The demand for geothermal HVAC is rising. One Indiana company is capitalizing.
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Riding a recent wave of environmental consciousness, consumers, business owners and government officials are all looking to implement new technologies to double down on efficiency and cost benefits. However, a trending HVAC method is anything but new to the market.
Fort Wayne-based WaterFurnace Renewable Energy Inc. has banked on geothermal technology since 1983 and now reports rapid growth from that commitment. By installing residential and commercial pumps across the country, it has grown to be a leader in this burgeoning industry.
“We’re at the right side of history, on the forefront of a megatrend,” said Tim Litton, WaterFurnace director of marketing communications.
Geothermal heat pumps use the constant temperature underground, which is around 55 degrees, to heat and cool homes and buildings. These pumps have been installed since the 1940s, but they’ve lacked household name recognition. New tax credits and incentives, costs and extreme weather are changing that.
“If you look around the country, most areas are moving further and further away from fossil fuels to clean electric solutions,” said Litton.
The company has 250 Indiana employees and is approaching 1 million units manufactured in the state. This type of work can be outsourced, he said, because the units have to tap into the ground. Plus, he said it’s a high-paying profession.
“It’s nice that one of the main players in renewable technologies comes from Indiana,” he said
Based and manufactured in Indiana, WaterFurnace sends its product all over the country with independent businesses carrying its product and a network of 2,000 installers on hand.
About the tech
The pumps can come in different forms, including vertical and horizontal installment and in ponds. This can depend on what’s available to the development, such as whether a person has a big or small backyard. Instead of using the air from outside where it could be a boiling 105 degrees or a frigid below zero, these pumps always swap air with a consistent temperature. The technology isn’t affected by intense temperature swings, Litton said.
Jerome Dumortier, IUPUI O’Neill School director of research and energy economics expert, said it’s that constant temperature underground that is important. It can be warmer or colder than the typical 55 degrees, he said, but the results will be the same. With air-to-air heat pumps, which source outside air, he said those systems can be variable in extreme temperatures since they have to adapt to ever-changing conditions.
Litton said heat pumps are at least twice as efficient as a typical heating and cooling system. Dumortier said these pumps are likely the most efficient HVAC technology on the market because they just run on electricity and not natural gas.
This technology can be used in most environments and implemented for several types of buildings, Litton said. He pointed to the pond just outside his window and said the company’s 115,000-square-foot headquarters and factory are climate controlled by the pump within it.
WaterFurnace has installed units in all 50 states and sees the most demand for installments in the Midwest and the Northeast. Litton said that’s because they have traditional hot and cold seasons. The west coast is lagging, he said, because there are more labor and regulation costs.
“The dirty secret of an air source heat pump, or an air conditioner, is that they are the least efficient when you need them to be the most efficient,” Litton said. “So rather than exchanging heat with the air, we exchange heat with the ground, which is much more efficient.”
Dumortier also mentioned these types of systems allow more reliance of the resources of your region, instead of leaning on natural gas. He mentions the politics of natural gas relating to Russia and its invasion of Ukraine and how gas availability hangs in the balance for Europe. With this technology, he said consumers can be independent of outside-sourced natural gas and its routine price fluctuations.
What’s the cost?
Forbes estimates installing a geothermal pump system can cost between $13,000 and $32,300 with the average middle cost being $24,500. Typical HVAC installation can vary with interior size, materials and set-up, ranging from $5,000 to $20,000.
Dumortier said the problem historically with this technology has been the cost. Drilling and ground upheaval will remain a static cost, even if the technology becomes cheaper, he said. However, he said subsidies are making it more attainable and those who do install such technologies will see savings over time within 15 to 20 years.
The 2022 Inflation Reduction Act offers a 30% tax credit on geothermal pumps. States like South Carolina and New York also offer 25% credits in addition to the federal incentive. Indiana also has a tax deduction process. Some companies are also offering saving for installation as well.
Litton talks about federal and state incentives, how WaterFurnace is making its product more accessible and how excited he is about the future of the technology.
As for low and moderate-income populations, Litton said some states are adopting programs specifically tailored to make this installation possible for that income bracket. Many companies and officials are realizing how cost-effective it is to switch to clean energy, he said. If more utility companies decide to carry this technology, Litton said it will continue to make it more accessible for people to install in their homes.
Those government investments, Litton says, provide stability for the industry.
WaterFurnace has added options to their financing, including elongating the repayment period to up to 20 years. This way, people can still benefit from the cost savings of the technology, he said.
WaterFurnace wants to get a jump on when people normally replace their heating and cooling: when it stops working. They want to build technology awareness and brand recognition, he said, so when that system does fail, the likely freezing or sweating customer is scared away by the idea of an unfamiliar, more costly solution.
“We realize to be successful, we have to advertise and introduce people to geothermal before their system ever breaks down,” he said. “The least sexy thing in your house is probably your furnace and your air conditioner.”
Looking to the future
There aren’t a lot of geothermal pump companies, Litton said, so WaterFurnace’s competition is other technologies like air source and heat pumps as well as people sticking to the status quo. However, he believes some energy alternatives work perfectly with their product, like solar.
“People who are interested in having Net Zero homes that generate as much power as they consume,” he said. “Geothermal is your best shot to do that because it is hands down the most efficient way to heat and cool.”
With the current price point in some places, Dumortier said he’s not sure this could be a widespread solution. Air-to-air pumps may be an alternative, he said, for people unable to cash in on tax credits and are still struggling with price but want a more sustainable HVAC system. Forbes said the average cost of a heat pump is $6,000 but can vary.
On the contrary, Litton foresees this technology becoming more commonplace with adoption increasing and the incentives piling up. After working at the company for 18 years, he said this is the most optimistic they’ve been.
“We’re a purpose-driven company, and we truly believe we have the best solution for all Americans,” he said. “It’s a net positive. You will get more out of it than you put into it.”