Overview

As consumer concerns continued over the rising cost of energy and tighter budgets, many savvy businesses and residential owners started to look for a more efficient way to heat and cool their buildings and homes through clean alternative energy sources; one of these was geothermal heat pump systems. Fueling this growth, in part, was the Emergency Economic Stabilization Act of 2008, H.R. 1424[1]. The Act, which became law on October 3, 2008, provides long-term tax incentives to encourage the use of renewable energy technologies that includes geothermal heat pumps for homes and commercial applications.

In 2008, total shipments of geothermal heat pumps surged more than 40 percent to 121,243 units (Table 4.1), while capacity shipped rose almost 43 percent to 416,105 tons (Figure 4.1 and Table 4.2). However, this was accompanied by growing pressures in the geothermal heat pump industry, such as manufacturers’ backlog orders, a shortage of trained installers, and high investment costs for consumers.

Figure 4.1 Geothermal Heat Pump Shipments, 2003-2008

Source: Energy Information Administration (EIA), Form EIA-902, "Annual Geothermal Heat Pump Manufacturers Survey." Chart data.

Industry Status

In 2008, there were about 23 known domestic manufacturers of geothermal heat pumps, including brand-name manufacturers[2] that shipped geothermal heat pumps manufactured by others under contract.

Almost all manufacturers have their geothermal heat pumps tested and certified by the Air Conditioning, Heating, and Refrigeration Institute (AHRI) for their cooling capacities and their operating efficiencies. In general, geothermal heat pumps are rated based on one of the four standards by the AHRI. These standards are ARI-320 (ARI/ISO 13256-1 Water-Source Heat Pumps), ARI-325 (ARI/ISO 13256-1 Ground Water-Source Heat Pumps), ARI-330 (ARI/ISO 13256-1 Ground-Source Heat Pumps), and ARI-870 (Direct Geoexchange Heat Pumps)[3].

Out of 121,243 geothermal heat pump (GHP) units shipped in 2008, a total of 23,204 were ARI-320 rated, 91,402 were ARI-325 or ARI-330 rated, and 783 were ARI-870 rated. ARI-rated shipments increased to 115,389 units in 2008, while the number of other non-ARI rated units shipped decreased to 5,854 in 2008 (Table 4.1).

Manufacturers reporting GHP shipments in 2008 also reported being involved in one or more of the following geothermal heat pump-related activities (Table 4.15):

• 17 manufacturers were involved in the design of geothermal heat pumps or systems,
• 12 were developing prototype geothermal heat pumps only,
• 5 were developing prototype systems, which include pumps and other components,
• 15 were involved in wholesale distribution,
• 3 were involved in retail distribution,
• 4 were offering installation of their GHP products, and
• 3 were involved in the manufacture of system components.

Of the 23 manufacturers active in 2008, 8 are planning to introduce new ARI-320 rated water-source heat pumps, 9 are planning new ARI-325 rated ground water-source heat pumps, 9 are planning to introduce new ARI-330 rated ground source closed-loop heat pumps, and 3 are expecting to introduce new non-ARI rated heat pumps in 2009 (Table 4.13). These statistics indicate that increasing public demand for alternative energy systems has created business opportunities for the geothermal heating and cooling industry, and the manufacturers have positioned themselves to supply a wide range of geothermal heat pumps designed to meet the needs of virtually every size and type of building.

In 2008, direct employment in the geothermal heat pump manufacturer industry accounted for 1,537 person-years[4] (Table 4.14), an increase of about 26 percent from 2007. Of the 23 manufacturers, 11 had 90 percent or more of their total company-wide revenues in geothermal heat pump-related activities, 1 had 50 to 89 percent, 4 had 10 to 49 percent, and 7 manufacturers had less than 10 percent (Table 4.16).

Geothermal Heat Pump Shipments

The total rated capacity of geothermal heat pumps shipped in 2008 was 416,105 tons, approximately 43 percent more than the 2007 shipments of 291,300 tons (Table 4.2). The average unit size shipped in 2008 was 3.43 tons, compared to an average unit size of 3.37 tons in 2007 (Table 4.1 and Table 4.2).

Shipments of ground water-source heat pumps and ground-source heat pumps (ARI-325/330 rated) continued to dominate the GHP industry in 2008, accounting for more than 73 percent of the total shipments (Figure 4.2 and Table 4.2). The shipments of ARI-325 and ARI-330 were 306,650 tons, a 44 percent increase from the corresponding 2007 shipments. In 2008, water-source heat pump (ARI-320 rated) shipments rose substantially to 59,360 tons[5] (Figure 4.2 and Table 4.2). Shipments of direct geoexchange heat pumps (ARI-870 Rated) totaled 3,114 tons in 2008 (Figure 4.2 and Table 4.2), about the same volume as in 2007. Despite the double-digit growth in total shipments, non-ARI rated heat pump shipments in 2008 decreased to 46,981 tons, more than 21 percent below 2007 shipments (Figure 4.2 and Table 4.2).

Figure 4.2 Geothermal Heat Pump Shipments by Type, 2003-2008

Source: Energy Information Administration (EIA), Form EIA-902, "Annual Geothermal Heat Pump Manufacturers Survey." Chart data.

