Contractingbusiness 841 0911 Growth Bailey

Renewable Systems: A Growth Market for Wholesalers

Sept. 1, 2011
Geothermal energy is getting a big boost from the federal government. In the next three years, technology advances will receive $70 million in new funding

Geothermal energy is getting a big boost from the federal government. In the next three years, technology advances will receive $70 million in new funding from the Department of Energy, the agency said in June. The DOE said it will use the money to reduce the upfront cost of geothermal energy systems, expand their use and enable the United States to have greater potential access to this renewable energy source.

The projects that this grant will fund will focus on reducing the cost of completing geothermal wells, lowering the cost of exploratory drilling, controlling injection and production of water in geothermal systems, and helping to monitor and optimize reservoir creation. This is a huge step in the right direction for renewable systems. HVACR manufacturers have been tapping into the renewable industry for years, and are finally seeing the trend move in their favor for reducing long-term energy costs.

HVACR Distribution Business magazine spoke with three manufacturers to find out how they are reacting to the growth in renewable systems in the HVACR industry.

“With the cost of fossil fuels on the rise due to dependency on foreign oil, consumers are looking for alternate energy sources,” says John Bailey, senior vice president of sales and marketing at ClimateMaster. “Renewable systems such as geothermal are environmentally friendly and reduce utility costs.”

“We're noticing subtle changes in the renewables industry and a pronounced spike in both consumer and contractor inquiries,” explains Nuno Fernandes, Bosch customer engagement and demand creation director. “In 2011 the average monthly traffic to our consumer website more than tripled compared with 2010, and an important share of our visitors are interested in renewable products. In addition, we also notice contractors starting to offer geothermal as their standard offering versus traditional heating and cooling units. It's a highly competitive marketplace, and differentiating technologies like geothermal offer a powerful tool to HVAC professionals,” Fernandes adds.

Michael Albertson, senior vice president of sales and marketing at WaterFurnace International, explains, “Over the past decade, we have seen the number of companies double who have entered into the geothermal HVAC equipment/system market, by choosing to manufacture their own products or have their products manufactured and branded by an existing company in the business.”

In order to keep up with the demand for alternative energy, manufacturers are constantly identifying needs and customer demands in the form of new technologies. “At ClimateMaster,” Bailey says, “we are constantly designing innovative products. We have designed a new product, the Tranquility 22 Digital Series, which has a lower cost point, a smaller footprint and digital controls. With many consumers choosing to renovate instead of build new, the product fits the need for the retrofit market.”

“WaterFurnace continues to evaluate its customers' needs and identify products, features and benefits the customer is requesting,” Albertson explains. “We then prioritize these needs and set into action a process of product planning, development of specifications for new or revised products, complete the engineering and testing of these products, then proceed with required marketing activities to launch the products to our sales channels.”

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“Bosch has begun to heavily market renewable technologies across North America to help raise awareness as well as invest in headcount to properly train the industry on sales, sizing, installation and service of these products,” Fernandes says. “In June, we launched our inaugural television spot that touts the benefits of geothermal energy. This TV ad is running alongside a robust radio campaign, trade print and online campaign to help educate the public. Bosch invests millions annually in research and development so we're working across the entire enterprise to provide more efficient solutions and support this growing sector.”

Trends in Renewable Energy

Manufacturers are working to stay ahead of renewable trends. “We have noticed small shifts from mainstream products to technologies such as geothermal, solar and heat pump water heaters,” Fernandes says. “In many cases, these three technologies are paired together to produce a complete renewable package that offers consumers and business owners maximum efficiency and savings on their monthly utility expenses. We see a tremendous growth opportunity in this application for our entire suite of sustainable products, which include solar, photovalic, geothermal and tankless applications.”

Tony Landers, director of marketing, commercial products at ClimateMaster, says, “The Tranquility 22 is an example of a new trend in geothermal. The product has digital controls, which makes the units easier to diagnose if there's a problem and to ensure that the unit is operating at optimum efficiency.”

Indeed, when viewing renewable systems, it appears that geothermal may be growing faster than its counterparts such as solar water heating and wind turbines because it's not as expensive. Albertson of WaterFurnace points out, “Geothermal HVAC systems provide a favorable return on investment while comfortably conditioning commercial buildings or residences of any size.”

Impact on Wholesalers and Distributors

Training and education is key for wholesalers and distributors who want to be a part of the renewable energy trend. “Distributors will need to invest in their sales force and make sure trained, dedicated staff is on hand to answer the technical questions associated with these complex and highly sophisticated systems,” Fernandes says. “They will also need to invest in inventory and in some cases additional warehouse space to ensure they have the products available when they are needed.”

The consumer will have to be educated as well. As Bailey explains, “Once the consumer is educated on the benefits of geothermal, it's likely that they will embrace this technology.” Landers adds, “At ClimateMaster, we've pursued educating the public from two directions. First, we're targeting the consumers via print media, Internet sources and our website to raise the awareness of geothermal. Secondly, we're educating our dealers since they are the ones visiting the homes of consumers.”

“Training is critical to the success of renewable products,” Fernandes says. “With training comes awareness and a higher rate of properly designed and installed systems. In fact, Bosch feels this is mission critical, and we've developed a comprehensive training platform utilizing both online and classroom applications to ensure that certified Bosch installers are prepared. Our online dealer portal,, has an expansive education tab that works in tandem with our three regional training centers to offer the latest techniques and Bosch products to HVAC professionals.”

Another benefit of renewable systems are the tax credits available to consumers. According to, the tax credit for installing renewable systems is available until Dec. 31, 2016. It offers a credit for 30 percent of the cost of a renewable system, including installation, and has no cap. All ENERGY STAR qualified geothermal heat pumps and solar water heaters are eligible. The push for HVAC wholesalers and distributors to move toward more sustainable, renewable offerings is growing more and more each year. The support from federal funding, together with training and education that the manufacturers are willing to provide, gives endless possibilities to the renewable systems and services that contracting companies can offer consumers.

Kate Kelly is an associate editor with Contracting Business magazine. Contact her at 216/931-9755 or[email protected].