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It is clear that the builders who are selling homes in this downturn are doing so by offering products that are different from those of the competition. As several companies building solar-powered homes around the Sacramento metro area–including Lennar and Pulte–have discovered, energy efficiency can prove a powerful incentive for buyers.

Unfortunately, solar is not practical for most home buyers. The payback period is far too long, unless state and federal rebates can be combined with local incentives. Most utilities, however, are now deregulated entities and are not likely to grant anything to the consumer beyond a monthly power bill.

Another proven technology is available that can ease a home's HVAC energy costs: geothermal. Since HVAC consumes the most energy of any system in the home, geothermal can cut the annual energy bill by as much as 50 percent.

Geothermal HVAC essentially uses a ground source and heat exchanger to extract heating or cooling from the earth, eliminating the need to mechanically or chemically raise or lower the air or water's temperature in the process. Geothermal is more efficient than heat pump systems or heat and air conditioning generated from fossil fuels. It operates at far lower temperatures than air-to-air heat pump systems and is less prone to "freezing up" when temperatures sink into the 30s.

Geothermal systems can be built using wells, bodies of water, or even a simple closed loop piping system buried several feet or aligned vertically in the ground. In the case of closed loop systems, ethylene glycol is pumped through simple–and inexpensive–PVC piping. In all geothermal systems, heat or cooling is extracted from the earth's relatively stable temperature, then transferred to a heat pump via a heat exchanger. When a de-superheater is added, hot water can be generated as a byproduct, meaning that it is, in essence, free (hot water can account for some 30 percent of total energy costs in the average home).

Joe Wiehagen, senior research engineer at the NAHB Research Center in Upper Marlboro, Md., says that commercial developers have been using geothermal systems for some time, but production home builders have not really tried the technology. He speculates that this is because each system must be engineered on site, which could add costs home builders would rather do without. Still, he thinks big builders "can sometimes achieve economies of scale just having the well driller come out and drill all the wells at one time."

Wiehagen sees potential in the technology, particularly with respect to common field systems that could provide the raw heating and cooling feed to heat pumps at large numbers of homes in master planned communities. However, "You really need a knowledgeable ground-source heat pump company on site," he cautions. "It really has to be installed correctly."

Bill Asdal, owner of Chester, N.J.-based Asdal Builders and chair of the Industry Committee of the Partnership for Advancing Technology in Housing (PATH), is a proponent of geothermal systems. His typical system is a closed loop, ground-source heat pump setup.

Asdal is currently building a 10-unit apartment building, with eight of those units age-qualified. In that project, the geothermal HVAC system will be located underneath the building's parking lot. "With the age-restricted units, they really appreciate the savings on energy."

A geothermal system's installation cost and the payback period depend largely on location. The more heating and cooling needed, the more efficient the systems become and the shorter the payback period. In New Jersey, with its temperate climate, Asdal estimates a 5.6-year payback with a 17 percent annual return on investment and a cost premium of about 30 percent.