In part 2 in our geothermal heating system home project, a solution was chosen.  Now, how to pay for it and who's going to install it?

You need a good installer/contractor. In our instance, my wife has a business colleague who had had a system installed satisfactorily in his house. This colleague passed along the name of an outfit called "Nexamp", which works in the northeast US. Research on the web showed us that they are a young company (and managed by young people) that appeared to be doing a lot of alternative energy projects, both for business and home installations: solar, wind, and geothermal. In theory, you could get a good HVAC company to do the job, as the core of the system is a  conventional thing called a heat pump -- but in fact the firm also needs specific engineering, contracting and installation skills for geothermal in order to properly do the external loop of piping into the earth. We spoke with the engineer, and as my wife and I are both engineers we felt confident in his skill when he could speak to us about technical variables such as thermal resistance, horizontal vs. vertical fields (wells), and distinctions in heating systems. Actually, their simply having an  engineer who clearly knew both theory and practice (besides having HVAC technicians) was reassuring. The fact that they had done numerous installations, including very large commercial installations, carried a lot of weight.

Nexamp was very helpful in doing our comparisons of technology. In fact, they had their own spreadsheet showing payback period and rate of return, comparing geothermal with other alternatives.The engineer was very patient with our tortoise-like approach to making the decision.

Getting your paperwork ducks in a row before starting work includes getting any financing incentives arranged for. Our power company, through a cooperative arrangement with the state (MassSave's Heat Loan Program) and local banks, offered a loan of $15,000, interest free, for 7 years. (Principal is paid back linearly over that time.) So, sure, we'll be happy to save our own $15K and invest it at a few percent! We first had to get an energy audit from the state program.  This would establish that we didn't have any other major energy issues that should take priority over the geothermal system. As it turns out, it also got us free compact fluorescent lights, a $150 rebate on a new Energy Star fridge, and 75% off a $2,000 job of putting additional insulation in the attic after the geothermal installation! This audit cost us nothing

TIP: To find out what green tax incentives are available in your state, see www.dsireusa.org.

Of course, ensuring that the contract with the installer is a good one is essential. Ours covers the whole enchilada -- the Manual J calculations, the geothermal wells, the heat pump, and the ductwork.

The out-of-pocket geothermal heating cost is about $37,000, a fixed price, of which about $7,500 is to install ductwork that you may already have. The tax credit we get is therefore about $11,000 (30% of 37,000). Add to that the return on investment (ROI) of being able keep $15,000 in our investment portfolio (the amount of the interest-free loan, diminishing over 7 years of capital payback), which is a cash stream worth about $2,000 to us, and the bottom line cost is around $24,000. This is not a lot more than we would pay to install any other central HVAC system and the extra cost, reduced by energy savings, over a conventional system is paid back within about 7 years. After that, the ROI is about 14%.

Here's the approximate breakout for the geothermal heat pump cost:

To be continued...