How to Measure Demand for Geothermal Heating and Cooling in Your Area

Your organization might want to break into the renewable energy fields — you may be considering geothermal and solar installation or energy auditing, but you might not know if you should take the plunge. You must determine: is there demand?

The truth is, most times it may not be a good idea to invest in training until you know whether or not the proper demand exists. Once a real job is in place, it won’t be difficult to justify the investment in training; however, the question of how to measure demand still stands. This process differs for each technology — we’ll start with geothermal demand.  Before you survey potential customers, do a quick self-assessment within your own company:

Where is your company in the value chain?

It is important that you understand where you are in the supply chain, because this will impact how you go about measuring demand. Make sure to note who your own suppliers are, and how much support they will or won’t be able to provide.  This leads to the next question.

Who is involved in your existing business and who are your customers?

Geothermal installation typically involves a driller, licensed HVAC technician, duct workers, and an electrician for wiring. Some general contractors, sales people, and the designer are also involved.  Every skill you already have in-house represents an advantage you have over potential competitors.

How do you get jobs and what are they?

Are you in direct communication with customers or are you getting your jobs as a sub through a GC, another company that is selling a service?

If working directly with customers or building owners who are paying the bills, the survey below will apply directly to you.

Who to target in a survey:

Once you have an idea of where your business resides within the industry, survey existing customers and all potential customers with a couple key questions to start measuring demand.

If you are a subcontractor, speak with the contractor who you typically work with and see if you can collaborate to find some geothermal jobs.  When directly involved with customers, it is easier to begin surveying them.  Remember to ask previous customers for retrofits. Send a survey to all old customers saying that new government incentives have made geothermal more economical and that they could be saving money on heating.  Ask them a few simple questions about their existing heating system — this is one of the quickest routes to getting information on geothermal demand since the connection already exists between you and the customer.  The objective here is to find the lowest hanging fruit possible with the least amount of sales and marketing investment.

Here are the top-line questions to ask existing customers to see how much low-hanging fruit you have in your area:

1. What type of construction is being performed? New or retrofit?
2. What type of heating system do you have or are you looking for?
3. How much do you pay in heating, or how much do you expect to pay?
4. Are you aware of government tax credits to upgrade HVAC equipment?
5. Where is the building located? How much space is on the property?

If you get someone who has already stated interest in geothermal heating and cooling, here are some pieces of top-line information that are useful for qualifying potential customers:

1. How much land is on the site?  Remember you need to get a drill rig in for vertical bores or have enough room to excavate for horizontal bores.
2. If it’s new construction, what type of heating system are they do they prefer, if any?  If a retrofit what’s currently in the building? If it’s forced hot air, geothermal is a perfect fit.  If it’s a radiant floor system, geothermal can sometimes be used for heating– it is tricky in the northeast for cooling, as hot, wet summers will make water condensate on the floor.
3. How much is the customer spending on heating and what is their existing system use as fuel? Keep in mind that geothermal is between fifty and ninety percent cheaper to operate than traditional methods. The older and less efficient the system is, the better a candidate for geothermal.
4. What is the customer’s budget?  A normal home will need a system that is between four and eight tones. In the northeast, each ton will typically cost ten thousand dollars, before government tax credits.
5. Is there an existing well on the property?  Standing column well geothermal systems are typically used in rural locations where wells are more common. If the customer has a well, geothermal can be cheaper to install and operate as long as the flow rate coming from the well, temperature and quality of water is suitable.

 Other things to keep in mind:

1. How is the construction being financed? Geothermal is almost always a good fit for profit-conscious customer because the savings from the heating bills will be greater than the addition loan costs.
2. Ten thousand dollars per ton is the typical total quote for a project. A normal house, around 2,000 square feet, generally needs a four-ton system, depending on the quality of the shell and siting of the building. This figure is without including federal and state incentives. (See DSIRE for those.)
3. Standing-column well systems are really cheap since the drilling has already been done, and the drilling is the most expensive part of the system.

If you go through this process and are encouraged by what you see, then chances are there is an opportunity to find success.  Line up some customers, get some geothermal training, and start building your business.

Check out our free Geothermal Business Plan course…