Cost-Benefit Analysis
Cost-Benefits
The cost benefit analysis is naturally dependent on the application, but we will demonstrate how this can be estimated and evaluated using an example.
A school board of an existing 150,000 sqf school complex is contemplating installing a geothermal HVAC system to lower their annual utility expense and become more of a “green” advocate by example. Located in the Philadelphia area, the school is heating load dominated (5050 heating degree-days; 1100 cooling degree-days). At 400 sqf/ton of HVAC, the school peak design heating load is approximately 4.5 MBTUH (375 tons). Like all schools, there is a substantial ventilation load, which, in this instance, is reduced through the use of natural ventilation and an economizer with an enthalpy wheel for heat recovery.
After 12 years of operation, the school is considering replacement of their current #2 oil burning furnace with a system of ground water heat pumps. The heat pumps will be used also to provide cooling when needed during the school year in place of the chiller/cooling tower. Cooling is needed especially at the start of the school year, but also mid-day year-round, when interior rooms experience heat build-up.
Two geothermal system designs are under consideration. The first is a closed-loop system requiring 168 grouted wells 400’ ft deep to be buried in the school yard that borders the rear and sides. This system of closed-loops is representative of the vast majority of school installations. The second design requires a group of 25 standing column wells (SCW) which are scheduled to be drilled 1200’ deep. Both systems meet the same design heating load and are more than adequate to serve the current cooling load.
The land area occupied by the well field is not a limiting issue, since the wells are buried and the land will remain available for school yard activities. Nonetheless, since the soil will be disturbed and require remedial grading after drilling, it is a small factor in the board’s decision. In the case of the closed-loop system, the geothermal well field requires 1.76 acres of land spanning the combined schools (1025’ x 75’) arranged 42 wells x 4 wells deep. The SCW geothermal well field, on the other hand, will occupy 0.59 acres, arranged 5 rows of 5 wells each. This three-fold reduction in land area occupied by the SCW system was impressive and became more of a factor than originally anticipated in the school board’s decision.
A comparison of installed costs for the drilling, loop installation and trenching is given in the Table.
| Geothermal Design | Number of Wells | Installed Cost($M) |
|---|---|---|
| Closed Loop | 168 | 1.236 |
| SCW | 25 | 0.762 |
The comparative results indicate a 38% capital cost savings using SCW rather than the typical closed-loop geothermal approach. Clearly, the board was impressed with this result, but wanted to understand the risks in going forward with the SCW design option.
What are the risks and issues in going forward with the SCW design? The slide below summarizes the qualitative benefits and risks of each geothermal design.
Water quality and maintenance in the form of submersible pump replacement appear to be the most significant risk factors for the SCW option. The capacity of the wells was not deemed to be an issue since water that is pumped from the wells is always returned to the wells from the building, so that nothing is netted from the aquifer.
Typical water in the area is somewhat acidic, but good quality and suitable as a potable water source for private residents who have not switched to a public utility. A review of the drill logs, water assays and resident satisfaction with their well, suggests that, once the pH is brought under control, there is little else to be concerned with regarding water quality and its potential impact on heat exchanger or heat pump longevity and maintenance.
Submersible pumps used in private wells in the area appear to last 12-20 years, depending on the amount of daily usage. The cost of replacement of the 33GS pump used in the SCW planned for the school is $1800 including a half day for service. Assuming that pumps would last for 12 yrs in this HVAC setting, the cost of replacing all 25 well pumps would be $45,000 in today’s money, or $3750 annualized expense. After 12 yrs, the accrued expense of replacement is only 10% of the capital savings from switching from closed loops to SCW design.
When considering the switch from #2 heating oil to run the furnace for building heat versus operating a ground water heat pump (GWHP) system, the annual savings can be calculated from a review of billing records. The slide below summarizes the argument favoring the switch.
A 54% annual savings is anticipated from switching from heating oil to GWHP system. Additional benefits carry-over to the cooling season as the operating EER of the GWHP will be greater than the chiller/cooling tower or an air based HP system.
If we assume that approximately $0.85/sqf of the average annual utility expense is directly attributable to HVAC, and apply the 54% savings, one can estimate a savings of $68,850 annually employing the geothermal system. The simple payback for the SCW system, assuming a 10% tax credit on the installed cost (see the Table), is under 10 yrs.