Geothermal
Stimulous Bill Increases Home Owner Tax Credit
An exciting new tax credit is now available for home and commercial building owners who install geothermal heating and cooling systems through the Energy Improvement and Extension Act of 2008 (H.R. 1424). H.R. 1424 offers a onetime tax credit of 30% of the total investment for homeowners who install residential ground loop or ground water geothermal heat pumps.. A credit of 10% of the total investment is also available (no maximum) for a commercial system installation.
To qualify, the systems must meet or exceed EnergyStar requirements and be installed after December 31, 2007. While units installed in 2008 are subject to a $2,000 cap on the credit, units installed from 2009 through 2016 can take advantage of the full credit. Owners can file for the credit by completing the Renewable Energy Credits subsection on their tax return forms for 2008. For taxpayers that are subject to the Alternative Minimum Tax, they can claim the credit on their taxes for the following year. No proof of purchase will be required; however, in case of an audit, owners are encouraged to keep a detailed invoice of their purchase on file. The contractor who sold and installed the product should list the purchase as a "Geothermal Heat Pump" on the invoice and that it "Exceeds requirements of Energy Star program currently in effect".
The tax credit is available through December 31, 2016. Consult your local tax professional for advice on taking advantage of the tax credit, as this announcement is not intended as a recommendation or endorsement of any financial strategy.
Download the brochure: Understanding the Federal Tax Incentives
Helpful Resources
- Excerpt from the Energy Improvement and Extension Act pertaining to geothermal.
- IRS Form 5695*: Residential Energy Efficient Property Credit
- More Information about the "Residential Renewable Energy Tax Credit"
- Find additional tax incentives that may be available in your state - www.dsireusa.org
Consult your tax professional for details.
*Form 5695 for the 2009 tax year are not yet available.
WHAT IS GEOTHERMAL?
The earth absorbs almost 50% of all solar energy and remains a nearly constant temperature of 50°F to 70°F depending on geographic location. Working with an underground loop system, a ClimateMaster geothermal unit utilizes this constant temperature to exchange energy between your home and the earth as needed for heating and cooling.
In winter, water circulating inside a sealed loop absorbs heat from the earth and carries it to the unit. Here it is compressed to a higher temperature and sent as warm air to your indoor system for distribution throughout your home.
In the summer, the system reverses and expels heat from your home to the cooler earth via the loop system. This heat exchange process is not only natural, but is a truly ingenious and highly efficient way to create a comfortable climate in your home.
According to the U.S. Environmental Protection Agency (EPA), geothermal heat pumps are the most energy-efficient, environmentally clean, and cost-effective systems for temperature control. Although, most homes still use traditional furnaces and air conditioners, geothermal heat pumps are becoming more popular. In recent years, the U.S. Department of Energy along with the EPA have partnered with industry to promote the use of geothermal heat pumps.
Horizontal Loops
Horizontal Loops are installed in areas where the soil conditions allow for economical excavation. Taking up more land area than any other loop type, they are used where space permits. Trenches are normally 5 feet deep. Normally, several hundred feet of trench is required.
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Vertical Loops
Vertical Loops are used extensively where land area is limited. A pair of pipes with a special U-Bend assembly at the bottom are inserted into a bore hole that averages between 150 to 250 feet in depth per ton of equipment.
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Lake Loops
Lake Loops are usually very economical to install. If a pond or lake at least 8 feet deep is available, lake loops can utilize the water (rather than soil) for heat transfer. Reduced installation costs are characteristic of this type of loop system.
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Open Loop
Open Loop installations actually pump water from an underground aquifer through the geothermal unit and then discharge that water to a drainage ditch or pond. Discharging water to a pond or lake is considered ideal. |
Geothermal heat pumps (GHPs) are a relatively new technology that can save homeowners money. These ground-source heat pumps use the natural heat storage capacity of the earth or ground water to provide energy efficient heating and cooling. GHPs should not be confused with air-source heat pumps that rely on heated air.
Geothermal heat pumps use the relatively constant temperature of the ground or water several feet below the earth's surface as source of heating and cooling. Geothermal heat pumps are appropriate for retrofit or new homes, where both heating and cooling are desired. In addition to heating and cooling, geothermal heat pumps can provide domestic hot water. They can be used for virtually any size home or lot in any region of the U.S.
A geothermal heat pump system consists of indoor heat pump equipment, a ground loop, and a flow center to connect the indoor and outdoor equipment. The heat pump equipment works like a reversible refrigerator by removing heat from one location and depositing it in another location. The ground loop, which is invisible after installation, allows the exchange of heat between the earth and the heat pump.
Geothermal heat pumps can be open- or closed-loop. Open-loop systems draw well water for use as the heat source or heat sink, and after use, return the well water to a drainage field or another well. Closed-loop or earth-coupled systems use a water and antifreeze solution, circulated in a ground loop of pipe to extract heat from the earth.
Ground loops can be installed in a vertical well or a horizontal loop. Vertical wells are usually more expensive and used where space is limited. The length of loop pipe required will vary with soil type, loop configuration, and system capacity. Loop length can range from 250 to 1,000 feet per ton of capacity.
Special heat pump features can include variable speed blowers and multiple-speed compressors. These features can improve comfort and efficiency in areas where heating and cooling loads are quite different. Add-on features include the capability to produce hot water.
Desuperheaters can be added to supplement the production of domestic hot water when there is a demand for space heating or cooling. These devices make use of excess heat during the cooling cycle and use some of the heat during the heating cycle to supplement hot water production. Dedicated water heaters can be added which operate whenever there is a demand for hot water.
Geothermal heating can be more efficient than electric resistance heating. These systems are also typically more efficient than gas or oil-fired heating systems. They are more energy efficient than air-source heat pumps because they draw heat from, or release heat to, the earth, which has moderate temperatures year round, rather than to the air (which is generally colder in winter and warmer in summer than the earth, resulting in less effective heat transfer).
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