GEO 2015 – The Year in Review
GEO Work in Washington, DC
GEO Advocacy “Fly-Ins” In late-March and again in late-September, the Geothermal Exchange Organization (GEO) Board of Directors and staff staged Fly-Ins to Washington, DC for political briefings and visits to key lawmakers on Capitol Hill. Issues included the industry’s need for tax extenders, tax credits and a legislated definition of clean and renewable energy that includes geothermal heat pumps (GHPs). During both visits to the nation’s capital, the GEO team met with leadership and staff of key Senate and House committees. In October, GEO President Doug Dougherty and Board Member-at-Large Dan Ellis also met with officials at the U.S. Energy Information Administration, U.S. Department of Energy Geothermal Technologies Office , and the Federal Energy Management Program.
Tax Extenders Bill Signed into Law On December 18, the U.S. House of Representatives and U.S. Senate passed a $1.1 trillion Omnibus spending bill to fund the government, and a companion bill to provide $650 billion in tax relief over 10 years. According to GEO President Doug Dougherty, “We scored a big win with the tax bill, which includes four ‘tax extenders’ particularly beneficial to the GHP industry.”
- Expensing under Section 179, modified and made permanent, making small business eligible for a 100% deduction for investments up to $500,000 in geothermal system equipment during the first year after installation,
- Bonus Depreciation, modified and extended for 5 years,
- Tax credit for energy efficient new homes, extended to Dec. 31, 2016, and
- Deduction for energy efficient commercial buildings, extended to Dec. 31, 2016.
“Having worked hard for these extenders over the past couple of years, GEO is very happy about their passage,” said Dougherty. “But we were extremely disappointed that despite our best efforts, GHPs were passed over for extensions of installation tax credits that were given to wind and solar technologies in the Omnibus bill.”
Tax Credits for Geothermal Installations The Omnibus spending bill passed by Congress on Dec. 18 extends for five years the Wind Production Tax Credit (PTC), the 30% solar Investment Tax Credit for commercial installations (ITC – including 5-year depreciation), and the 30% solar income tax credit for residential applications. Though GEO was assured that GHPs would be included in the bill, they were left out during last-minute, closed-door negotiations over lifting the U.S. ban on crude oil exports. The wind PTC and solar tax credits were hurriedly inserted into the final Omnibus bill, but GHPs, fuel cells, small wind, microturbines, and combined heat and power were left out of the measure.” Just like those industries, GHP advocates were blindsided by the 11th-hour deal,” said Dougherty.
Immediate backlash whipped up by the GHP and other industries left out of the tax credit extensions made key congressional staff well aware of the problem. House Ways & Means Chairman Kevin Brady (R-Texas) publicly acknowledged concern that the ITC and income tax credit extensions for solar did not include other eligible technologies, as did Senate Minority Leader Harry Reid (D-NV). House Minority Leader Nancy Pelosi (D-CA) said she has been promised action in early 2016.
GEO believes that the situation has created an easier path for us to get commercial and residential tax credits for GHPs extended through 2021. During the first quarter of 2016, GEO will work to include GHPs in an amendment that will provide parity with the solar industry tax credit extensions. The message? Congress should not be in the business of picking winners and losers among renewable energy options. It must remain technology neutral and market sensitive. This is especially important as the nation reaches for lofty environmental and economic goals.
Executive Order Included GHPs On March 19, the administration officially recognized the efficiency and renewability of GHPs with its Executive Order (EO), “Planning for Federal Sustainability in the Next Decade.” With that, the federal government now defines thermal energy for buildings produced by GHPs as renewable, right alongside electricity generated from naturally occurring geothermal steam. GHP inclusion in the EO is the direct result of two GEO meetings with the White House Council on Environmental Quality and the Office of Management & Budget. “Having GHPs officially recognized as a source of clean energy in the Executive Order is a homerun for the industry,” said Dougherty. “GHPs are easily applicable to many sections of the EO as an efficiency tool and renewable thermal energy source for saving energy, reducing costs and curbing emissions from federal buildings across the country.” The EO is available here.
