GeoExchange is the new national brand for the most advanced, energy-efficient, and economical heating, cooling, and hot water system available today. This brochure is designed to introduce you to the technology, explain its benefits for you and your customers, and show why it adds sustained value to a property. GeoExchange is the new brand to identify "geothermal heat pumps," which are bringing comfort and savings to hundreds of thousands of homes all over America.
GeoExchange system owners have invested in greater comfort and sustained savings that more than offset the first cost premium. GeoExchange systems add value to real estate and generate energy savings that help borrows to pay their loans.
There are two basic types of systems — those that require a flame to operate (i.e., combustion based), and those that do not.
Combustion-Based Systems
Combustion systems use a furnace or boiler to burn oil, natural gas or propane. Furnaces and boilers have been popular because of their moderate installation costs and wide availability in the market.
Combustion-based systems require a flame and high temperatures, so failures or improper installation can result in property loss to fire. They also create by-products such as carbon monoxide. Incorrectly installed systems, chimneys that are blocked by birds nests, or down drafting can cause carbon monoxide to remain inside of buildings. This is especially dangerous in modern, well-sealed, buildings.
Combustion based central heating systems are often coupled with low-efficiency central air conditioners. This raises operating costs significantly, while adding an entirely separate unit to be maintained.
Heat Transfer Systems
More advanced, non-combustion systems use electricity to transfer or move heat from one location to another. These systems include heat pumps and GeoExchange systems. Heat pumps operate by capturing heat from outdoor air and transferring it inside of a home or business. GeoExchange systems capture and transfer heat from the earth.
Nearly all heat transfer systems can be reversed, providing central cooling as well as heating. Some heat pumps and most GeoExchange systems also provide domestic hot water at low operating costs.
Below the frost line, the temperature of the earth is relatively constant. GeoExchange heating and cooling systems use geothermal heat pumps to take advantage of this constant temperature to provide efficient comfort conditioning. Since GeoExchange systems operate by moving heat from or to the earth, they burn no fossil fuels. This approach linkls homes and buildings to an inexhaustible source of renewable energy.
GeoExchange manufacturers package a geothermal heat pump in a single cabinet that includes the compressor, heat exchangers, fan, filter, and controls. These cabinets may be hung in an attic, or installed in a basement or closet.
The indoor heat pump is attached to either a series of buried pipes (closed loop) or water wells (open loop) buried beneath the yard. Closed loop systems circulate water or an environmentally-safe antifreeze solution through these buried pipes. The fluid absorbs heat from the ground during the winter and transfers it to heat pumps inside the home or building. In the summer, the process is reversed with heat returning to the ground. Open loop systems operate on the same principle, and can be installed wherever an adequate supply of water is available.
Reduced Energy Costs
Because they use the Earth’s constant temperature, GeoExchange systems are inherently more efficient than systems that rely on outside air as a source of heat or for disposal of excess heat. GeoExchange costs less to run than other heating and cooling systems.
GeoExchange systems typically provide overall energy savings of 40-70% in the heating season and 30-60% in the cooling season.
The following table provides an operating cost comparison for a typical home in different cities across the United States.
| "The
number one reason we chose GeoExchange was bottom line
cost. Every month we see a savings. And we get the added
benefits of a more comfortable home." Larry Hill |
Increased Comfort
GeoExchange systems are comfortable. During the heating season, GeoExchange systems heat the air that is distributed through the duct system at approx. 110 degrees. Most air to air heat pumps heat the air to approximately 92 degrees. The relatively cool air feels cold or drafty to many people. Combustion furnaces provide air that may feel too warm, typically over 130 degrees. It is commonly referred to as "scorched air" because it is extremely dry . This problem is often corrected with the addition of a central humidifier (with its associated installation, operating, and maintenance costs).
With GeoExchange, good construction, and proper duct design, warm air circulates through the house and humidity levels are comfortable. The system also runs very quietly.
Longer Life and Lasting Performance
When properly installed, GeoExchange systems rarely need service and are extremely reliable. The pipe for the ground loops is guaranteed for up to 50 years and the geothermal heat pumps are virtually maintenance free for 20 to 40 years, except for regular air filter changes.
Most GeoExchange units are housed indoors, not outside. And most GeoExchange systems have a sealed refrigerant system, and longer life since the unit is not exposed to the outside environment. This is particularly important in harsh environments such as salty coastal areas.
HVAC System |
Atlanta, GA |
Phoenix, AZ |
Burlington, VT |
NY Metro Area |
| Standard GeoExchange System | $583 |
$797 |
$1,179 |
$1,062 |
| Standard Air-Source Heat Pump | $826 |
$1,109 |
$2,059 |
$1,541 |
| Standard Gas Furnace/Electric AC | $686 |
$860 |
$1,377 |
$1,138 |
| Electric Resistance/ Standard AC | $1,196 |
$1,317 |
$2,945 |
$2,352 |
"Space Conditioning: The Next Frontier," Environmental Protection Agency
In homes, GeoExchange systems typically cost more to install than other space conditioning systems — from $2,000 to $5,000 or more. GeoExchange is usually coupled with other efficiency upgrades such as increased insulation and high-efficiency windows, adding as much as $15,000 to the cost of a new home.
