California's energy efficiency history.

 The “Rosenfeld Effect” explains California’s relatively flat per capita electricity usage since 1973 in contrast to the sharp rise across the rest of the United States in the same time period. It is a very impressive achievement, a testament to the leadership of Art Rosenfeld, and symbolic of California’s historic position of energy efficiency innovation. Unfortunately, it is only a beginning.

Recently, a proposal has been put forth by a group of 54 scientists representing 26 institutions around the world to establish “the Rosenfeld” as a unit for electricity savings, specifically the amount, some 3 billion kilowatt-hours per year, needed to replace the annual generation of a 500-megawatt coal plant.It is just this kind of “Big Bold” scale and thinking that will need to be employed to make a serious contribution to minimizing the effects of climate change. Secretary of Energy Steven Chu calls improving the efficiency of buildings, which account for 40% of United States energy use, the “truly low hanging fruit” amid growing consensus that energy efficiency within buildings, and specifically existing buildings, is the key to achieving AB32 target goals and reviving California’s economy.

Ground source heat pumps (GSHPs) can play an important role in achieving demand reduction and efficiency within the built environment but have so far little impact in California. Improving the energy efficiency of buildings will be the key to "filling the white space" of AB32 target goals. (Click here to enlarge)
Patrick Hughes of Oak Ridge National Labs estimated that a moderately aggressive adoption of ground source heat pumps throughout American building practices would yield annual energy savings of 3.4 to 3.9 quad BTUs, which at current prices, represent savings of between $33 and $38 billion in retail utility bills and dwarf current combined renewable energy contributions from solar PV, wind and geothermal power. Mr. Hughes’ conclusions are both shared and strongly supported by many officials at the Department of Energy and the Environmental Protection Agency: as far back as 1993, the two agencies have identified heat pumps as the most effective way to heat and cool buildings. Cathy Zoi, the current DOE Assistant Secretary for Energy Efficiency and Renewable Energy (EERE), co-authored the landmark Space Conditioning report while at EPA.The Obama administration has made improved energy efficiency a top national priority—providing billions of dollars for energy efficiency improvements through the American Reinvestment and Recovery Act. Residential GSHP now enjoys a 30% federal tax credit while commercial projects receive a 10% grant.

Up until now, the problem has been moving from theory to everyone’s back yard. Problems to wider adoption identified in the Zoi report seventeen years ago remain today in the form of general lack of awareness (by consumers, industry and government), high first costs and unnecessary regulatory hurdles. Project Negatherm was conceived as an investigation that would identify and suggest ways to overcome barriers to ground source heat pumps in California, especially with regard to borehole drilling. Awareness can be targeted and built up if everything else is in place. First cost barriers are eroding with tax credits on the backend and property assessment financing strategies up front. However, the regulatory thicket in California has not yet been cleared.

California has lagged substantially behind other states in GSHP regulation. (Click here to enlarge)

A nationwide survey of GSHP regulations conducted by the University of Idaho concluded “the regulations which presently govern the design and construction of open and closed loop geothermal heat pump systems across the U.S. are a patchwork of appropriate and inappropriate responses to potential environmental problems.” As it stands today, the regulatory landscape for GSHP technology in California presents considerable obstacles for industry growth. Inconsistent permitting processes, confused work classifications and fee schedules across local jurisdictions have a deleterious effect upon projects. The current training and licensing requirements have nothing to do with closed loop bores and everything to do with water well work. These hurdles can be overcome by recognition of the problem, a concerted effort to reform and leadership at the state level to create an appropriate environment for heat pump adoption.

Project Negatherm completed a number of varied tasks:

• Reviewed relevant literature
• Compiled permit regulation in all 58 counties, as well as other municipal districts and states
• Developed methodologies for stakeholder interviews
• Interviewed industry stakeholders
• Convened an industry advisory board
• Identified technical and financial hurdles
• Conducted field research on commercial and residential projects
• Researched the latest innovative finance models
• Devised and conducted surveys of consumers and driller groups
• Developed resource web portal containing project research findings for industry and consumers.

