Frequently Asked Questions
Throughout the year, outdoor temperatures fluctuate with the changing seasons. However, underground temperatures do not. In fact, about 4 to 6 feet below the earth’s surface, temperatures remain relatively constant year-round. A geothermal system, which consists of an indoor unit and a buried earth loop, capitalizes on these constant temperatures. In the winter, fluid circulating through the system’s earth loop absorbs stored heat and carries it indoors. The indoor unit compresses the heat to a higher temperature and distributes it throughout the building. In the summer, the system reverses, pulling heat from the building, carrying through the earth loop and depositing it in the cooler earth.
A geothermal system utilizes the energy from the sun, which is stored in the earth, to heat and cool homes and buildings. Typically, electric power is used only to operate the unit’s fan, compressor and pump. So, unlike conventional systems, geothermal systems do not burn fossil fuel to generate heat—they simply transfer heat to and from the earth.
Questions You Should Ask About a New Heating System
All types of heating and cooling systems have a rated efficiency. Fossil fuel furnaces have a percentage efficiency rating. Natural gas, propane, and fuel oil furnaces have efficiency ratings based on laboratory conditions. To get an accurate installed efficiency rating, factors such as flue gas heat losses, cycling losses caused by oversizing, blower fan electrical usage, etc., must be included.
Geothermal heat pumps, as well as all other types of heat pumps, have efficiencies rated according to their coefficient of performance or COP. It’s a scientific way of determining how much energy the system produces versus how much it uses.
Most geothermal heat pump systems have COPs of 2.5 – 3.5. That means for every one unit of energy used to power the system, 2 and one-half to 3 and one-half units are supplied as heat. Where a fossil fuel furnace may be 50-90 percent efficient, a geothermal heat pump is about 300 percent efficient. Some geothermal heat pump manufacturers and electric utilities use computers to accurately determine the operating efficiency of a system for your home or building.
Heat Pumps: What are they and how do they work?
Closed Loop Systems
Open Loop Systems
There are a number of ways to dispose of water after it has passed through the heat pump. The open discharge method is the easiest and least expensive. Open discharge simply involves releasing the water into a stream, river, lake, pond, ditch, or drainage tile. Obviously, one of these alternatives must be readily available and must possess the capacity to accept the amount of water used by the heat pump before open discharge is feasible.
A second means of water discharge is the return well. A return well is a second well bore that returns the water to the ground aquifer. A return well must have enough capacity to dispose of the water passed through the heat pump. A new return well should be installed by a qualified well driller. Likewise, a professional should test the capacity of an existing well before it is used as a return.
Geothermal heat pumps used in open-loop systems need differing amounts of water depending on the size of the unit and the manufacturer’s specifications. The water requirement of a specific model is usually expressed in gallons per minute (g.p.m.) and is listed in the specifications for that unit. Your heating contractor should be able to provide this information. Generally, the average system will use 1.5 g.p.m. per ton of capacity while operating.
Your well and pump combination should be large enough to supply the water needed by the heat pump in addition to your domestic water requirements. You will probably need to enlarge your pressure tank or modify your plumbing to supply adequate water to the heat pump.
Poor water quality can cause serious problems in open-loop systems. Your water should be tested for hardness, acidity, and iron content before a heat pump is installed. Your contractor or equipment manufacturer can tell you what level of water is acceptable.
Mineral deposits can build up inside the heat pump’s heat exchanger. Sometimes a periodic cleaning with a mild acid solution is all that’s needed to remove the build-up.
Impurities, particularly iron, can eventually clog a return well. If your water has a high iron content you, should be sure that the discharge water is not aerated before it’s injected into a return well.
Finally, you should opt against using water from a spring, pond, lake, or river as a source for your heat pump system unless it’s proven to be free of excessive particles and organic matter. They can clog a heat pump system and make it inoperable in a short time.
No. They are pollution free. The heat pump merely removes or adds heat to the water. No pollutants are added whatsoever. The only change in the water returned to the environment is a slight increase or decrease in temperature.
Some people are concerned that open-loop systems contribute to the depletion of our ground water resources. This issue is not critical in some parts of North America because of abundant supplies of ground water.
Parts of the System
No. There are different kinds of geothermal heat pumps designed for specific applications. Many geothermal heat pumps, for example, are intended for use only with higher temperature ground water encountered in open-loop systems. Others will operate at entering water temperatures as low as 25°F which are possible in closed-loop systems.
Most geothermal heat pumps provide summer air conditioning, but a few brands are designed only for winter heating. Sometimes these heating-only systems incorporate a groundwater cooled coil that can provide cooling in moderate climates.
Geothermal heat pumps can also differ in the way they are designed. Self-contained units combine the blower, compressor, heat exchanger, and coil in a single cabinet. Split systems allow the coil to be added to a forced-air furnace and utilize the existing blower.
Most units are easy to install, especially when they are replacing another forced-air system. They can be installed in areas unsuitable for fossil fuel furnaces because there is no combustion, thus, no need to vent exhaust gases.
Ductwork must be installed in homes that don’t have an existing air distribution system. The difficulty of installing ductwork will vary and should be assessed by a contractor.
Ground source heat pumps capture solar energy stored in the Earth creating “the most energy-efficient , environmentally clean, and cost-effective space-conditioning system” (Source: U.S. EPA 1993)
What are the tax incentives for geothermal heat pumps?
As part of the Emergency Economic Stabilization Act of 2008, an incentive was added for geothermal heat pump property. The incentive for businesses is available from Oct. 3, 2008, through December 31, 2016, and for residential installations, the incentive is available for units placed in service starting January 1, 2008, until December 31, 2016. Qualified geothermal heat pump property refers to any equipment which uses the ground or ground water as a thermal energy source to heat the taxpayer’s residence, or as a thermal energy sink to cool the residence. The unit must meet the requirements of the Energy Star program* which are in effect when the heat pump is purchased.
The residential incentive covers 30% of the expenditures in the year the incentive is taken, up to a cap of $2,000 if the property was installed prior to January 1, 2009. Qualifying geothermal heat pump property installed after December 31, 2008, is eligible for 30% of the installed cost without a cap, as provided under the American Recovery and Reinvestment Tax Act of 2009 (ARRA). The incentive is available for taxpayers installing qualifying equipment at their primary residence or a second home, but not for a rental property.
Two options exist for the commercial incentive. An investment tax credit of 10% of the installed cost is available through 2016. The ARRA legislation also provides the option of taking a grant in lieu of the credit, worth 10% of the installed costs for equipment placed in service during 2009 and 2010. Manufacturers of geothermal energy equipment may qualify for a separate investment tax credit.
What do I have to do to qualify for these incentives?
To qualify, tax payers will need to have evidence regarding the cost of the system, when it was placed in service, and whether the system meets the qualifying criteria discussed above.
Taxpayers installing geothermal heat pump systems at their residence should use IRS Form 5695 for the Residential Energy Efficient Property incentive. For businesses, use Form 3468 for geothermal heat pump systems.
For more information regarding geothermal heat-pump systems:
Geothermal Heat Pump Consortium
Information on applying for the incentive
- Currently, the criteria for Energy Star geothermal heat pumps are: for a closed-loop system, 14.1 EER and a coefficient of performance (COP) of at least 3.3. For an open-loop system, 16.2 EER and 3.6 COP. For a direct expansion system, 15 EER and 3.5 COP. In addition, the geothermal heat pumps must include a desuperheater, which helps heat water, or an integrated water heating system.
Source: The Tax Incentives Assistance Project (TIAP)
Please Note: The above statement is an explanation of incentives as described by the TIAP. Contact a tax professional for a complete explanation of tax incentives.