the North American geothermal market is expected to reach $147.6 million in revenue by 2017. Opportunities abound for electrical contractors to bring cost-effective heating and cooling options to their residential customers, according to market research firm Frost & Sullivan.


“Thanks to new construction starts in the recovering economy, as well as increased manufacturer advertising and consumer awareness of geothermal technology, this is a growing market,” said Gerard Maloney, president of EarthHeat, Duvall, Wash. 


“In addition, geothermal systems installed 30 years ago need to be replaced,” said John Lower, president of J.W. Geothermal Inc., Colton, Ore. “Residential geothermal equipment is very accessible.” 


Market overview


Geothermal heat pumps were first used in the 1940s, and current systems became commercially available in the 1970s, according to Navigant Research. Geothermal systems are successfully deployed in nearly every region of the world.


“The Earth collects about 40 percent of the solar rays that hit it,” Maloney said. 


In winter, a geothermal heating system circulates a food-grade antifreeze solution through pipes arrayed in a loop in the ground. The solution is carried to the geothermal unit, where it is compressed and sent out as warm air or water to the indoor system. It then circulates through the home with an air delivery, in-floor radiant or hydronic system. In the summer, the system reverses and expels heat from the house to the cooler earth using the loop system.


“There are many options, including geothermal pumps, that can also pull water out of a well, pond, rivers or stream in an open-loop system,” Lower said.


Many factors drive the demand for geothermal technology, including homeowners who want high-quality heating and cooling but also want to conserve energy and reduce their environmental footprint. One of the biggest drivers is the volatility of oil and gas pricing.


Both federal and state tax credits, as well as utility incentives and financing opportunities, are helping to drive the geothermal market. 


“There is a 30 percent federal tax credit through 2016 for homeowners who install a geothermal system,” Lower said.


Oregon, for example, offers a tax incentive of up to $1,200. For information about individual state’s incentives, electrical contractors or homeowners can reference the Database of State Incentives for Renewables and Efficiency at dsireusa.org.


Geothermal system benefits drive the market’s growth. They include the small environmental footprint; the equipment’s longevity (which is not exposed to weather); a lack of combustible fuel entering the home; and low production, operational and maintenance costs.


“For every $1 worth of fuel used to operate the pump, the homeowner gets $4–$5 worth of heat,” Lower said. “In conventional HVAC [heating, ventilating and air conditioning] systems, homeowners usually receive less than $1 worth of heat for each $1 worth of fuel used to operate the system.”


Needless to say, geothermal market deployments also face barriers, such as upfront costs. 


“A basic system can run up to $40,000 before tax credits, which can scare some people away,” Lower said. 


However, homeowners in cold climates can get a full return on investment in as quickly as 5 years or up to only 10 years in more moderate areas.


“Geothermal is the only system that pays itself back in savings, because operational costs are less than fuel costs for a conventional system,” Maloney said.


Opportunities heat up


To create opportunities in the residential geothermal market, electrical contractors need to understand the major differences between geothermal and conventional HVAC technology, including the electrical service lines required for both, and demonstrate their knowledge to the homeowner, Lower said. For example, a geothermal system can decrease a house’s electrical load requirements, and an electrical furnace requires four times as much amperage to operate as a geothermal heat pump.


“Contractors should also keep in mind that many of the homeowners who install a geothermal system will also install photovoltaic technology as part of their energy-conservation efforts,” Lower said.


Geothermal systems also are an opportunity for contractors to expand their capabilities in performing control work. 


“Contractors that get educated on geothermal technology and the controls and service requirements involved can become the homeowner’s single installation source,” Maloney said.


As geothermal technology continues to evolve and make efficiency improvements—such as multistage compressors and circulation pumps, variable speed blowers, and more efficient refrigerants—the contractor that keeps current will benefit from installing geothermal systems for their residential customers.