Hotel Diaries: Geothermal, Part II - Energy/Carbon Savings & the Electrical Grid

Last time I explained how geothermal (or geoexchange) systems work – they save energy by exchanging heat (or cold) with the ground beneath a building. The picture on the right is the old furnace in our building – this will soon be replaced by some version of the Water Furnace heat pump seen in the second picture. What does this transition imply, from the perspective of energy use, carbon reduction and financial payback? The reduction in energy use is dependent on the use of the system: here, the system will be maximally used in the sense that it will provide space heating in winter, space cooling in summer, and will pre-heat (in combination with solar thermal) hot water all year round. Since we are building a hotel with around 100 beds/bodies, the hot water requirements are high, as are the cooling requirements in the summer. I can provide a rough estimate of the energy savings: actual savings can be measured only once the system is operational and only from a calculated baseline (1). I shall assume, for comparison purposes, a high-efficiency natural gas furnace and a standard central air-conditioning system.

So what’s the estimated energy and carbon savings? Since the heat-pump provides five times the efficiency of a natural gas furnace, we start with 80% savings on the heating cycle. However, one must also take into account the efficiency of the source on the electrical grid. This is not straight-forward since it all depends on the source of that electricity - that source could be nuclear, coal, natural gas, renewables, etc. For the sake of argument, let’s assume natural gas electrical production; the efficiency of the energy conversion at the plant would max out at a (very optimistic) 40%. Thus, for a given amount of natural gas, I would get only 40% of the total heat energy in the form of energetic electrons to the heat pump compared to the heat energy I’d get from the furnace (which is very efficient, let’s assume 100%). Thus, it takes 2.5 times the energy I get from my outlet to produce it in the first place. This effectively reduces the net gain in efficiency from using the heat pump, instead of a natural gas furnace, from 5 times the efficiency to only 2 times. Hence carbon/energy reduction on the heating cycle is 50%. Note that the carbon reduction would be less if the electrical source is coal, and more (100%!) if nuclear or some form of renewable (wind, etc.). Also note that the net efficiency would be higher if we compared electrical base-board heating, or heating oil - and not natural gas. On the cooling side, the reduction in energy/carbon is greater since I am comparing two sources of cooling coming from the same electrical outlet - which negates the distinction between sources of energy as a basis of comparison. I shall assume that the heat-pump is roughly 5 times the efficiency of a standard air-conditioner; therefore – regardless of the source on the grid – both my carbon and my energy use in the summer cycle is reduced by 80%. Note that – in addition to being significantly more efficient on the cooling cycle – the heat from the living areas can be transferred to pre-heat the water required for showers and laundry, thus the efficiency in the summer months is even greater. So a conservative assumption is that the total energy and carbon reduction year-round will be somewhere around 60-70%.

Pretty great stuff, eh? So - what’s the payback time and financial picture? Typically, a house will pay back your investment in 8 years or so, and a more commercial application such as this one will reduce it to somewhere around 3 years. These are estimations, of course, and depend on the local cost of natural gas, oil, electricity, etc. You can go to the Water Furnace website to do a calculation for a house in your area, with your energy cost inputs. Payback is also dependent on the cost of installation (obviously) and that can vary – new installs are cheaper than retrofits, and shallow geo (horizontal loops around the yard) are cheaper than vertical geo (deep, vertical holes required for buildings like this one with no yard to take advantage of). The thermal conductivity (2) of the ground is important – the less the conductivity, the bigger the hole you have to dig, and vice versa. If, for example, one strikes an aquifer while digging holes, well – you don’t have to dig much further since the thermal conductivity of an aquifer is huge compared to regular old dirt! Someone had asked in response to the last column how much the energy savings are, net of the energy input required to produce the pipes. Well, it seems to me a pretty good rule of thumb is to assume that the cost of the pipes includes the cost of the energy required to produce those pipes– right? So once the system has reached financial pay-back (3), there simply cannot be any excess energy in the production of the pipes. What’s the total potential of geothermal? Well, on my building the net energy and carbon reductions due to this system will be in the order of 60-70%. Since the building/water heating/cooling share of energy consumption is around 30%, we could reduce total energy consumption by 15-20% with geo. This, of course, is a massive retrofit project but it seems reasonable to say geo by itself could reduce our energy consumption by 10%. That said, there are ancillary benefits to this sort of energy use. First – it puts demand onto the grid, and away from local fossil consumption in the form of furnaces. This means geo enables the possibility of heating our homes with totally renewable or carbon-free sources. Obviously, massive renewables need to be put on the grid - but that is a clear, if costly, engineering possibility. Burning fossils in our basements negates that possibility, however difficult it may be to achieve. Second – since summer months are typically the peak demand times for electricity, due to air conditioning loads, massive geo installs would reduce that peak demand. Electrical grids need to be balanced, and are generally composed of baseline production (this can be nuclear) and incremental (often coal plants). By evening out the demand curve, geo allows for greater emphasis on baseload production, and more freedom in grid load balancing. Any building can have it’s heating/cooling turned off for an hour or two at any time, without any real downside. Grid balancing is a complicated subject, and I’ve only touched on that issue here, but suffice to say: geo helps in the design of a low-carbon electrical grid.


  1. The building has been vacant for over 10 years, and both the size of the building and its use are each being considerably altered. Therefore, a comparison to past bills is not possible. What we can do to measure energy savings is two-fold. First, model the energy use requirements, given the building envelope characteristics and use profile and calculate actual energy use versus modeled use. Second, simply quantify the energy being produced by the heat-pump, net of the electrical energy required for operation, and directly calculate the energy savings from an assumed energy source.
  2. This is the rate at which heat is transferred from the pipes and dissipated in the surrounding ground volume.
  3. Energy payback will actually occur way before financial payback, since energy input costs of the equipment is a small fraction of the total cost.

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  • Posted on Jan. 8, 2008. Listed in:

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