Blog : Volatile oil markets draw attention back to geothermal

By Jim Cavan | Mar 21, 2011 | in

Rising tensions in the Middle East might be far too complicated to fully comprehend. But anyone who’s had to fill up at the pump or have their home oil tank topped off in the last 6 weeks understands at least one consequence of the turmoil.

With oil at a two year high, American consumers are once again wondering aloud whether our century-old dependence on fossil fuels might not be reaching critical mass.

According to the Office of Energy and Planning, New Hampshire currently spends $2.6 billion every year importing petroleum products. What’s more, over half of Granite State homes use conventional oil to heat their homes.

But while some would argue New Hampshire – like New England as a whole – has little choice but to ride out the markets and hope for cheaper fuel in the future, such voices ignore the availability of another bountiful resource, this one right beneath our feet: geothermal.

According to Melissa Aho, owner of Barrington-based Ultra Geothermal, New Hampshire’s unique geology makes it a prime source for a ground source geothermal heating and cooling system.

Aho should know: to date, her company has installed over 700 systems in the Granite State alone – including 48 at the brand new campus dorms at the University of New Hampshire two summers ago.

That’s not to say that a geothermal system is cheap; far from it. In fact, they typically come in at 20-30% higher than standard fossil fuel systems. But Aho maintains that, if a household is willing to pay for the initial investment, the down-the-road savings will make it more than worth the initial cost.

“With oil so volatile and unpredictable, geothermal is becoming more relevant and making more sense as an option every day,” explains Aho. “And you don’t get the kind of corrosion with a geothermal system that can ruin a typical fossil fuel system.”

According to the EPA, geothermal systems can save homeowners 30-70 percent in heating costs, and 20-50 percent in cooling costs, compared to conventional systems. When gas hits the $3 a gallon threshold – prices at the pump here in New Hampshire are currently hovering around $3.60 – savings can be as high as 50-70 for a geothermal ground source heating system.

With a majority of geothermal systems being in the Midwestern U.S., New Hampshire’s unique, rocky geology can certainly present problems. That’s why Aho tends to recommend vertical closed-loop systems – or a standing column, open loop system – to her Granite State customers.

But for all its challenges, when it comes to geothermal’s green credentials, the jury is all in. The EPA has called the technology “the most energy-efficient, environmentally clean, and cost-effective space conditioning system available.” Needless to say, it’s a sentiment that Aho wholeheartedly echoes.

“Originally Ultra Heating & Cooling was actually a traditional HVAC company that did a small percentage of its business in geothermal,” recalls Aho. “But that changed three years ago when we realized that – with the volatility of oil – there was a better and greener way. So Ultra Geothermal opened and changed directions of their heating company to be one that only promotes and installs ground source heating.”

What’s more, customers can still take advantage of a sizable federal tax credit, which covers 30% of systems placed in service before December 31, 2016. That’s something that purveyors of fossil-fuel based systems can’t say, which Aho sees as a decided coup for her business.

“The fact that it’s an uncapped tax credit could be a huge selling point to a consumer who may be making the choice between a high efficiency natural gas system and a geothermal system,” says Aho. “I think the more people become aware of this tax credit opportunity and learn about its specific applicability to geothermal, it will definitely help drive acceptance of our technology."

While certainly complex, the systems actually require very little in the way of materials, and in most cases existing property sites have all the water necessary to make the system function. Ultra even offers classes and tutorial sessions about their systems to the public free of charge.

Here’s how a typical geothermal installed in New Hampshire works, in a nutshell: A well or series of wells are drilled below ground, and a heating pump is installed in the home itself – typically in the basement. The heat exchange occurs with the extraction of loop temperature – that is, taking the heat from the water itself – as it passes over a refrigerant circuit within the heat pump, and warmed. The resulting heat is then pumped into the house, as the water is put back into the well and allowed to warm before being used again.

Obviously that’s the simplest way of looking at it. But it’s also not as complicated as most people think. To that end, Aho has spent a good deal of time not only demystifying the technology itself, but proving to people that – when installed correctly – it works.

“A lot of people think it doesn’t work because a lot of companies are simply installing it incorrectly,” explains Aho. “It’s a product of the economy that people are looking to undercut the competitors and take shortcuts, and when that happens you risk the functioning of the system.”

“It absolutely does work – and works in a way that isn’t corrosive to the system the way oil is – so long as you do it right.”

No one is certain whether the recent upsurge in oil prices will hold, or whether – like in 2009 and 2010 – time will simply bring the market back to normalcy. But with most experts agreeing that peak oil is right around the corner (if we haven’t hit it already), one thing is certain: the time will come when prices rise and rise, never to return.

A scary proposition, no doubt – but one that New England residents should feel good in knowing there are clean, green, realistic and cost-effective alternatives available.