On October 23rd, the Yampa Valley Community Foundation (YVCF) moved into its new, geothermal-powered building at 348 Oak Street. YVCF elected to install a Ground Source Heat Pump (GSHP) system over a “conventional” natural gas furnace and air conditioning (AC) system in the new building. Their decision to do so was pretty straightforward: YVCF knew this is both the right thing to do from an environmental standpoint, and the most cost-prudent thing to do from a fiscal standpoint.
The environmental case for a geothermal system is well-known and clear (and reflected in the Routt County Climate Action Plan): switching away from greenhouse gas producing energy sources, including natural gas, is essential to reducing carbon.
So how is going with a GSHP the smarter fiscal decision? The YVCF GSHP system cost more than twice what a conventional natural gas furnace and AC system would have cost. Given that upfront cost and the fact that natural gas is currently three 3 times less expensive than electricity on a BTU basis in Colorado, why would they choose to go down this path? To put it simply, because over a few years, a GSHP is far more cost effective.
A GSHP system is about four times more efficient than a conventional natural gas system. This means it uses much less energy to produce the same amount of heating or cooling than a conventional natural gas system. In addition, maintenance costs over time are much less than a conventional system. After the installation of a loop field, a GSHP system providing both heating and cooling is essentially run by an electric pump. There are no moving parts, no need for many conventional HVAC components, and no outside mechanical equipment, like cooling condensers.
As a result, YVCF expects the payback of their GSHP system relative to a conventional system would be in the 8-15 year range, depending on the cost of electricity and natural gas over that period. That payback period will be further shortened by the 40% tax credit provided in the Inflation Reduction Act. With the tax credit reducing their up-front costs by one third, YVCF expects to break even on the cost difference between a conventional versus a GSHP system in 5-10 years! That’s a blink of an eye in the expected life of the building.