GEO Presses for GHP Renewable Definition Even though the Executive Order described above desig-nates GHPs as a clean and sustainable option for U.S. government energy purchases and consumption, GEO wants to codify the technology into the Federal Renewable Energy Purchase Requirement in the 2005 Energy Policy Act. “We are still seeking a vehicle to amend the law, to set an example for the states,” said Dougherty. The following is GEO’s suggested definition for renewable energy in federal law:
The term ‘renewable energy’ means electric energy, or thermal energy if resulting from a thermal energy project placed in service after December 31, 2014, generated from, or avoided by, solar, wind, biomass, landfill gas, ocean (including tidal, wave, current, and thermal), geothermal, municipal solid waste (other than commonly recycled paper that is segregated from solid waste), qualified waste heat resource, or new hydroelectric generation capacity achieved from increased efficiency or additions of new capacity at an existing hydroelectric project.”
A potential vehicle for GEO’s amendment in 2016 is a comprehensive energy bill crafted by Senate Energy and Natural Resources Committee Chairwoman Lisa Murkowski (R-AK) and her supporters.
EPA Won’t Increase GHP Efficiency Standards In October, GEO learned that the U.S. Environmental Protection Agency (EPA) will not be increasing the efficiency standards for GHPs listed in the Energy Star Program. Prior to the decision, Dougherty participated in several discussions with EPA staff regarding their triennial review of Energy Star products. “I stuck to the point that GHPs are the most efficient way to satisfy the thermal loads of homes and we are the most expensive,” he said. “We still have less than 2% of residential market share, and our biggest barrier to adoption is high upfront cost. EPA shouldn’t raise this barrier for only incremental gains in efficiency when we already significantly outperform our nearest competition.” EPA agreed, and will reach out to GEO in about 30 months to revisit the issue.
GHPs Can Help States Meet Clean Air Rules Last August, EPA released its 1,530-page Clean Power Plan, which sets state-specific targets for carbon dioxide emissions from coal-fired power plants. A major compliance option was originally to encourage energy efficiency by the states. GEO submitted comments to EPA’s Proposed Rulemaking in June 2104, asking that thermal energy produced onsite by GHPs be recognized as a compliance option for the states. Unfortunately, GHPs are not specified as a compliance option in the final Clean Power Plan released last year. Even so, states can still get credit for energy efficiency programs implemented before 2022. GEO is working with its allies at the International Ground Source Heat Pump Association (IGSHPA), the National Ground Water Association (NGWA) and the Geothermal Energy Association (GEA) to alert state environmental agencies about how GHPs can contribute to power plant emission reductions by cutting peak power demand and fossil-fuel use onsite.
GEO Helping DOE Find Its “Geothermal Vision” The U.S. Department of Energy (DOE) Geothermal Technologies Office (GTO) is conducting a “vision” study to analyze geothermal growth scenarios for 2020, 2030 and 2050 across multiple market sectors, including geothermal power, direct use and GHP applications. The purpose of the study is to identify the potential for geothermal energy to serve as a key part of the nation’s energy and climate-change priorities, and to articulate a clear GTO investment strategy to achieve that outcome. GEO President Doug Dougherty was appointed to the Visionary Team to provide recommendations and review the process and strategic vision of the project. A forum at the IGSHPA 2015 Conference & Expo in October for involved stakeholders included industry representatives from GEO, IGSHPA and NGWA, as well as GHP team lead Dr. Xiaobing Liu (Oak Ridge National Laboratory) and Arlene Anderson (DOE/GTO program manager).
GEO Support of State Initiatives
GEO continues its priority of backing efforts by stakeholders in the states to encourage public policies that are favorable to GHPs as a renewable source of energy and the most efficient way to satisfy thermal loads of buildings. “GEO devoting its resources at the state level across the country to help gain recognition of the economic and environmental benefits of GHPs,” said Dougherty. “Working with our allies on a broad range of issues, legislative solutions, and regulatory battles is challenging, but we are seeing success as state associations and other stakeholders forge ahead with important and valuable initiatives.” Following are highlights of advocacy for the GHP industry in the states during 2015.
