The Future of Comfort. How the World Cup Might Help Your Help Your HVAC Business.

How did Qatar win their bid to host the 2022 World Cup?  In this video, Wolfgang Kessling explains how his team designed a comfort strategy that helped make it happen.  Yes, comfort.

Here’s why I wanted to share this video with HeatSpring readers:

Comfort is a word I hear HVAC and geothermal contractors use all the time, but […]

Finance 101 for Solar Thermal Pros

In this article, I’ll go through the basic step-by-step process of how to evaluate, understand and communicate the financial benefits of investing in a solar thermal system. The analysis will be on the client side, but obviously it’s critical for sales as well.
Before you read: get familiar with financial terms and analysis, you should read the first article in the series “Finance 101 for Renewable Energy Pros”. Also, it’s important to note that I’m using the word “finance” as a way to build financial models, understand the economic drivers and benefits of specific  technology – not finance as in ‘we financed our car instead of paying cash’.

Here are the other articles in this series:

 Finance 101 for RE Pros
Finance 101 for PV Pros
Finance 101 for Geo Pros

We’ll be going through the same drill that I did with solar PV and geothermal in terms of the outline but the specific content will be tailored to the technology that we’re looking at, solar thermal.

Here’s the outline

What makes SHW special and a little different then analyzing other technologies
Step 1. Estimating solar thermal load, array size and power production
Step 2. Gross and net installed costs
Step 3. Determine the value of a SHW BTU
Step 4. Estimating operations and maintenance costs
Step 5. A few examples IRRs and sensitivity analysis for residential and commercial projects based on 1) load 2) fuel source 3) site characteristics
Marketing Implications
What I did not address that could be investigated.

A few issues around the difficulties and issues with determining the exact NPV of a SHW system. 

On residential applications, it’s too costly to figure out exactly how much hot water is being used. Thus, we use assumptions that frankly, are not very accurate. See the Canadian study that found out the average of 65 gallons used per day, was actually around 44.
Unless the hot water generator is the only fuel source of that specific kind, it’s difficult to estimate on residential applications and mainly based on assumptions, which can be very wrong.
On commercial applications, it is common to use ultrasonic BTU meters for a week or so to understand exactly how much water is being used. However, it’s still key to understand daily and yearly usage patterns. For example, if a laundromat is used heavily in the morning or a college dormitory is not used during the summer that will have implications for the value of the heat the solar thermal system is creating. See point 2.
Production and usage of solar thermal energy are not equal. A property owner only gets the value of a solar BTU when they’re using water that is getting preheated by a solar thermal system. If they’re not using water, and the solar thermal system is producing that energy gets lost. Not all of it is lost, because the storage tank is able to hold a lot of water but they can’t hold it forever. The reason this is important for financial modeling is because, UNLIKE SOLAR PV, just because the solar thermal modules produce power doesn’t mean it was used and thus doesn’t mean the financial benefit was realized. The classic example is a family that goes on vacation for 2 weeks, if it’s a pressurized solar thermal system (we’re not going to get into pressurized vs drawback in this article and the design and financial implications of each) the pump will likely still cycle and energy will be produced, but nothing will be used. From a finance perspective, nothing is gained, only lost in the power the pump needed to run.
Quoted prices for solar thermal systems can vary widely from site to site and between geographic regions. The main drivers between sites will likely be 1) structural support needed. All else equal pitched shingle roofs are cheaper then flat roofs. 2) If a storage tank is required. For buildings that have a constant load 365, storage is typically not required. Pool heating is a good example. This will decrease installed costs. Between geographic regions that main drivers of costs tend to be the training of the crew. Almost all of the parts are off the shelf, or close to it, so it’s difficult to get better pricing on equipment, however a crew’s ability to executive and their level of training will be different between regions.
Module output is based on more factors then in solar PV. In a solar PV product output is mainly based on 1) the solar resource available 2) orientation of the module 3) efficiency of the module 4) temperature. With solar thermal, all of those factors also apply IN ADDITION to the load profile of the building. Why? The higher the load of the building the colder the water will tend to be, all else equal, when entering the solar therm module. This will increase heat exchange. So for example, if the modules were 180 degrees, the water passing through them will collect more BTUs if it enter the modules at 50, then if it entered the modules at 100. What this means is that if we installed 10 modules on a building with a load of X, if the same number of modules were installed on a building and the load was 2X, the production of the modules would be much higher. For this reason, it’s a good idea to keep the solar fraction low in a design, to maximize the BTU production of each module. How low? Dr. Ben suggestions between around 30% and 60%, see his great explanation of the subject here.
Maintenance costs can vary widely based on the type of system, equipment used, equipment warranties, and what the type of system is connected to. Also, because the solar thermal industry is relatively small, I haven’t been able to find large data sets of warranty information that I can be confident in.


[Video] How to Select Solar Hot Water Components and System Types

In this video, author and ISPQ Certified Master Trainer Bob Ramlow provides a detailed outline of common components found in solar thermal systems, and the four most common types of systems.

Answer 3 Questions to Make your Small Business a Solar Sales Machine

The most important element of a profitable solar company is maximizing what I am referring to as “the sales equation”. In this article, I want to share specifically what the sales equation is, and what questions you can ask to begin to understand how well your company is doing.  Sales is the front line of the solar industry. While your business needs the technical expertise to design and install a solar system, those skills alone will not insure your business is successful.

While consulting with a new solar company, figuring out the best way to structure the new company to maximize profits, and speaking with Keith Cronin who sold solar company to SunEdison, I’ve learned that there is one single question key to a successful solar company. If you’re running a small businesses that is run on cash and does not have outside investment, super efficient marketing and sales and an overlap with operations is what will set your business apart.

This may sounds simple, but it’s not. Most small construction companies have net profit margins of around 5%. In the solar or geothermal industries, you should be able to bump this up to at least 10%. Accordingly, your gross margins should be around 20%.

In order to do this, this is the equation you need to maximize.

A profitable solar or geothermal sales engine = high gross margin on project * closes the fastest / marketing dollar spent. 
Why this equation?
The equation is showing that the best companies will get the most amount of profit and cash in the fastest amount of time possible. By it’s nature, it includes how you structure the company, your ability to cost jobs correctly, your effectiveness at client relations, and how effective your marketing is.


IGSHPA Installer Accreditation Versus Vertical Loop Installer (Driller) Accreditation

In the past, we’ve written a few articles about what exactly the IGSHPA accreditation is, if it’s worthwhile, and when contractors should get it.

The International Ground Source Heat Pump Association (IGSHPA) now has a separate program for drillers, called “Vertical Loop Installer Accreditation.” This accreditation is similar to the traditional IGSHPA Installer Accreditation but specifically focuses […]