The Inflation Reduction Act of 2022 (IRA) has provided new guidelines and incentives to advance the use of clean energy in the public sector, which includes many educational institutions. Touted as the most significant climate legislation in U.S. history, organizations planning energy related projects can take advantage of lucrative tax credits for upcoming capital improvement projects.

Identifying Eligible Projects

Tax credits for certain energy projects will be effective through 2032 – the longest U.S. energy policy to date. Public sector owners will receive a direct payment from the IRS, up to 40%, after the installation of systems. For systems placed in service on or after January 1, 2025, the Clean Electricity Production Tax Credit and the Clean Electricity Investment Tax Credit will replace the traditional Investment Tax Credit and Production Tax Credit. Eligible building project examples include:

• Geothermal HVAC systems
• Solar and wind energy
• Energy storage technology
• Combined heat and power system (CHP)

The IRA also makes school buses eligible for electrification funds through a new Clean Heavy Duty Vehicles program run by the EPA to support sustainable transportation.

Why Choose Geothermal

Geothermal HVAC systems are now more affordable than other traditional systems and are recognized as the most energy-efficient and environmentally safe heating and cooling system by the EPA. Need to know more about what a geothermal HVAC system involves? Read more about utilizing geothermal for education facilities.

K-12 school districts with bonds voting in 2024 or later can begin planning now for these future energy savings and IRA incentive. Higher education institutions are also eligible for these federal funds. Partnering with GMB and our team of certified GeoExchange Designers can ensure you are maximizing the long-term benefits for your specific building needs, help achieve your sustainability objectives, and/or also assist in providing commissioning services for your systems, and training for your staff. Additionally, GMB will assist with documentation needed for the IRA application process.

The current IRA incentive, paired with energy savings, will mean more dedicated funds can be allocated towards updating school facilities, adding technology, and improving teaching and learning spaces. Read more about our partners at Allendale Early Childhood Center (pictured) who utilized a geothermal HVAC system to help achieve their sustainability objectives.

Economic Comparison Case Study

The table below outlines a high-level comparison of a conventional HVAC system, which does not qualify for the IRA incentive, against implementation of a geothermal HVAC system that does qualify for the IRA incentive. While a conventional HVAC system and a geothermal HVAC system include different pieces of mechanical equipment, they also share a lot of similarities in ductwork, piping, controls, and more. Due to the similar nature of the scope of work happening ‘inside’ of the building for both systems, we’ll assume these costs to be equal for this analysis.

Historically, the premium cost of any geothermal HVAC system is the cost of the work happening ‘outside’ of the building including the installation of the ground heat exchanger (GHX) piping. The IRA incentive of up to 40% is applied to the cost of the entire geothermal HVAC system and includes the scope of work both inside and outside of the building. The costs included in this analysis are based on historic project data for educational facilities in the Midwestern United States.

GMB has almost 30 years of experience designing geothermal HVAC systems and has transformed HVAC systems at more than 40 education facilities across the Midwest. Our team has multiple Certified GeoExchange Designers on staff who have implemented these HVAC solutions for our education clients and are available to discuss your next energy related project.

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There is a lot of buzz surrounding decarbonization, sustainable design, renewable energy, and green building technologies. What does it all mean when addressing your next renovation or building project? To balance the building systems for facilities right now with the anticipated needs of the future, one eco-friendly energy solution rises to the top – and it is now more affordable than ever before.

Stepping away from the conventional HVAC systems that consume nonrenewable fossil fuels, like a chiller and boiler system, education facilities are turning to renewable energy sources that are becoming more accessible and affordable. Specifically, integrating geothermal heat pump technology into operational or new facilities is gaining popularity. Geothermal HVAC systems offer benefits like life-cycle cost savings, reducing your facility’s environmental impact, improved year-round occupant comfort, and is quieter than conventional systems which lowers distractions for students in the classroom.

Geothermal HVAC systems utilize the constant Earth temperature to heat and cool facilities. Upgrades in technology make it possible to integrate geothermal HVAC systems with electrical-based systems and other energy-efficient / renewable options, like photovoltaic solar energy and solar thermal energy. In fact, the U.S. Environmental Protection Agency recognizes geothermal HVAC systems as the most energy-efficient and environmentally safe heating and cooling system option.

New legislation is on the way to make the use of geothermal HVAC technologies more affordable for public entities and non-profits. Prior to 2022, the alternative energy base credit for commercial buildings was a 10% tax credit for ground source heat pumps. The new Inflation Reduction Act (IRA) changed this to a 6% tax credit with an additional 2% for systems using products made in the USA, but also added a 5x multiplier to both of these percentages along with extending the geothermal tax credits into 2035. Public and non-profit organizations can also now qualify for up to 40% direct reimbursement for the installation of geothermal HVAC systems, once put into service, with one of the following criteria in place:

• The project has a net output of less than 1 Megawatt (MW), or
• Meets prevailing wage and apprenticeship (P+A) requirements

The language surrounding these changes is still in development. Clarification on if these credits apply to the entire cost of updating existing building systems with a new geothermal system, direct payment options, and more are likely to become available within the first quarter of 2023.

