Renewable Energy Substitution Choice

Renewable Energy Substitution Choice --- Potential of Geothermal Heat Pump (GHP) Abstract This paper analyses the potential of geothermal heat pumps (GHP) for increasing social welfare by supplying a constant source of energy, avoiding energy management problems that result from varying energy supply; and enhanced system efficiencies when combining with other energy sources from both engineering and economic perspective. To realize the future potential of geothermal energy, the paper reviews policies and action that may increase the installation rate of GHP. Introduction The use of renewable energy has gained a lot of interest in past years, due to the increasing acknowledgement of environmental problems and its on wildlife and local residential health and life quality. With up to date renewable energy technologies, increasing numbers of people have shifted their daily energy sources from conventional sources and many more are begin to consider shifting their daily supplier. In considering substitute renewable energy sources, people hear a lot about solar, nuclear, wind energy choices, while many lack knowledge of geothermal heat pumps (GHP). When people do actually mention geothermal energy, their first impression is often that it is expensive and inefficient. This paper summarizes how usage of GHP may not be a very expensive renewable energy source, and discusses its potential when combined with all other renewable energies. What is geothermal energy? Before getting into details, it is necessary to make concrete the concept of geothermal energy. Geothermal energy is the thermal energy generated by the core of the Earth and stored inside the Earth in its mantle. Typically we divide geothermal energy into two categories depending on the initial measurement of water temperature coming out of the ground--- highenthalpy geothermal energy (HG) and low-enthalpy geothermal energy (LG). High-enthalpy geothermal refers to high-temperature geothermal energy, that produces water temperatures measured above 302 Fahrenheit; while low-enthalpy geothermal energy refers to lowtemperature geothermal energy, producing water temperatures measured below 302 Fahrenheit, and this is the energy source collected by geothermal heat pump (GHP). Because of the widespread impression that geothermal energy is a very expensive, inefficient energy source, people often put geothermal energy at the bottom of their list when considering about substitute energy sources. This makes sense concerning HG energy which is collected from deep inside the ground, and there are reasons it is costly. When exploring the fit spot for HG, businesses need to go through all available data related to field studies to find the fit spot to drill, and they then need to examine the source with geothermometers to find out the degree of temperature and deepness of the source. If there is access to the actual geothermal fluid, acidic levels will be collected and evaluated, and chemical analyses will be performed. After that, geological structure will also be explored by radar. Using the data collected, businesses can now create a basic geological map of geological structural, lithology, volcanology activity, and potential geo-hazards and environmental impact. The largest challenge that such exploration faces is the feasibility of current existing technologies, and there are several things that can go wrong. First, if there is not access to the actual geothermal fluid, it is possible that most updated equipment may not be adapted to the acidic level or unexpected chemical compounds may not be able to dissolve in the hot water that drills out. Secondarily, geological structure is observe using radar. Radar can only procide information about layers underground, without identifying materials. There is a possibility that even the most updated equipment may not have the capacity drill through the materials. Failures to reach the desired frill depth can make the costs ascend steeply and quickly. Drilling is extremely expensive. In 2020, the average market price for 100 feet of trenching is about $800, with the lowest price $400 and the highest price $1,200; this is an average of $4 to $12 per feet. On the other hand, the average market price for 150 feet of drilling is about $5,500, with the lowest price $1,500 and the highest $12,000; this is an average of $10 to $80 per feet. In order to reach HG at locations not near a volcano, it is usually required to drill around 5000m deep to reach temperatures of 338 Fahrenheit, this adds up the total cost for one time drilling to be about (5000m=16404feet) $164,040 to $1,312,320. If there is mistake or unexpected exploration of certain materials that equipment not capable to drill through, costs will build up really fast. Plus, drilling is not the only high price in the bill when installing HG, the equipment for HG is also very expensive, costing around $18,000 - $25,000. Equipment fee on its own is almost double the installation fee for GHP. However, the advantage for HG is that it not only can provide direct heat and hot water, it can also use steam to create electricity to satisfy daily house hold demand which is something that GHP cannot achieve