Project Negatherm’s key findings reveal a consistent message of undeserved obscurity and inadvertent barriers. Sixty-nine percent of Californian green consumers surveyed, representing the cream of the market crop, who anticipate doing a major project within the next three years, have simply never heard of heat pumps.When given some factual summary information, consumer interest spikes markedly across the board, on the order of magnitude of three to twenty times across fourteen different attributes. In short, if it can be built and installed, they will come.

Local jurisdictions have little knowledge of GSHP and little project experience. If there is to be any progress in heat pump adoption, it will have to come from state leadership.

The start of GSHP reform would be the recognition that a closed loop borehole is not a water well. At present, all regulation for GSHP is tied to water wells. Closed loop bores are drilled, an HDPE plastic u-bend tube is emplaced and then the hole is immediately grouted. The sun does not set on an open hole. Unlike more exploratory water well drilling, casing and pump work, closed loop boreholes for ground source heat pumps are about production and optimization. The two are fundamentally different yet subject to the same rules and regulations.

In order to promote the adoption of ground source heat pumps, and thereby enhance California’s energy efficiency capacity of buildings, dramatically reduce fossil fuel demand, contribute to greenhouse gas reduction goals and build a sustainable statewide green collar workforce, Project Negatherm makes the following recommendations:

• Recognize GSHP publically as a key energy efficiency technology for California, by retrofitting the Governor’s Mansion and/or the State Capital Building
• Designate a statewide leader and champion for GSHP technology.
• Consider formally closed-loop bores as something separate from water wells
• Move jurisdiction for closed loop bores from the Department of Water Resources to the Energy Commission
• Centralize state-level permit administration, as other states have done, with the Energy Commission
• Centralize and standardize permitting and fees for ground source heat pump boreholes at the state level.
• Create an educational GSHP web portal in order to inform and build consumer confidence and create a central repository of GSHP-related information.
• Direct the Contractor State License Board to carve out a closed-loop driller sub-classification from the C-57 water well drilling classification in the manner that the C-46 solar installer classification grew out of the electrician classification
• Educate local permitting authorities about GSHP work
• Sunshine well completion information into a central database, as other states do currently
• Direct the Public Utility Commission to devise a specific rate schedule to account for GSHP’s constant low-level usage of electricity
• Give GSHP the same California Charter provision property as solar that sets aside heat pump installations from property tax assessment
• Integrate GSHP formally within CaliforniaFIRST energy efficiency loading order as an approved and recognized technology.
• Encourage utility-based loop lease solutions and on-bill payment structures
• Include measurable and verifiable energy efficiency (negawatts and negatherms) within portfolio standards and carbon markets.
• Enable GSHP technology to count towards Renewable Electricity Standards (RES).
• Enable utilities to aggregate greenhouse gas savings from GSHP technology and be authorized to trade them on the secondary market.
• Streamline Title 24 and CalGreen accounting of the efficiency benefits of GSHP technology. Fund a software project to convert GSHP data to Title 24.
• Create split incentives (between owners and renters) in order to reach an as-of-yet inaccessible segment of the GSHP market.
• Propose no sales tax on GSHP equipment.
• Better support for drillers transitioning away from stationary diesel equipment.
• Add green collar jobs by growing California’s GSHP jobs training (drillers, contractors, manufacturers)
• Develop coordinating capacities (drilling, bulk purchasing) within the industry in order to combat the lack of aggregation and capture economies of scale.

Click here to download Executive Summary

 Project Negatherm Principal Investigator Dennis Murphy has joined longtime friend and geo industry veteran Phil Henry at Geoexchange Solutions, Inc., a Sacramento-based consulting firm focusing on expanding heat pump industry business development, policy and communications. More info here

Disclamer: This web site was prepared as a result of work sponsored by the California Energy Commission. It does not necessarily represent the views of the Energy Commission, its employees, or the state of California. The Commission, the State of California, its employees, contractors or subcontractors make no warranty, express or implied, and assume no legal liability for the information in this document; nor does any party representthat the use of this information will not infringe upon privately owned rights.