Advocates Working to Reform Title 24 Last April, GEO commented to a California Energy Commission (CEC) Workshop Docket, addressing problems with the Title 24 energy code for building permits that limits GHP installations in the state. The current Title 24 permitting process requires using laborious “work around” approaches to get GHPs approved through the state’s energy compliance software. The CEC is close to adopting its 2016 Building (energy) Code, which as currently written would exclude GHP heating and cooling technologies in California in favor of polluting natural gas heating and water heating in all new construction. With GEO support, the California Geothermal Heat Pump Association is working in good faith with the CEC on ways to develop compliance software that will reduce these barriers.
GEO-GAOI Efforts Pay Off with Expected ComEd Program Commonwealth Edison plans a residential GHP financial incentive program for Illinois. GEO and the Geothermal Alliance of Illinois (GAOI) partnered in the highly technical and sometimes tense legislative and regulatory work that paved the way to ComEd’s GHP program. Following their success in advocating legislative recognition of GHPs into Illinois renewable and energy efficiency laws, GEO and GAOI were directly involved in revising the state’s Technical Resource Manual to ensure GHP access to state incentives. GEO gained every concession it proposed, including allowance of fuel switching and recognition of GHP efficiencies. GEO believes the changes to Illinois law and ComEd’s GHP program can serve as a template for states with similar regulatory impediments. GEO and GAOI brought together a focus group of GHP installers and ComEd officials last March to foster positive additional feedback and cooperation for the utility’s GHP program.
Geothermal Included in Michigan Energy Bill Michigan State Rep. Aric Nesbit (R-District 66) intro-duced HB 4297 last March, to amend the Clean Renewable and Energy Efficiency Act (2008 – Public Act 295). Among other things, the proposal would specify that thermal energy from GHPs is clean and renewable, and therefore eligible for Renewable Energy Credits (RECs). The Michigan Electric Cooperative Association (MECA) and Michigan Geothermal Energy Association (MGEA) are taking the lead to pass this important legislation. GEO helped amend the bill with a Btu conversion formula to help assign RECs to GHPs. The bill passed the Energy Policy Committee in December, but with complications posed by wholesale power provisions, the measure didn’t come to a floor vote. At the same time, the Michigan Senate was tardy in voting their own energy bills out of committee. GEO will work with MECA and MGEA in pursuit of the legislation in 2016.
GEO, NEGPA Team Up to Change NH Cost Calculator In November, Emeritus Chairman of the New England Geothermal Professionals Association, Martin Orio (Water Energy Distributors, Inc. – Hampstead, NH) found an online heating and cooling cost calculator used by New Hampshire Climate Audit (NHCA). The calculator posted an unrealistically low Coefficient of Performance (COP) for GHPs of 2.75. NHCA officials referenced a paper produced by the Jordan Institute, a renewable energy promotion group in Concord, NH. Orio shared his discovery with GEO. “I immediately contacted Jordan Institute Executive Director Laura Richardson to question the validity of the referenced paper,” he said. “She admitted that the technical paper was dated (2006) and should no longer be used, and asked for current GHP ratings, which we provided. Richardson also agreed to accept additional documentation from Orio, which she will provide to NHCA organization with a request to update their cost calculator.
Thermal Energy Bill Including GHPs Signed into Law On April 7, New Mexico Gov. Susana Martinez (R) signed HB 263 into law, allowing Renewable Energy Certificates (RECs) to be issued to utilities for the use of thermal energy produced by geothermal energy sources. The law also sets standards for measurement of thermal energy and GHPs, and defines “useful thermal energy.” GEO Member Western Farmers Electric Cooperative (WFEC) led efforts to pass the legislation, which cleared the state Senate on March 18. “We now have a law that give RECs to electric cooperatives for the thermal energy they produce from the ground with GHPs,” said WFEC’s Eric Austin. More information about New Mexico’ Thermal Energy law is available here.