with the most updated technology. According to N.Galanis (2009), research on generating electricity from low temperature sources to provide temperature between 176 to 302 Fahrenheit has been conducted by using fluid that will condense and expand in a lower range, and take advantage of the temperature differentiation. Power plants using conventional processes and unconventional fluids have the most potential of generating electricity from low temperature sources. If this technology is released into the market, GHP will have all functions that HG can provide. To be able to generate electricity is significantly important for GHP to reach the goal of self-sustaining and absolutely zero emission, but at this point its applicability is limited. However, it can still provide a great deal of value. How Geothermal Heat Pump (GHP) Functions? Unlike HG which is very geographic limited or requires expansive fee to drill deeply into the ground for high temperature to provide both heat and electricity, GHP is more suitable for the majority of areas which do not have proximity to near-surface heat, such as being near a volcanic source. Nevertheless, GHP in locations such as Massachusetts is suitable for stabilizing house temperature by utilizing the constant temperature below the surface of ground. According to Sanner.B(1993), geographically, the temperature of the earth under 10 feet is constantly stable between 50 to 60 Fahrenheit throughout whole year. GHP gathers this LG energy below the ground by circulates heat-conveying fluid in between underground and house through a closedloop which does not attach underground water. There are two installation options for underground GHP pipeline. One is drilling into the ground horizontally to reach a higher temperature and gather the heat deep in the ground; this option is usually the choice of installation for houses without a large yard area and the majority installer are city or town residents. The second installation option is to extend a hundred foot pipeline vertically and to spread out the pipeline in a large area to increase the contact surface of the pipe. During the winter, the heat pump gathers temperature from underground by cycling the heat-conveying fluid inside the pipeline to absorb the heat from underground, then pump the fluid to your home to release the heat and absorb cold inside the house and pump the cold fluid back down to the ground again and start a new cycle. During summer, the fluid inside the heat pump absorbs the heat from house, then the device pumps the fluid down to the ground to release the heat, absorbs the coolness underground, and brings it to the house, reducing or eliminating the need for air conditioning. By repeating this cycle over and over again, heat GHPs can equalize your house temperature with the stable underground temperature and keep your house temperature in between 50 to 60 Fahrenheit the whole year. However, GHP consumes a certain amount of electricity to be able operate the pump and keep the circulation active. Since GHP itself cannot supply any electricity, an amount of electricity needs to be supplied by some other source. If the investigation of low temperature conversion to electricity shows commercial viability, GHP can start to supply its own electricity and become fully self-sustaining. But with the technology that we have today, GHP can only get electricity supply by combining with other energy sources. Why is GHP a good choice? Nowadays, there are many renewable energies to choose from to have a house reach the target of zero CO2 emissions. Combined energy choice that includes GHP is better than a single choice of any other renewable energy that is currently being chosen, such as solar, wind, or hydro energy. Inability to provide energy constantly is the biggest challenge that other renewable energy sources face, because our current technology is not well developed to store extra electricity provided by these methods during off-peak hours and supply the extra energy during periods of peak usage. For example, a house installed solar panel can only gain electricity during the day-time when there is enough sun light; but during the night-time when there is not enough sunlight provided, the solar panel cannot provide enough electricity to satisfy the demand of single household. The ability to store energy is very important for renewable energy. Without this ability, what we commonly facing today is something called the California Duck Curve (Figure_1). The California Duck Curve is a famous curve representing a problem that electricity grids are facing with their daily demand. It clarifies the disadvantage of renewable energy --- that it is unstable and lack of sustainability as part of the social welfare. California is one of the states in America that has large accessible to the sunlight and is very suitable for installing solar panel. Therefore, many community neighborhoods inside California chose to install solar panels as their electricity source to reduce CO2 emission as well as their electricity bill per household. However, research and data shows that after more and more neighborhoods convert their electricity source to solar panel, there is a reduction in the demand