Federal Investment in GHPs Tops $200 Million

February 1, 2002

Federal facilities bought into geothermal heat pump (GHP) systems in a big way in 2001, bringing the total Federal investment in GHPs, also referred to as ground-source heat pumps or geoexchange systems, to about $200�million. John Shonder of Oak Ridge National Laboratory (ORNL), estimates that about 40,000�tons of GHP capacity are now installed in the Federal sector, which equates to at least 15,000 individual GHP systems in U.S. Federal buildings. (Estimates of Federal investment in GHPs are based on Super ESPC statistics, FEMP's database of utility-financed projects, and records of Federal projects in the core team's GHP construction and maintenance cost database.)

In late 1998, in response to agencies' interest in GHP systems, FEMP initiated a program offering technical and financing assistance specifically geared to the application of GHP technology. Since then the annual Federal investment in GHPs has grown from $6�million in 1999, to $13�million in 2000, to $74.4�million in 2001, which includes about $47�million under Super Energy Savings Performance Contracts (ESPCs), $24�million under utility energy services contracts (UESCs), and $4�million funded by appropriations. The momentum is going strong, with another $70�million worth of Federal GHP projects already under development.

Federal investment in geothermal heat pump products has been as follows: Using appropriated funds, it has been $3 million in 1993 and 1994, $2 million in 1995, $1 million in 1996, $2 million in 1997, $5 million in 1998, $2 million in 1999, $3 million in 2000, and $3 million in 2001.  Using utility energy service contracts and/or energy savings performance contracts, Federal investment has been zero in 1993, 1994, and 1995; $23 million in 1996; $2 million in 1997; $11 million in 1998; $3.5 million in 1999; $10 million in 2000; and $70 million in 2001.  FEMP's geothermal heat pump program began around 1999.
Federal investment in GHP projects surged to an estimated $74.4�million in 2001. (UESC/ESPC numbers include the $19�million Fort Polk ESPC project in 1996 and a $9.4�million UESC project at Little Rock Air Force Base in 1998.)

FEMP's GHP program was established to make the energy- and cost-saving benefits of GHPs easily accessible to all Federal agencies by overcoming technical obstacles and providing a vehicle for financing these projects. FEMP's long-term goal was to help bring GHPs into the mainstream to lower their cost and to fully realize their potential to save energy and help meet energy goals in the Federal sector.

FEMP established the Technology-Specific GHP Super ESPC to (1) provide Federal agencies with access to qualified providers of GHPs, (2) provide a means of financing Federal GHP projects, and (3) generate enough activity in the industry to boost GHPs into a mainstream technology.

FEMP's GHP team, which draws on the ongoing GHP research and expertise at Oak Ridge National Laboratory, was formed to provide a reliable, unbiased source of information and technical assistance for Federal agencies. "We like to say we level the playing field, giving Federal customers access to the same level of technical expertise the ESCOs and utilities rely on," remarked Shonder. The core team supports projects of all stripes, whether funded through ESPCs, UESCs, or appropriations.

Douglas Sattler of Alliant Integrated Services (formerly known as Energy Performance Services, Inc.), one of the GHP Super ESPC energy service companies (ESCOs), remembers ORNL's early role in GHP research: "Though the technology has been available since the 1950s, GHP systems were considered by many agencies to be new and unproven before ORNL's evaluation of the 1996-97 Fort Polk GHP project," where GHPs and other energy conservation measures were installed in 4,003 family housing units under a site-specific ESPC. "That evaluation revealed that GHP systems are based on a sound, economically viable, energy-efficient, renewable technology. FEMP has been successful in mainstreaming GHP technology through the GHP Super ESPC, but also because of the FEMP GHP core team at ORNL."

Sattler observes that the core team's affiliation with DOE gives them credibility with agency customers. "The GHP core team is a valuable asset in that they have the technical expertise to review the ESCOs' engineering and assist with price-reasonableness determinations. Federal installations usually don't have that expertise and some would otherwise not agree to pursue a GHP project with an ESCO for that reason alone," Sattler said.

Thomas Mitchell is CEO of Co-Energy Group, the GHP designer and provider that installed the heat pumps at Fort Polk (and in other ESPC and UESC projects across the United States). Mitchell said, "FEMP's GHP core team is the reason a lot of our projects get installed. The unbiased information provided by the core team gives Federal customers the confidence they need to go ahead with the project."

GHPs Hit the Mainstream at Fort Jackson

The burst of investment in 2001, and the range of GHP projects, signify the breakthrough of GHP technology into the mainstream. In September 2001, the Army's Fort Jackson in South Carolina awarded a $19 million delivery order that includes $10 million for GHP retrofits under the Southeast Regional, "all-purpose" Super ESPC rather than the GHP technology-specific Super ESPC. (See article on page 10.) This shows that the industry infrastructure to support GHP technology is growing, FEMP's GHP strategy is paying off, and the reputation of GHPs as a proven, efficient, and cost-effective technology is now established.