Geothermal Tax Credit and Exemption Bills Won and Lost Last summer, New York lawmakers passed two bills to benefit the GHP industry. On June 1, the State Assembly unanimously passed S2905/A2177a, to provide a 25% tax credit for residential GHP installations up to $5,000. And on June 9, the Assembly unanimously passed S4297/A5508, to exempt GHPs from the state sales tax. Despite a concerted advo-cacy effort by the New York Geothermal Energy Organization (NY-GEO)—which was joined and pushed by GEO—Gov. Andrew Cuomo (D) vetoed the bills on Nov. 20. Cuomo said the bills would have “signifi-cant revenue impact,” but promised to work with their sponsors “to best encourage the growth and use of geothermal energy throughout the State.” NY-GEO Executive Director Bill Nowak promised a best effort by the geothermal association to include both measures in the New York 2016-17 budget, sched-uled for passage by April 1.
Renewable Energy Standard Bill Signed into Law On June 11, Vermont Gov. Peter Shumlin (D) signed H. 40 into law, a Renewable Energy Standard that will “retool Vermont’s renewable energy programs and spur utilities to help customers cut costs and carbon emissions in heating their homes.” Among many other provisions, the legislation calls for an “Energy Transformation” program, which will allow Vermont utilities to provide leasing or on-bill financing to help customers make energy improvements to their homes, such as installing high-efficiency GHPs. Jim Ashley (now President of the New England Geothermal Professional Association) discovered that only air-source heat pumps were included in a weatherization incentive program in previous legislation, while GHPs were omitted. Through his effort with assistance from GEO, the error was corrected in H. 40, which included geothermal heating and cooling technologies in its first draft.
GEO Refreshes IGSHPA Alliance
IGSHPA 2015 Conference & Expo GEO Chairman Steve Smith (Enertech Global LLC – Greenville, IL) offered a passionate keynote address on Oct. 7 at the Opening Session of the International Ground Source Heat Pump Association (IGSHPA) 2015 Conference & Expo in Kansas City, MO. “What I bring to you today is a message of strength and unity,” he said, as he pressed the need for working together to ensure that Congress extends the federal tax credits that are set to expire at the end of 2016 for resi-dential and commercial GHP installations. “All of you are our voice—it can’t just be the voice of GEO members. To succeed, we need to include all the members of IGSHPA and NGWA. It has to be all of you. None of us can afford to wait for somebody else to move our goals forward. We all have to work together to be heard.” Along with Smith’s keynote address, more than a third of technical and other presentations at the IGHSPA 2015 Conference & Expo were provided by GEO members.
Joint Meeting Finds Common Ground As the IGSHPA 2015 Conference & Expo came to a close on Oct. 8, a quorum of Board Members from GEO and IGSHPA convened a joint meeting to discuss improving relations between the groups. In his introduction for the meeting, Smith said, “Both organizations are after the same thing: growth and success of the GHP industry. There is no winner and loser. We all win or we all lose.” Smith emphasized overcoming the breakdown in communication that has occurred be-tween GEO and IGSHPA. “We have shared priorities and goals we should work on,” Smith said. He proposed that discussion must start with regular contact between the staff of the two organizations. IGSHPA Board Chairman John Turley agreed: “Including NGWA, we all have different priorities, but we are all in this together,” he said. “The consensus here today is that IGSHPA and GEO want day-to-day interaction of our staffs.” GEO Chief Operating Officer Ryan Dougherty was designated as contact person and coordinator of state associations for the group. The meeting ended with agreement to:
- Craft an MOU to pursue issues of common interest for the benefit of the GHP industry.
- Involve NGWA and other groups in the new coalition formed by GEO and IGSHPA.
- Form a joint working group/task force to address issues facing the GHP industry.
- Coordinate and fund a joint research project and paper study by Dr. Liu to independently verify GHP reductions of GHGs on a state-by-state basis. (GEO)
GEO Signs MOU with IGSHPA
In November, GEO and IGSHPA signed a Memorandum of Understanding (MOU) to strengthen and expand the complementary relationship that currently exists between the two associations. GEO President and CEO Doug Dougherty and IGSHPA Executive Director Bob Ingersoll signed the MOU, recognizing the two organizations share a common interest in advancing the geothermal/ground-source heat pump industry. IGSHPA and GEO will establish a joint task force to coordinate the efforts of the organizations as related to advocacy, research and promotion of the industry; organizational committees will exchange information on technical and scientific public policy matters; and staff of both organizations will be in frequent communication about items of mutual interest.
