When Drew Derrick and his family decided they wanted to add central air conditioning to their 200-year-old Catonsville home, they had a number of options.
They decided on a geothermal system in which the earth’s constant 55-degree below-ground temperature can be tapped for cooling and heating.
The system — which required the drilling of three 430-foot-deep wells in the front yard, piping and ductwork — was completed in July.
For the next month, they cranked up the air conditioning. With the addition of central air to cool the entire house, their utility bill was $20 higher than the month before, when they had window units cooling only parts of their home.
“It’s much more efficient,” Derrick said.
Not far away, Dave Sinclair and his wife Angela added solar panels to their house in the spring of 2015. In 2014, their average utility bill was $165 a month. The solar-panel system has since cut their bill by more than half, to the point they are sometimes paying a minimum $22 fee on their monthly bill.
Across Baltimore County, more homeowners are looking at alternative energy sources like solar and geothermal, spurred on by a new generation of more efficient, cheaper systems, tax credits, rebates and incentives and an altruistic desire to reduce the use of fossil fuels.
While tax credits, rebates and other incentives can lower costs for the systems, prices can be steep: An average geothermal system in Maryland runs around $25,000 and purchasing a solar system can be about $30,000.
Savings on utility costs over a five- to 10-year payback period can offset the higher upfront costs, according to industry analysts.
“It’s becoming more of an everyday thing,” said John Hencken, vice president of SolarGaines, a Baltimore solar power system installer, who has two solar arrays on his Catonsville house.
“It’s not some sort of off-the-wall thing, where people are hoping it would pay them back one day in the future,” Hencken said. “It’s much more clear.”
Since 2008, more than 21,000 of Baltimore Gas and Electric Co.’s 938,000 residential electric customers have added solar systems, about 18 percent of them in Baltimore County, the utility said.
More than 1,800 geothermal units have been installed since 2012 by BGE residential customers, including more than 650 in the county.
While state and county agencies don’t actively track installations, county inspectors in the past two years have done an average of 150 solar system inspections a month, up from 15 a month in 2013.
The Solar Energy Industries Association, a national trade group, said $410 million was invested in solar installation projects in Maryland last year, an 86 percent increase over 2014.
For the Derricks, the upfront cost to install a geothermal system and related interior work was about $70,000.
After applying rebates and tax incentives, Derrick said the cost dropped to about $40,000.
A number of tax credit, rebate and incentive programs are in place to help homeowners reduce costs.
The state makes solar projects eligible for a $1,000 credit and geothermal heating and cooling systems are eligible for a $3,000 credit. BGE offers a $1,620 rebate on geothermal heat pumps through its BGE Smart Energy Savers program.
Home solar systems can qualify for a federal tax credit equal to 30 percent of the purchase price.
Baltimore County provides a property tax credit of up to $5,000 for solar or geothermal heating devices, and $1,500 for solar hot water heaters.
The program has been so popular that there is a waiting list until 2021, since the county has limited the program funding to $750,000 a year, a county spokeswoman said.
The Sinclairs are on the wait list for the county credit.
Derrick estimates it will take about six years for the savings from the geothermal system to cover the price difference between geothermal and a more conventional system.
“People may have known about geothermal in the past or heard about it but never considered it a real option for them,” said Alex Kougianos, owner of Supreme Air, the Baltimore air conditioning, heating and geothermal company that installed Derrick’s system. “Then incentives were created and it got the word out.”
Supreme Air’s geothermal sales have been on the rise each year, Kougianos said. Last year, the company’s geothermal division installed about 170 units — about $3.8 million in revenue, Kougianos said. This year, the company is projected to do about $4 million in geothermal work.
While system prices vary, largely based on well-drilling fees, the installation cost for a typical house in Maryland is in the mid-$20,000 range, in line with the national average, according to Douglas Dougherty, president and CEO of the Geothermal Exchange Organization, a nonprofit trade group.
The typical payback period — where savings from lower energy bills over time make up for the higher installation and purchase costs — for a geothermal installation is four to seven years, and can be shorter with rebates, according to GEO.
Hencken, of SolarGaines, said solar panel purchases gained momentum after 2009, when the federal government sweetened tax credit incentives, removing a $2,000 cap that was in place. He added the cost of materials has come down in recent years, making the investment more affordable.
“That’s what made it an industry,” Hencken said. SolarGaines, opened in 2009, has had business volume double every year and now has about 400 customers, he said.
Homeowners have a number of options for solar systems. They can buy them, lease them or sign a PPA – a purchase power agreement. With a PPA, a company installs, owns and maintains the system and sells electricity to the homeowner at a price that is typically below market rates. Lease and PPA contracts generally are in force for 10 to 25 years, according to trade associations, and terms can vary.
The Sinclairs, of Catonsville, spent between $30,000 and $40,000 to get their 36-panel solar system installed. They decided to buy the panels outright instead of leasing so they could take advantage of tax credits and incentives. With rebates and credits, he believes they’ll recoup costs within 10 years.
“I think plugging into things like solar energy … is a great opportunity,” Sinclair said. “It’s a good way to supplement and offset some of the dirty power generated for our use.”
Reflecting on alternative energy’s upward trajectory, Drew Derrick’s wife, Lily, said the future is clear.
“Resources are finite. Fossil fuels are finite. We’re going to have to tap into other means of heating and cooling, or not use heating and cooling,” she said. “This system may be trendy now, but it has to be the trend.”
Drew Derrick has recommended geothermal systems to others but admits costs can be prohibitive without incentives. Congress has yet to renew a tax credit for geothermal systems.
“If the federal rebate goes away, it’s going to be harder and harder to warrant people getting these systems installed,” he said. “The cost is twice as much and without that 30 percent off and those other rebates, it’s just not going to be affordable to an average person.”
How they work
Solar panels, typically installed on roofs, absorb light from the sun to generate electricity. Photovoltaic cells in the panels convert it to direct current electricity. An inverter converts it to alternating current electricity. An electrical panel sends power to whatever in the home needs electricity, such as appliances or lights. A utility meter tracks how much is used and how much extra power is sent back to the grid, or network of existing power lines. Some power can also be stored in batteries.
While the temperature outside changes over the course of the year, it remains more constant underground.
In the winter, a ground loop — underground pipes that connect to a heat pump — circulates water which absorbs heat from the ground and sends it to the indoor heat pump. The heat pump takes the heat from the liquid and is supplemented by an electric heat pump for additional warmth.
In the summer, the process is reversed. The heat pump takes the hot air from inside the home and removes the heat, leaving behind cool air to be circulated as air conditioning. The removed heat from the air is sent into the earth through the ground loop.