FEMP's efforts to give agencies easy access to the benefits of GHP systems have depended heavily on its partners in the energy industry—ESCOs, utility companies, and subcontractors who design and install GHP systems. An attribute seen in every successful GHP project is a healthy working relationship between agency customer and service provider.

Robert F. Payne of DukeSolutions commented on the partnerships that made the Fort Jackson project work: "I am very proud of our positive working relationship with FEMP. During development of the project, the FEMP technical support team was outstanding. They were professional, objective, and helped us and Fort Jackson consider options that significantly reduced construction costs. There is no doubt in my mind that our success at Fort Jackson was in large part due to the years of programmatic effort and refinement of GHP renewable energy technology by DOE."

FEMP project facilitator Robert Baugh said that the Fort Jackson project went well because all parties were committed to making it work. DukeSolutions developed a project that met Fort Jackson's needs and made economic sense, and Fort Jackson's acquisition team kept site command informed through routine briefings. "When time came for approval and commitment, site command was already in the loop and approval of the project was seamless," Baugh said.

Navy Benefits from First Delivery Order Under GHP Super ESPC

The first delivery order awarded under the GHP Technology-Specific Super ESPC went to Energy Performance Services, Inc. (now Alliant Integrated Services) for a $5�million project at the Naval Air Station Patuxent River in Maryland. Sattler said that the project is a prime example of what the FEMP team does to help agencies bring their projects to reality. "The base didn't have the expertise to perform detailed design reviews or evaluate the computer models associated with the proposed measurement and verification plan. The FEMP team stepped in and did the necessary evaluations while supporting a very aggressive project schedule. They also made several value-engineering suggestions to reduce the capital cost of the project that were incorporated into the project by Energy Performance Services," Sattler said.

Co-Energy Group, the project designer for Patuxent River, is currently working with the base on a future GHP project. Mel Green, base energy awareness manager, chooses GHPs for very straightforward reasons: "Each time a life-cycle cost analysis is performed, geothermal tops the list, and our experience has been that there is little to no maintenance."

GHPs Overseas in U.S. Embassy

The GHP Super ESPC can be used for Federal facilities anywhere in the world, and the Department of State is finding GHPs especially useful in humid or extreme climates. In Seoul, Korea, the Trane Company installed GHPs in the Ambassador's residence in the U.S. Embassy and in 157 State Department residences. GHPs replaced electric air conditioners and fuel-oil-fired heaters, eliminating all use of fuel oil and resulting in a net reduction in electricity use as well. Energy and maintenance savings will pay for the $5.9�million project in 19�years. The State Department is also considering GHPs for U.S. employees' residences in Tanzania.

Utility-Financed GHPs at Camp Lejeune

FEMP's utility partners have not hesitated to help their customers acquire GHPs, and one of the largest Federal projects ever financed under a utility energy service contract (UESC) was for GHP retrofits. U.S. Marine Corps Base Camp Lejeune last summer finished retrofitting 2,089 family housing units with GHPs under a $15�million contract with Carolina Power & Light. (See "Camp Lejeune Gains Utility-Financed GHPs and Superior Customer Service," FEMP Focus, September 2001.) Kenneth Day, Housing Director at the base, said, "We have really bought into GHP here at Camp Lejeune, considering that I have 4,447 family housing units and 2,089 have been outfitted with GHPs. We're studying GHP feasibility for at least an additional 250 housing units, and we're considering GHPs for more units in the future."

Financing GHPs Two Ways at Marine Air Corps Station Beaufort

The Marines at Air Corps Station Beaufort in South Carolina have bought into GHPs with as much enthusiasm as Camp Lejeune. Beaufort is investing more than $22 million in two GHP projects, one under the GHP Super ESPC and one under a UESC with Bill Eisle's team at South Carolina Electric & Gas. The Super ESPC project was awarded in September 2001 to Trane Company for commercial-type GHP systems to be installed in a chapel, theater, gymnasium, hangars, and office buildings. The project also includes energy management controls and upgrades to lighting and conventional HVAC systems. Savings of $483,000 per year will pay for the $11�million investment over 15�years.

Beaufort retrofitted 1,236 family housing units with GHPs in a UESC project completed in November 2001. The base requested the GHP core teams' help in reviewing preliminary designs for the $11.5�million project, which will save $800,000 annually. "The core team really came through for us," said Neil Tisdale, Utilities Director at Beaufort. "I believe their assistance was key to the technical and financial success of the project."

These are just a few milestones in the emergence of GHP systems into the mainstream, but there are many notable projects to learn from. Federal facilities are now using GHPs in all kinds of buildings, and benefiting from energy and cost savings, improved comfort, and minimal maintenance costs.

For more information about FEMP's GHP program or Southeast Regional Super ESPCs, please contact Doug Culbreth of the DOE Atlanta Regional Office at 919-782-5238 or carson.culbreth@ee.doe.gov. John Shonder of the FEMP GHP core team can be reached at 865-574-2015 or shonderja@ornl.gov, or visit the GHP pages on FEMP's Web site at www.eere.energy.gov/femp/financing/espc/geothermal_heat_pumps.html.