of electricity grid during day-time and an increasing demand during the night-time. The increasing gap of electricity demand in between day-time and night-time became a problem for local electricity grids. Electricity grids cannot fully receive their profit that they were used to receiving before renewable energy took over the local market. In the past, the electricity grid supplied electricity throughout the whole day, and though there were peak hours and non-peak hours, the gap was not too large, and they could operate profitably. But what they get right now is close to zero demand during the day-time and full capacity requirements during the night-time, and they are barely or even not making any profit. “Actual duck curve shown in brown, representing data from March 27, 2017 in Los Angeles Department of Water and Power territory. The net load (brown) represents the load without solar energy (dotted blue) minus the available solar energy (orange).” Behdad, K., Joan, O., & Lauren, C. (2020) Why is the gap an important thing to study and why are grids losing money right now? When the grid was functioning throughout the whole day, even with peak hour and non-peak hour, the summed up utility rate are making the electricity grid prophet within a reasonable price that can be accepted by the majority of population (The price of the product equals cost plus transportation plus maintenance and risk). As more residents changed their electricity supplier to solar panel, the demand for electricity grid reduced dramatically. This reduction of demand has led to two separate situations: 1) If the grid chooses to keep making profit, they have to increase the price of utility as when demand larger than supply and not being satisfied, high utility increases price of product, when demand smaller than supply, low utility decreases price of product. But, increasing price of electricity will eliminate the accessibility of lower level householder -- people who cannot make enough money to cover their higher electricity bill, and the high price of solar panel equipment and installation fee, and this further lowers the quantity of life for these people. As people need to pay more to maintain their basic needs of energy without a changing salary, they will have less purchasing power for other necessary needs like food, clothing, and house maintenance, and this will further increase the gap between rich and poor which is already a harsh social problem faced by most states of America. 2) If electricity grids choose to not increase their utility price, they will make negative profit and end up in bankruptcy. Yet even those residents who can supply their own energy during the day still need it at night. The total unit of electricity to be provided by grids is dependent on their mechanical capability: before renewable energy took over the local market, the number of exist electricity grid are just right to satisfy the demand, reserve some capacity for emergency, at the same time making profit. With many grids going into bankruptcy, at one point, supply will not be able to satisfy the sudden increase of demand during night-time even grids give up with reserves for emergency use and their machines are running at the maximum capacity line to satisfy the demand. Therefore, the common situation is that the states are usually paying extra maintaining fee to remain the opening of enough electricity grid to satisfy the demand without raising the price to a very high level. So, the social welfare will reduce due to the reduction in the profit of utilities and increasing maintaining fees. In order to solve the problem of reduction in social welfare caused by renewable energy, researchers have been working on the development of storage, but it remains expensive to produce at this stage. With the support of electricity storage equipment, renewable energies can produce as much as they can during their most feasible hour and save the energy for later, or small numbers of electricity grids can run full capacity the whole time and save energy produced earlier for the peak hour to come. However, we do not have economically feasible electricity storage technology in the market right now. This lack of storing equipment provides enough reason to consider the biggest advantage of GHP compared to other renewable energy. Since GHP is collecting heat from earth underground surface, it is able to provide constant heat throughout the whole year at any time no matter what happens aboveground. If all residents can install GHP energy sources on their own, the average total bill towards energy may shift a bit upward for the first few years, but there is a lot of potential for subsidies to push down the price, as discussed below. The importance of combining solar, wind, and other intermittent sources with a constant energy source like GHP is that it aims to reduce the losses in social welfare. When heating is completely from constant renewable energy, that electrical demand will not show on the data of electricity grid at all, because each house hold can selfsatisfy on their own. In other words, once a household has their heat reduced by constant renewable energy sources, it is reduced all time. On grid and community