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Local Homeowners Can Benefit from New Federal Tax Incentives For Installation of Geothermal Systems

Commercial building owners get help, too!

Home and commercial building owners who install geothermal heating and cooling systems are now eligible for federal tax incentives under the Energy Improvement and Extension Act of 2008, passed by Congress Oct. 3, 2008, as part of the economic recovery package. "By passing this important piece of legislation, Congress is encouraging the growth of renewable energy and the small businesses like ours that support it," noted Dan Green, owner of Water Source Heating & Cooling.

"As a dealer for the WaterFurnace brand of geothermal heat pumps, we are encouraged by these tax incentives and the positive impact they can have to make geothermal systems more attractive to both homeowners and commercial building owners."

The Energy Improvement and Extension Act offers a one-time tax credit of 30 percent of the total investment for residential ground loop or ground water geothermal heat pump installations. The legislation also provides a credit of 10 percent of the total investment, with no maximum credit, for commercial system installations.

To qualify for the tax credit, residential systems must meet Energy Star requirements, and legislation is retroactive to residential systems installed after Dec. 31, 2007. The tax credit for commercial buildings begins with systems installed after Oct. 3, 2008. Owners can file for the credit by completing the Renewable Energy Credits subsection on their 2008 tax return forms. No proof of purchase is required. However, in case of an audit, owners are encouraged to keep a detailed invoice of their purchase on file.

"As the installing contractor, we will list the purchase as a Geothermal Heat Pump on the customer’s invoice and note that the unit ‘Meets or exceeds requirements of the Energy Star program currently in effect,’" Green noted.

Geothermal systems tap the free, renewable, supply of solar energy stored just a few feet below the Earth’s surface and use that energy to drive heating and cooling in both residential and commercial buildings. In addition to utility, state and now federal tax incentives that enhance the affordability of geothermal systems, this cost-effective, environmentally friendly technology offers a host of benefits that includes:

• Efficiency ratings up to five times higher than those of ordinary heating and cooling systems
• Savings on utility bills up to 70 percent
• Reduced carbon footprint since the system burns no fossil fuels
• More even distribution of heating and cooling for improved comfort
• Improved indoor air quality
• Quiet operation with no noisy outdoor units to disturb the environment or neighbors
• Safe operation that requires no open flame or fuel storage tanks
• Less maintenance
• Increased system longevity (an average life span of 24 years vs. 15 for conventional air conditioners and 20 years for fossil fuel furnaces)

For more information about the benefits of a geothermal heating and cooling system, visit www.waterfurnace.com or email us today!

To learn more about the new federal tax credits, visit http://www.thomas.loc.gov or contact your local tax professional.

Water Source Heating & Cooling of Eau Claire

From the Chippewa Valley Business Report, April 2008

Free energy
"The message we try to get across to people is that this technology means that 75 percent of your energy is free and renewable this year, next year, and 100 years from now. Actually, it is until the sun goes out because it is stored solar energy," said Green.

"It's an education process. People hear the word 'geothermal' and picture steam and Old Faithful. That's not what we're doing. We're dealing with the constant 50 degree earth under us."

Geothermal systems are not dependent on daily weather conditions as are solar panels or wind generators. A typical geothermal system, often referred to as a geothermal heat pump, includes an indoor heat-pump and an underground loop. This loop is a buried fluid-carrying series of plastic pipes that can be installed horizontally or, if space is limited, vertically in the ground.

Heat is distributed through the transfer of energy between the outside ground and inside air. In winter, that means the fluid in the loop absorbs heat from the earth and moves it to the building. In summer, that means the fluid pulls the heat from the inside air and disperses it to the ground.

"Most education occurs person to person," said Green. "Now, after over 30 years in business and over 2,000 geothermal heat pumps installed, we've convinced a lot of people. Now we typically do around 90 geothermal installations per year."

Green first heard about geothermal energy in 1981. A graduate of the University of Wisconsin- Stout in Industrial Technology, he was handling new construction for a Minnesota firm then known as the Northrup-King Seed Company. It had just built a 10,000 square foot seed research facility in Shakopee, MN.

"We were always looking into energy efficiency issues," said Green. "We tried to incorporate solar power and even looked into earth-shelters. An engineer we met at that time told us about geothermal heat. That was my first contact with this technology. I'd never heard of it before.

"Once it registered with me and I understood that we were essentially taking three-quarters of our heat energy as free and renewable energy from the ground, I realized that it was stored solar energy — ultimately the sun had put it there. Initially all that energy came from the sun or the earth would be a big ball of ice. I thought, 'this sounds too good to be true.'

"We don't have to live underground like in earth shelters and unlike solar, we can take advantage of that heat any time of the day or night."

Northrup-King decided to install a geothermal system at its Shakopee, MN facility. The company monitored its operational costs. It soon found that annual costs were one-fifth of its anticipated heating and cooling budget for the year.

"We were really surprised, especially because the facility included 2,000 square feet of greenhouse space," said Green. "That was really an attention-getter for me."

Business start-up
By 1983 Green decided to return with his family to the Eau Claire area, where he had grown up. He saw the opportunity to start his own geothermal systems company.

"We'd always hoped to get back in the country," he said. "In June 1983 I started my company. That summer I put in one geothermal heat pump."

"At that time we were operating at about half the cost of LP (liquid propane) gas, which was 40 cents a gallon then," said Green.

"Geothermal heat pumps were so new that people were skeptical. Lots of my early customers, my guinea pigs, were friends and family."

Nevertheless, the idea of saving energy costs through using a renewable source was appealing to a lot of people. Green's business steadily grew, and by 1988, his brother, Chad Green, joined him as a partner. They hired more employees each year as their business expanded. In 2003, his son, Jesse Green, joined the business full time.

"As fuel costs kept rising, we kept growing," said Green.

By 1992, the company moved to its present location on Highway 93 south of Eau Claire. "We primarily do residential, but we also do some small commercial work. Our little world – our niche – is residential. The larger commercial jobs we get involved in are maybe one or two per year and occasionally we'll do a large geothermal loop for a commercial building. But 90 percent of our work is residential."

     --CV Business Report, April 2008