Total Revenue and Average Price

The total revenue for shipments of geothermal thermal heat pumps was approximately $319 million in 2008 (Table 4.5). Revenue includes charges for cooperative advertising and warranties, but does not include excise taxes and the cost of freight or transportation.

The average price (dollars per ton) for water-source heat pumps (ARI-320 rated) was $743.34 in 2008, and the average price for ground water-source heat pumps and ground-source heat pumps (ARI-325/330 rated) was $787.73 (Table 4.5).

Domestic Shipments

As prices for electricity rise, and prices for such winter heating fuels as natural gas and oil show significant volatility, geothermal heat pumps for heating and cooling are becoming increasingly viable. During 2008, domestic shipments continued to surge rapidly, with rated capacity totaling 346,622 tons, slightly more than a 45 percent increase from 238,870 tons in 2007 (Table 4.6).

During 2008, GHP shipments to domestic wholesale distributors, the largest customer category, totaled 184,869 tons or 53 percent of the domestic market share. Shipments to the second-largest customer category, installers, amounted to 160,084 tons, or 46 percent of the domestic market-share (Table 4.10).

In 2008, domestic shipments to the residential sector accounted for 165,146 tons or more than 47 percent of the domestic market. Of the domestic shipments to the residential sector, 4 percent were ARI-320 rated, 86 percent were ARI-325/330 rated, approximately 2 percent were ARI-870 rated, and 8 percent were non-ARI rated (Table 4.11). The commercial sector was the largest domestic market in the United States in 2008, accounting for 174,044 tons or more than 50 percent of the domestic market share. Twenty-six percent of the purchases for this sector were ARI-320 rated, more than 64 percent were ARI-325/330 rated, less than 0.01 percent were ARI-870 rated, and about 10 percent were non-ARI rated. The industrial sector, with slightly more than 2 percent of domestic shipments, was the smallest domestic sector.

Complete Systems

In general, geothermal heating/cooling systems provide space heating and cooling, as well as water heating. A complete geothermal heating/cooling system is defined as a unit with all the necessary functional components, except for installation materials. The system includes three principal components (listed below) and a device called a “desuperheater” which can be added to provide hot water when the system is providing heat or air conditioning.

• Geothermal earth connection subsystem: Using the earth as the heat source and heat sink, this subsystem consists of a series of pipes which are commonly called a “loop.” They carry a fluid used to connect the geothermal system's heat pump to the earth near the building to be conditioned.
• Geothermal heat pump subsystem: An electric heat pump that exchanges heat between the fluid and the air that conditions the building.
• Geothermal heat distribution subsystem: An air-delivery system that delivers the conditioned air to the building.

Of the manufacturers reporting 2008 shipments, the majority of these manufacturers sell only geothermal heat pump subsystems (geothermal heat pump units), and five manufacturers reported selling complete systems. These systems accounted for 19,043 tons, or 4.6 percent of total GHP shipped in 2008 (Table 4.12).

Origin of Shipments

Of the 416,105 tons of total GHP shipments in 2008, 86 tons of GHP shipments were imported from China (Table 4.9). The remaining 416,019 tons of GHP shipments were manufactured in the United States. The top five manufacturing states were: Florida, Indiana, Michigan, Oklahoma, and Texas, with almost 56 percent (232,888 tons) of the total shipped from Indiana and Oklahoma (Table 4.8).

Destination of Shipments

Exports of GHP shipments totaled 69,483 tons in 2008. The export market accounted for more than 16 percent of total shipments and was dominated by sales to Canada, with almost 81 percent (56,212 tons) of total exports (Table 4.7).

In 2008, a total of 346,622 tons of domestic GHP shipments went to all 50 States, Puerto Rico and the District of Columbia (Table 4.6). About 51 percent of domestic GHP shipments (175,190 tons) went to ten States: Florida, Illinois, Indiana, Iowa, Michigan, Minnesota, Nebraska, New York, Ohio, and Pennsylvania, with approximately 14 percent (49,093 tons) of the total shipments sent to Illinois and Pennsylvania.

Average Performance Rating

The performance rating is useful for comparing GHP units of the same type. However, the ratings used for different types of GHP units are usually not comparable. In 2008, the capacity-weighted average cooling energy efficiency ratio (EER)[6] by model type for ARI-320 was 13.1, ARI-325/330 was 19.5, ARI-870 was 17.5, and other non-ARI rated was 13.5 (Table 4.3). The capacity-weighted average heating coefficient of performance (COP)[7] by model type for ARI-320 was 4.4, ARI-325/330 was 4.0, ARI-870 was 4.2, and other non-ARI rated was 3.6 (Table 4.4).

Geothermal Direct Use of Energy and Heat Pumps

Direct use of geothermal energy and energy consumed by GHP units both increased in 2008. In modern direct use systems, a well is drilled into a geothermal reservoir to provide a steady stream of hot water. This can be used for many applications that require heat such as: heating buildings, raising plants in greenhouses, drying crops, heating water at fish farms and other industrial processes. Direct use of geothermal energy inched upward from 9.4 to 9.7 trillion Btu, while GHP energy consumption increased 15 percent in 2008 to an estimated 37 trillion Btu (Table 4.17)[8].

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