side, this choice would efficiently reduce the CO2 emission as well as the unnecessary cost of a grid maintenance fee because once the GHP reduces the demand of electricity usage, it will reduce it at night as well- eliminating the Duck Curve problem which was caused by the inability of solar to provide electricity at night. In this case, the social welfare has increased as many people reduce the usage of electricity without increasing maintaining fee for electricity grids and these funds that are saved can now be used for other purposes. Cost of Energy Many people may argue that GHP can only return the profit in a 10-year range or longer after installation and GHP only has an average life cycle of 25-30 years. Why would one not just take the risk and wait for scientists to improve storage systems? To answer this question, we first need to be clarifying that technology is not something that can be promised. If research does not result in finished success, then there is nothing you can do about it. Beside this, we also have to talk about the energy efficiency and losses. When heating up the space from a lower temperature, it is always more energy consuming than starting it from a higher temperature. According to Heidric.M(2016), “If the composite of two thermodynamic systems constitutes an isolated system, then any energy exchange in any form between those two system is bounded.” And Brenn.J(2010), “Different temperature levels of the ambient heat influence the efficiencies of heat pump.” After considering all situations including CO2 emission and space heating efficiency, electrically driven systems – electricity heat pumps (EHP) have the lowest system cost, but have the highest CO2 emission and lowest efficiency degradation; natural gas driven system – natural gas heat pumps (NGHP) has less CO2 emission compare to electricity heating with a reasonable price, but its efficiency degradation is lower than electricity heating with increased flow temperature. Compare to these two traditional heat pumps, GHP is definitely a better choice as it has high efficiency degradation and lower cost. Although, GHP also uses electricity to active heat pump, but unlike EHP which directly turns electrical energy to thermal energy, it turns electrical energy to kinetic energy to move the thermal energy, and this is three times more efficient than direct thermal conversion. With installation of GHP, temperature of the space can be stable in between 50 to 60 Fahrenheit. For the NGHP and EHP user, installing GHP can aim to decrease the temperature flow and increase the efficiency; for other renewable energy user, GHP can aim to increase the efficiency of space heating and satisfy their self-sustaining life with a higher quality. Therefore, even if the storage system for other renewable energies are fully developed, GHP can still aim to stabilize the temperature, make other energy sources more efficient, and raise life quality. Another disadvantage for other energy sources is losses during transportation and transformation. According to the 2015 statistics survey of “Main Space Heating Fuel” provided by EIA, in New England and Middle Atlantic area, 11.4 million houses use natural gas, 2.8million houses use electricity, 4.8 million houses use fuel oil, 0.9 million houses use propane, and 1 million houses using wood. This survey shows about 54% of household use natural gas as main space heating fuel. The average cost of heating the average Massachusetts household by fuel types is: Natural Gas $1,082; modern wood heating $1,240; heating oil $1,743; propane $2,307; and the electric resistance heat $4,606. This means householders in New England and Middle Atlantic are spending $12.3 billion on natural gas, $12.9 billion on electric, and $8.4 billion on fuel oil per year. 5.6 15.4 10.8 3.2 Average foot2/ housing unit (Energy Consumption) 2,186 2,055 2,974 1,105 4.7 834 10.6 6.8 2.5 2,073 1,963 2,385 # of Housing Units (Million) New England Middle Atlatic Single-family Apartments in buildings with 2-4 units Apartments in buildings with 5 or more units Natural Gas Electricity Fuel Oil In order to reduce losses during transportation, natural gas is often liquidized before transport to different grids, then boil-off to gas again on individual. Losses during transportation and storage have been reduced to 0.1-0.15%, but the boiled-off loss rate during transformation is still as high as 2-6%. According to the U.S. Energy Information Administration (EIA), the average retail Massachusetts electric price is 15 ¢/m3, and about 0.5 pounds of CO2 emissions per kWh with $50/ton worth of damage. This means that the New England and Middle Atlantic areas are consuming a total of 85.42 billion m3 of reactive natural gas and emitting 42.71 billion pounds of CO2 per year, with $513million worth natural of gas lost and creating $1.07 million worth CO2 emission damages during transportation if we consider transformation losses at 4% and rate of real power as 96%. Losses of Transformation (Million) Direct Losses $513 CO2 Emission $1.07 Total $514.07 Electricity usually transmitted by transmission lines in a high voltage to different grids, then turned to low voltage before distributed to the consumer. When electricity