SOLAR TODAY - January/February 2011

TABLE 2. Annual Energy Savings from a 3-Ton Ground-Source Heat Pump (GSHP) Retrofit vs. Alternatives
GSHP system
$709

cost for Alt #1, it is close to the cost of Alt #2
($9,102 vs. $8,642). With currently enacted
federal tax credits, which offset 30 percent
of the installed cost of GSHP systems (valid
through 2016), the cost premium of GSHP
system can be further reduced.
Table 2 (at right) summarizes the
national average annual energy expendi-
tures for the 3-ton state-of-the-art GSHP
system and the two alternatives in a typical
single-family home. As indicated, on national average, the state-of-the-
art GSHP system saves $469 and $332 each year compared with Alt #1
and Alt #2, respectively.
Compared with Alt #1, on national average, the simple payback
period of the GSHP retrofit at current market prices is 14. 4 years.
It falls to 9. 8 years if the 19 percent cost-reduction potential is fully
realized. Even without cost reduction, the simple payback falls to 4. 3
years if the 30 percent federal tax credit is accounted for. The simple
payback period for the GSHP retrofit becomes much shorter when
compared with the state-of-the-art conventional system (Alt #2). With
the 19 percent cost reduction, the simple payback period of the GSHP
retrofit is only 2. 4 years. When compared with Alt #2, investments in
the GSHP retrofit at current market prices show a positive net pres-
ent value (NPV) over the typical 20-year service life of a heat pump,
even when future energy cost savings are discounted at rates as high
as 14 percent. However, when compared with Alt #1, investment in
the GSHP retrofit at current market prices will yield a positive NPV
only when the discount rate is lower than 8 percent. If the 19 percent
cost-reduction potential of GSHP systems can be fully realized, invest-
ments in the GSHP retrofit will have positive NPVs even with higher
discount rates. With the existing 30 percent federal tax credit, invest-

National average of annual energy expenditure
for space conditioning per single-family home
National average of annual energy expenditure savings per single-family
home from GSHP retrofit compared with alternative systems
$469
$332

Installing a ground-source heat pump begins with drilling a few small
vertical bores a few hundred feet deep (for a vertical-loop heat exchanger),
or digging a few 6- to 8-feet-deep trenches a few hundred feet long (for a
horizontal-loop heat exchanger).
If 20 percent of U.S. homes replaced
their space-conditioning and water-heat-
ing systems with state-of-the-art gSHP
systems, it would yield significant benefits
each year: 0.8 quad btu of primary energy
savings, 54.3 million metric tons of CO2 emis-
sion reductions, $10.4 billion in energy cost
savings and 43. 2 gigawatts of reduction in
summer peak electrical demand.