At the same time, the consumer’s ability to make payments is enhanced by the increased cash flow from the GeoExchange system. For example, in a recently-constructed 2,600 square foot home in the Midwest, the higher initial cost of a GeoExchange system added $31 to the mortgage payment. However, monthly energy bill savings averaged $62.
The GeoExchange industry is growing rapidly — as much as 30 percent annually, more in some areas of the country. This growth is both residential and commercial. The National goal, supported by the Department of Energy, the Environmental Protection Agency, and many of the Nation’s utilities is to increase the installation of GeoExchange to 400,000 annually. At this level, GeoExchange will represent 12 percent of the market — an important business opportunity.
Lenders can realize many benefits by offering energy efficiency financing, and especially by targeting GeoExchange in their marketing efforts.
Energy efficiency loans are larger and more profitable. Efficiency improvements can add substantially to the cost of a new home or renovation. And lenders can exceed FHA and VA loan limits by the cost of the energy efficiency improvements.
No additional cash down payment need be required when following FHA and VA energy efficiency mortgage guidelines. For other loans, regulations allow the lender to increase qualifying ratios by two percent. Thus more consumers will qualify for loans, and cash-poor consumers can achieve the benefits of energy efficiency.
The Geothermal Heat Pump Consortium, many utilities, and thousands of trade allies can and will channel new business to lenders with energy efficiency and GeoExchange programs. In particular, the Consortium will include lenders with GeoExchange programs in their referral systems — presently used by hundreds of consumers monthly. And local utilities and allies may wish to include the lender in their marketing and advertising activities.
The steps that a lender may need to take to write energy efficiency loans are minimal. For example, there are no special approvals required from FHA, VA, Fannie Mae, or Freddie Mac to underwrite these loans.
A lender will need to locate qualified energy efficiency raters in its area. In many states, home energy rating systems (HERS) are a valuable information resource. To lenders, HERS provides assurance that the energy-efficient investments they are financing will actually save money. HERS can differentiate energy-efficient homes on the market by providing information on relative energy costs.
Before going to loan underwriting, a lender must complete an energy rating and financial analysis of savings. Generally, only one addition form (which varies by underwriter) is required.
Many lenders have already recognizes the value of energy efficiency financing and GeoExchange by including it in their lending programs
.Energy Efficiency Financing Products
| Lender | Mortgage Loans |
Improvement Loans |
| FHA | Yes | n/a |
| FHA 203K | Yes | n/a |
| VA | Yes | n/a |
| Fannie Mae | Yes (2% stretch) | Yes, through 3rd party lender |
| Freddie Mac | Yes (2% stretch) | No |
| Utilities | No | Yes |
| Mortgage Companies | Yes | Yes |
| Banks | Yes | Yes |
The Environmental Protection Agency’s Energy Star and the Edison Electric Institutes’s E-Seal program have partnered with PHH Mortgage Services to provide 100% incremental energy efficient mortgage financing with reduced rates and closing costs. (EPA has determined that GeoExchange systems are the most environmentally-friendly technology available today, helping to reduce greenhouse gas emissions.)
Other companies that provide energy efficient mortgage financing include: Chase Manhattan Mortgage Corporation, Countrywide Mortgage Company, and GMAC Mortgage. NationsBank has a lending program which specifically targets GeoExchange. In addition, some utilities and many local lenders provide financing packages for GeoExchange and other energy-efficient technologies.
The Geothermal Heat Pump Consortium is a non-profit organization with participation and support from the U.S. Department of Energy, the U.S. Environmental Protection Agency, and the Nation’s utilities. The Consortium can provide a variety of information to help you learn more about GeoExchange systems and their added value. Call us toll free at 1-888-ALL-4-GEO (1-888-255-4436). And visit our web site at <http://www.geoexchange.org>. Lenders with an interest in GeoExchange systems are eligible for membership, and can participate in the Consortium’s lender referral program.
One of the best sources of reference for lenders contemplating new energy efficiency financing programs has been prepared by the Alliance to Save Energy. Their lender’s guide for taking advantage of this growing market is available for a nominal charge from the Alliance at 202-857-0666. Or it can be downloaded from their web site at no charge at http://www.ase.org.
The HERS Council, a national collaborative organization, is finalizing a uniform set of national, home energy rating guidelines for states to implement, thus making it easier for national lenders and consumers to access information. Contact them at 202-638-3700 or visit their web site at http://hers-council.org.
In addition, the Residential Energy Services Network (RESNET) provides information on state and national contacts for energy efficient mortgages. Contact them at 907-345-1930 or visit their web site at http://natresnet.org This site includes Financing Energy Efficiency: A Handbook for Lenders, an excellent resource listing guidelines and required forms for FHA, Fannie Mae, and Freddie Mac loans.
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