is transmitted in high voltage, losses are small enough to be ignored; when electricity is distributed in low voltage, losses during transportation is usually 30%, which it becomes larger as the resident is further away from grid. If we look at the Massachusetts residential electricity bill (Chart_1), distribution is taking up to one third of the electricity bill and there is negligible electricity from renewable energy. Chart_1: Residential Electricity Bill Massachusetts % Distribution 35.18 Stranded Costs 6.54 Transmission 9.54 Renewable Energy 0.33 Energy Cons 1.67 Supply/Energy 46.74 According to the U.S. EIA, the average retail Massachusetts electric price is 22.02 ¢/kWh, and about 1 pounds of CO2 emissions per kWh with $50/ton worth price of damage. That means the New England and Middle Atlantic areas are consuming a total of 83.69billion kWh electricity and emitting 83.69 billion pound of CO2 per year, with $5.53 billion worth of electricity lost and creating $627.67 million worth of CO2 emission damage during transportation if we consider transformation losses at 30% and rate of real power as 70%. Losses of Transportation (Billion) Direct Losses $5.53 CO2 Emission $0.63 Total $6.16 According to Sanner.B(1993), Duesseldorf airport in Germany uses a combined system of solar and GHP. The airport has a net floor area of 6100m2, and available data shows that from October 1991 to September 1992, the total energy consumption for heating and cooling is only 54.2 MWh of electricity, converting to 8.9 kWh/m2. This includes 61.4% of electricity consumed by heat pump, which is a 40-48% energy saving as compared to heating up the space with electricity only. Keep in mind that Duesseldorf Airport is located in north-western Germany with mild weather, where the lowest temperature during winter is around 30 degree Fahrenheit, and the highest in the summer around 73 degrees Fahrenheit. New England and Middle Atlatic area is expecting a lower temperature during winter and higher temperatures during summer; therefore, it is reasonable to expect a 50% and higher saving rate when converting whole New England and Middle Atlatic area to GHP combined heating system. According to Esen.H(2006), after studying the conversion of the natural gas driven space heating system to GHP, “The geothermal heat pump system is not economic when compared with natural gas heating for Elazıg ̆in Turkey.” With life cycle 25-30 years, GHP is going to make a payback until right around the 30th year when counting pure energy consumption if convert from natural gas. There is not benefit gaining from GHP if resident were using NGHP. Saving on GHP Equipment and excavation cost for GHP is expensive, in 2016, it generally cost $3,381 to $12,723 per household. Since most houses in New England and Middle Atlantic do not hold yard and drilling cost more than trenching, we can assume that it will cost about $10,000 per household to install a whole set of GHP. If the household was previously space heating with electricity, each household will save around 50% per year. Before installing GHP, the average space heating cost is around $1,963 per year. After installing GHP, the average cost will be down to $981.5 per year. After including the installation fee of $10,000, a single household will get pay back in a little bit more than 4.3 years when counting pure energy consumption. The good news is that according to energystar.gov, there are several tax credits that can be added into the picture to reduce GHP installation costs. The tax credits for residential renewable energy products are available through December 31, 2021. Renewable Energy Tax Credits • 30% for systems placed in service by 12/31/2019 • 26% for systems placed in service after 12/31/2019 and before 01/01/2021 • 22% for systems placed in service after 12/31/2020 and before 01/01/2022 Expires: December 31, 2021 Geothermal Heat Pumps Requirements Must meet the requirements of the ENERGY STAR program which are in effect at the time of the expenditure. Tax credits includes installation costs. The home served by the system does not have to be the taxpayer's principal residence. Water-to-Air Water-to-Water Direct Expansion Closed Loop: Closed Loop: EER >= 16 EER >= 17.1 EER >= 16.1 COP >= 3.6 COP >= 3.6 COP >= 3.1 Open Loop: Open Loop: EER >= 21.1 EER >= 20.1 COP >= 4.1 COP >= 3.5 Definitions: • COP (Coefficient Of Performance) - of a heat pump is the ratio of the change in heat at the "output" (the water reservoir of interest) to the supplied work. • EER (Energy Efficient Ratio) - The higher the EER rating, the more energy efficient the equipment is. This can result in lower energy costs. This DOE site can show how to calculate potential energy costs savings of a more efficient unit. The tax credits for home builders have also been retroactively extended, through December 31, 2020. Tax Credits for Home Builders: Federal Tax Credits for Builders of Energy Efficient Homes The Federal Energy Policy Act of 2005 established tax credits of up to $2,000 for builders of new energy-efficient homes. The tax credit is available for homes built/manufactured in the United States between January 1, 2018, and December 31, 2020 Energy Efficiency Requirements Home