money budgeted by the school board to cover the conventional system would be at least partly equity. Thus the school board shares in the risk of the project and lenders would be willing to consider the investment.

Real project

Results

Daniel Boone High School, located in Johnson City, Tennessee, USA, installed a water loop heat pump (WLHP) with a closed-loop ground-source heat pump (GSHP) system during the 1995-1996 heating season. Five configurations were examined prior to selecting the GSHP system. These were:

• WLHP with electric boiler;
• WLHP with gas boiler;
• WLHP with electric thermal storage;
• 4-pipe system using a natural gas engine-driven chiller and boiler; and
• WLHP with closed-loop ground-source system.

Detailed simulations were performed using an hourly analysis model. The base case system selected for comparison was the WLHP with natural gas boiler and cooling tower. The model was calibrated with actual energy and weather data gathered prior to the feasibility study. The GSHP system was selected on the basis of the simulation results and the anticipated construction cost. An annual energy saving of US$29,000 was predicted.

The preliminary feasibility study also estimated that maintenance costs for the GSHP system would be reduced on annual basis by approximately US$0.55/m² of floor space compared to the base case system. These savings were attributed to 1) lower maintenance and operating (labour) costs of the GSHP system compared to the boiler, cooling tower, and heat exchanger of the conventional system, and 2) chemicals for the cooling tower and makeup water usage.

Initial results for the first year of operation showed a net annual saving of US$33,000. Based on these savings, a 6-year simple pay back period is achieved. Further monitoring of the building energy-use appears to indicate that the installed capacity and ground loop may be oversized by about one third.

System description

The geothermal heat exchanger consists of 320 boreholes, each 45.7 m in depth. Each borehole contains 91.4 m of 1.9 cm diameter polyethylene pipe. The boreholes are grouped in clusters of 20 holes with 4.6 m centre-to-centre spacing. A 20.3 cm diameter supply and return line enters the school through the existing mechanical equipment room. The total installed cooling capacity is 1,410 kW. The system uses a pair of two-speed circulating pumps of 30 kW each.

The ground-source heat pump system cost US$451,000. This cost exceeded the initial estimate by US$100,000 due to unexpected casing costs. The local utility, Tennessee Valley Authority (TVA), agreed to co-fund the project in order to demonstrate and evaluate the GSHP system, particularly the variable flow pumping and the loop sizing. TVA provided US$104,000 in direct funding plus the system monitoring costs. The cost of a conventional boiler, cooling tower, plate-frame heat exchanger, and associated pumping and controls was estimated at US$150,000. The incremental cost of the GSHP system was US$197,000.

Lessons learned

• Parasitic pumping in WLHP and ground-source heat pump systems is an area with considerable potential for energy savings. Traditional designs incorporate constant operation of circulation pumps. This can substantially increase energy use, resulting in lower overall system efficiency.
• Significant unexpected costs can jeopardise the economic viability of GSHP systems. A thorough estimate with appropriate provisions is needed. Ground conditions should be evaluated by local experts.
• Oversizing of ground-source exchangers is often attributable to an overestimation of the cooling demand.
• In new construction applications, a significant credit should be given to the substantial reduction in mechanical equipment room requirements. This further reduces the system payback period.

The big picture

Institutional applications are a perfect platform for demonstrating GSHP system benefits. This market segment will usually tolerate longer payback periods and is more willing to use innovative systems. It is common that institutional applications will be the first GSHP systems in a region. These serve to demonstrate the benefits of GSHP systems and give contractors design and construction practice. It is critical that contractors and well drillers be experienced and capable. Unsuccessful or trouble-prone systems can rapidly tarnish the technology's image. In particular, accurate sizing of the GSHP system is key, since oversizing is more costly with GSHP systems than with conventional systems.

Photo

School - Heat pump - Ground-source, Tennessee, United States of America

References

• Dinse, David, "Personal communication," Tennessee Valley Authority, March 2000.
• Dinse, D., Geothermal System for School, ASHRAE Journal, May 1998, pp. 52-54.
• GeoExchange Case Study, Energy Crafted Homes in Connecticut, Website: http://www.geoexchange.com, March 2000.
• Henderson, H.I., Implications of Measured Commercial Building Loads on Geothermal System Sizing, ASHRAE Transactions, 1999, V. 105 # SE-99-20-02.
• Parent, Michel, "Personal communication," Technosim Inc, 2000.