GEO Webinar Draws a Crowd
Geothermal vs. Variable Refrigerant Flow In late-2014, GEO released scientific research that shows a GHP system offers 44% more efficiency in a large commercial building than a variable refrigerant flow (VRF) system. With financial and technical assistance from The Southern Company, GEO contracted a research team from Oklahoma State University and Oak Ridge National Laboratory to evaluate the performance of GHP vs. VRF heating and cooling systems installed at the American Society of Heating Refrigeration and Air-conditioning Engineers (ASHRAE) International Headquarters Building in Atlanta, GA. The team’s Final Report, Performance of the HVAC Systems at the ASHRAE Headquarters Building was presented during a 2-hour webinar on Feb. 4 that drew more than a thousand participants from across the country and around the world. The report is available at the GEO website, here. Two peer-reviewed articles by Dr. Jeffrey Spitler et al. in the ASHRAE Journal describing the project are available here, and here. You can view the webinar here.
GEO Launches New Website
In August, GEO announced its all-new website at www.geoexchange.org. The site is a robust Internet portal to the world of geothermal heating and cooling. It has been completely redesigned, with more intuitive access to content that offers information about geothermal technologies to potential consumers, plus valuable technical and policy information to industry professionals and decision makers. With regular industry news features and links throughout the industry, the GEO website is tuned to draw maximum traffic. At current rates, the GEO website attracts an outstanding million+ hits per year by over 300,000 unique visitors.
A popular feature is the Find-a-Pro Directory, which drives inquiries across the United States to GEO member companies. The GEO website also provides important updates about current GEO advocacy to promote the industry, including legislation under consideration by Congress and our interaction with state geothermal associations to help them institute laws and regulations that will bolster the industry. In addition, the GeoExchange® Forum provides a convenient way for potential customers to interact with geothermal heat pump experts and find answers to their questions. The Forum regularly features topics such as determining what type of system will best meet consumer heating and cooling needs; operating assistance; and environmental benefits of GHP systems.
GEO 2015 Administrative Highlights
GEO Board Expanded During its meeting on Oct. 1 in Washington, DC, the GEO Board of Directors confirmed by unanimous vote that new ClimateMaster President and CEO Richard Aldridge will replace Dan Ellis on the Board. The Board then unanimously voted to expand the Board from 7 to 9 members, including Mr. Ellis (Comfortworks) as a Director-at-Large. During a teleconference meeting on Dec. 11, the Board accepted Chris Mays’ (Emerson Climate Technologies) resignation, and his company’s later designation of David Hules as a new Board Member. The GEO Board now (Jan. 2016) includes:
- Chairman Steve Smith (Enertech Global LLC – Greenville, IL)
- Vice Chairman Keith Swilley (Gulf Power / Southern Company – Pensacola, FL)
- /Treasurer Phil Schoen (Geo Enterprises – Catoosa, OK)
- Member Richard Aldridge (ClimateMaster, Inc. – Oklahoma City, OK)
- Member Tom Huntington (WaterFurnace Renewable Energy – Fort Wayne, IN)
- Member Joe Parsons (Earthlinked Technologies – Lakeland, FL)
- Member David Hules (Emerson Climate Technologies – Sidney, OH)
- Member Dan Ellis (Comfortworks – Goldsby, OK)
- Member Open Seat
GEO Utility Membership Dues Slashed In other action, the GEO Board of Directors unanimously voted to lower association membership dues for utilities from 5 cents per meter with a $25,000 cap to a stratified dues structure depending on business model. The new dues are $2,500 per year for Investor-Owned Utilities, $1,000 per year for Generation and Trans-mission Cooperatives, $500 per year for Municipal Electric Utilities, and $500 per year for Electric Distribution Cooperatives. The change is meant to foster greater participation with GEO among all types of utility service providers. (GEO)