builders are eligible for a $2,000 tax credit for a new energy efficient home that achieves 50% energy savings for heating and cooling over the 2006 International Energy Conservation Code (IECC) and supplements. At least 1/5 of the energy savings has to come from building envelope improvements. This credit also applies to contractors of manufactured homes conforming to Federal Manufactured Home Construction and Safety Standards and meeting the same energy efficiency requirements. There is also a $1,000 tax credit to the producer of a new manufactured home conforming to Federal Manufactured Home Construction and Safety Standards and achieving 30% energy savings for heating and cooling over the 2006 IECC and supplements (at least 1/3 of the savings had to come from building envelope improvements). Alternatively, a manufactured home also qualifies for a $1,000 tax credit if it meets ENERGY STAR requirements. Please note that, with the exception of the tax credit for an ENERGY STAR certified manufactured home, these tax credits are not directly linked to ENERGY STAR certification. Therefore, a builder of an ENERGY STAR certified home may be eligible for a tax credit but it is not guaranteed. Certification The Internal Revenue Service (IRS) has issued guidance to provide information about the certification process that a builder must complete to qualify for the credit. The guidance also provides for a public list of software programs that may be used in calculating energy consumption for purposes of obtaining a certification. Not only for residential building, there is also tax credit for commercial building through December 31,2020. Tax Deductions for Commercial Buildings: A tax deduction of up to $1.80 per square foot is available to owners or designers of commercial buildings or systems that save at least 50% of the heating and cooling energy as compared to ASHRAE Standard 90.1-2007 (or 90.1-2001 for buildings or systems placed in service before January 1, 2018). The deduction is available for buildings or systems placed in service after December 31, 2017 through December 31, 2020. Partial deductions of up to $.60 per square foot can be taken for measures affecting any one of three building systems: the building envelope, lighting, or heating and cooling systems. Improvement and Encouragement Yet another tax credit for residential energy efficiency has been extended retroactively through December 31,2020 with “10% of cost up to $500 or a specific amount from $50-$300.” However, this policy only includes air source heat pumps, not GHP. Economically, geothermal heat pump is more profitable than air source heat pump. According to Hepbasli, A., & Akdemir, O. (2004), though GHP has 30-50% higher initial capital cost, GHPs “(a) Consume less energy to operate; (b) they tap the earth or groundwater, a more stable energy source than air; (c)they do not require supplemental heat during extreme low outside temperature; (d) they use less refrigerant; (e) they have a simpler design and consequently less maintenance and; (f) they do not require the unit to be located where it is exposed to weathering.” And GHP has 10 to 15 years longer life time than an air source heat pump. Therefore, GHP should also be included in this policy. There are also governmental offices such as the Energy Efficiency & Renewable Energy (EERE) that encourage the installation of renewable energy by provide funding and other technical assistance. This is not limited to individual technologies, as long as the need fits the requirements of application (Apply for EERE Funding Opportunities), it is possible to qualify. Individual states should also be providing some funding for installation of GHP and other renewable energy, because as many more households install renewable energy, less CO2 emission will slowly reduce health costs as people are living in a cleaner environment. Also, cleaner environments not only can raise residential satisfaction, but also property values and thus local tax revenues. Communities can consider allowing the funding of upfront costs through property tax assessments Other suggestions are that housing agencies should include the choice of renewable energy as part of their housing evaluation. People in America love to hunt for job opportunities in different local, it is common for people to move around the state or city a lot. If choice of renewable energy, especially GHP can be involved in the price evaluation, this should encourage residents to install GHP in some degree. Also, because of the high rate of changing residences, it is hard for individuals to get payback on their own since it does take several years to get the payback from saving on energy costs. If most or all GHP installation is contracted with companies, these companies can provide their customers with reasonable energy price and gain the profit in a long term without eliminating the activity of individual householder. This will also encourage more people to install GHP. After all, geothermal heat pump has great potential to increase social welfare at the same time reducing CO2 emissions; it gets huge potential and should be encouraged and introduces to residents when they are looking for renewable energy subsidies.