GMB has almost 30 years of experience designing geothermal energy systems and has transformed HVAC systems at more than 40 education facilities across the Midwest. Our team has multiple Certified GeoExchange Designers on staff who have implemented these changes for our education clients. GMB has a network of resources to connect your district or campus with the right funding, contractors, suppliers, and more. We have an established process in place, from design and energy / building performance modelling through commissioning, to accurately define and support the systems your project needs.

Monroe County Community College – Campus Geothermal Conversion

After completing our analysis of the existing systems as well as facility constraints, GMB proposed replacing the existing three distributed boiler plants with new geothermal heat pump-based plants. The project consisted of three central geothermal heat pump plants, 244 bores and has a 600-ton cooling capacity. MCCC anticipates that the new geothermal system will yield an annual energy consumption reduction of around 27,000 MMBtu, which translates to energy savings of $275,000 annually, or $5.5 million over 20 years.

East Lansing Public Schools – Donley Elementary School

East Lansing Public Schools passed a bond proposal to replace all five elementary buildings in the district with an emphasis on sustainability. Donley Elementary incorporated a geothermal heating and cooling system paired with an onsite solar array for their electric-based HVAC system, which has realized significant energy savings for the district and an operating Energy Use Intensity (EUI) of 28.1 kBtu/sf-yr. This combination of energy solutions has yielded a building that has near zero site CO2 emissions and relies on the utility grid for an estimated 56% of its power needs. This project was recognized as a first-place winner in the ‘Education Facilities – New Construction’ category for the American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE) Western Michigan Chapter’s 2022 Technology Awards.

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Aging Infrastructure on a College Campus

Monroe County Community College (MCCC) is a public community college in Southeast Michigan. Built in 1967, the college serves over 3,000 students. Conventional HVAC systems heated and cooled five original campus buildings with steam and chilled water. In the late 70’s, central steam infrastructure began to break down, leading MCCC to convert to a distributed hot water boiler solution. Recently, the aging chilled water system also began to fail which required the college to utilize a temporary rental chiller to provide campus cooling.  This led MCCC to pursue planning for a long-term solution for the original campus buildings.

A Vision to be an Energy Leader in the Community

MCCC began to evaluate what a new infrastructure system would look like. A newer campus building was running on geothermal heat pump energy, and MCCC felt that this could be a solution for the original campus buildings as well. They desire to be a community leader, setting an example in environmental stewardship. The timing of these improvements also coincided with a bond issue vote to seek funding for facilities and infrastructure upgrades. Looking at alternate energy solutions helped position MCCC as good stewards of resources.

Project Goals & Guiding Principles

GMB worked with MCCC and their ESCO partner, Ameresco, to develop geothermal heat pump design, plant design, and select air handling systems. The following served as Guiding Principles that provided the framework for the project:

• Improved system life cycle costs – increase life cycle cost savings and reduce operating and maintenance costs
• Energy efficiency and environmental impact of system – reduce annual energy consumption
• Community perception – reinforce MCCC’s position in environmental leadership and financial stewardship

The Design & The Details

The existing building mechanical systems were showing their age and replacement equipment and infrastructure presented several challenges within the budget and existing space constraints.  The existing equipment rooms were tight and the constant volume reheat system which would no longer meet the energy code utilized a leaky supply air plenum rather than ductwork to distribute the air.  

Based on GMB’s analysis of the existing systems and facility constraints, we initially proposed replacing the equipment with roof-mounted, heat pump-based air handling units. We also recommended upgrading the constant volume reheat systems to a low pressure variable volume system with an actual ducted supply.

The large rooftop air handling equipment posed an aesthetic challenge. So MCCC instead chose to replace the original equipment with new traditional air handling equipment. This still utilized the low pressure variable air volume solution as originally proposed. In order to incorporate geothermal heat pump technology into this new concept, GMB proposed replacing the existing three distributed boiler plants with new geothermal heat pump-based plants. These plants utilize modular heat recovery chillers connected to the geothermal borefield to supply heating and cooling water to the new traditional air handling equipment.

Since a complete infrastructure replacement was cost prohibitive, the replacement of equipment with new in existing locations allowed the team to utilize much of the existing piping and distribution ductwork, while still supplementing the existing infrastructure where needed.  This raised an additional challenge of satisfying the new capacity requirements as related to code ventilation requirements. GMB proposed utilizing a specialized air purification system that allowed the team to reduce the requirements for the amount of outdoor air being brought into the building. This enabled us to keep much of the existing infrastructure and yield significant cost savings to the client.

GMB’s design involved the use of traditional air handling systems that were connected to three central geothermal plants. These plants were connected to the earth via 288 bores ranging between 350-400 feet deep. Our design also includes space for additional bores and capacity in the underground distribution piping to handle two additional campus buildings that are planned to be added to the campus geothermal heat pump system after the useful life of their current infrastructure ends.  This complete design allowed for the utilization of significant portions of the existing infrastructure while still meeting the energy efficiency and environmental goals of the project.

The Results

MCCC anticipates that the new geothermal system will yield an annual energy consumption reduction of around 160,000 kWh. This translates to annual energy savings of $275,000, or $5.5 million over 20 years. The ground source heat exchanger has a life expectancy of 50 plus years compared to a 20-25 year life expectancy of conventional equipment. MCCC also expects a reduction in carbon emissions of over 1,000 metric tons per year.

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