Episode 6
Industry Trends




Announcer: This is TLC, The Taco Learning Channel.

Tim: Welcome to Episode Six of the Taco FloPro Roundtable. Today we have assembled a panel of experts to talk a little bit about the general trends in the industry--green, maybe a little bit about the trade show John Barba just visited, and some upcoming events. So John, why don't you take over and introduce our panel?

John Barba: Thank you very much. I'm coming to you live from Pearson International Airport, Gate A1A, in Toronto, Ontario. The land of the great white north, the home of Ann Murray, Margaret Trudeau, and the Toronto Maple Leafs. [chuckles] It's kind of a neat place to be, a stranger in a strange land.

Joining us today, we have Paul Rohrs from Biggerstaff Radiant Solutions, in Lincoln, Nebraska.

Paul Rohrs: Hello everyone.

John: Hello to Paul. And from Faribault, Minnesota, from Hilpipre Heating and Air Conditioning, Jim Hilpipre.

Jim Hilpipre: Hello.

John: Hello, Jim, the ace of the NTI matrix, I think you're now officially their lead installer.

[laughter]

John: All right guys, today's topic, as Tim said, we want to discuss "Green".

We're hearing green this, green that. You pick up every trade magazine and it seems like they're printing them in green ink, for goodness sake. There is an overwhelming concern about a) the environment, and b) fuel usage.

On the manufacturing level, I know there's much concern about green technology. At the trade show that I was attending in Toronto, the CIPH, or Canadian Institute of Plumbing and Heating, trade show, we saw tons and tons of solar equipment, and a lot of geothermal equipment, as well.

My question that I'm going to throw out to both Paul and Jim, is a) are you getting information from manufacturers about how they're approaching this whole green movement, and b) are you getting inquiries from your customer base, about green technology?

Paul, we'll start with you in Nebraska, because most everything in Nebraska is red, right?

Paul: [laughs] You speak the truth, John. What a perfect segue..

John: Yea, for those cornhuskers.

Paul: Go cornhuskers! Yes, we're looking for good things this year. You know, we are getting quite a few inquiries about solar and geothermal. Residentially speaking, people aren't using the term green, but that's really what they're speaking about. We are getting inquiries about integrating hybrid systems, which is always a plus for any radiant contractor.

We're always looking to put in different heating mediums, or heat generators, into a primary loop, and plug and play and go. We're still in the Midwest here, in the land of cheap electric kw rates, so integrating electric boilers for off-peak hours is something that we're getting more inquiries about, frankly.

John: Are they looking at, say solar for instance, to help run their heating systems or more for domestic hot water?

Paul: At this point in time, in our climate and our latitude, it's more for domestic water production and for reducing a total package. It would be up to us as designers and installers to harvest BTU's, if there are BTU's available for us to harvest when we get to the late fall or early winter. That's what we would try to accommodate. So all of the above, I guess, would be the best answer to that.

John: Jim, how about in Minnesota? What's green like there?

Jim: It's definitely growing and growing and growing. Generally, all of the inquiries are coming from homeowners. I don't see much being put out there manufacturing-wise, because they're pretty much specialized in their segment of our industry. You see a lot of advertising about the LEED homes and things like that. I'm starting to see more and more of that pop up, where a year ago we didn't even hear about this program. I think the public is definitely getting a lot of knowledge out there, somewhere, via Internet or whatever. There's a lot of talk about that lately.

John: Explain the LEED Program for our listeners. What constitutes a LEED home?

Jim: I don't know a lot about that program, but it is definitely energy conservation measures from the whole [building] envelope to mechanical equipment systems. I know to become a builder to build one of these, you get a lot of tax incentives, and things like that, but it's quite a process. You can't just decide you're going to build one of these, is my understanding. I think there's a certification process involved. We had one that someone brought up to us, but that we did not partake in because it was too far from us. They're coming and I know there's a few more coming to our state, beside the one that was started last year.

John: Paul are you seeing anything with the so-called LEED Program, in your territory?

Paul: I'm familiar with the term--and here we go with more things we can educate ourselves on--but I haven't been really fully versed in it. It is my understanding that the LEED building and green building [are based on] a points system. From a scale of something like 30 on up. I don't know the highest. I think there was 49, 50, or 60 points available to get a certified green building. I think it's a silver level, or gold level. I think there are different plateaus, there for what echelon of green building you're employing. There's a lot of information I still don't have, and I haven't been approached. My builders, they're using the terms, high-efficiency and green building, but I haven't seen much in the way of LEED certification around here.

John: Then let's take a step back. When a builder is talking about green building, what do you think he means?

Paul: I'll jump in. I've seen people trying to employ more earth-friendly materials, recycled materials, but still giving state-of-the-art quality, and something you're going to expect to perform for a long time. Then you can get into the mechanical systems, which again, is just another facet of the building, and something that's going to be whole house integration. Some Internet based controls and something that's going to give them a platform for future efficiency that may become available.

John: How about emissions? Would a builder, or even a homeowner, be concerned about what your heating equipment is throwing out into the air?

Paul: That's a great question John. I have not been approached about that. They hear high efficiency, and they accept that as a euphemism for state-of-the-art, the best equipment we can give them at this time. I haven't had anyone ask me about carbon footprints, or anything like that, so if we educate on high efficiency, they haven't really pushed us for more than that.

John: Jim, how about you?

Jim: You know as far as carbon emissions go, I think, the only thing that's ever come up to me is the outdoor wood boilers. That's becoming an issue, apparently. We don't do many of those, but that's the only topic that has ever been brought up to me about emissions, in that respect, I guess.

John: Jim you mentioned before we started recording that this has been a red letter year for you with geothermal. Go with that a little. What do you mean by it's been a "great" year? Are customers asking you more about it? Are you finding that you're selling more? Is it something that they're interested in doing?

Jim: It's an interesting market. I did a home show a few weeks ago and I did a geothermal booth. That booth was lined up the whole weekend. It was amazing. We put out some good advertisements in the local paper. But what I'm finding, is that the people that are coming and inquiring about geothermal are very well-versed on how this system works and what it's going to do for them. And, they have a general idea of what they're going to be spending to have one of these systems installed, which puts me in kind of a unique situation, that you don't have to necessarily play that price game. It seems like your more qualified leads, if you're going up against the hydronics versus forced air--forced air is everywhere and it becomes a big price issue at that point. But, if you're a qualified installer of geothermal systems, these people seek us out and right now we're currently doing three geothermal systems and we have seven more coming up this summer. We haven't done ten in the last three years.

John: Wow!

Jim: It's just a really fantastic market for us right now. I can't be more pleased with that area.

John: And, what's the benefit to the end user, to the homeowner of a geothermal system? If someone were to ask you, "What's in it for me if I put in a geothermal system?" [Background noise.] Did you guys hear that? [laughs] I think that was the voice of Canada paging someone, that bled through. [laughs] What's the benefit to the end user of a geothermal system? What do they hope to get out of it?

Jim: The biggest thing is people see this on TV. They'll hear it there and they'll talk about using the earth's energy, and it is the key for a lot of people.

They don't really understand anything like that, but they understand that there's energy in the earth that we can use to heat and cool our homes, I guess. That's huge, but aside from that, through, say geothermally, you see efficiencies on lower water temps, if you design around very low water temps. You can see efficiencies at 400%, all day long.

We can't do that anywhere. You just can't. I don't think you can get anything more efficient than that, set aside from [maybe] solar technology. But your different areas aren't really conducive to that as well. We have many homes that we might be heating three to four thousand square feet and they're spending less then $700 a year to heat and cool their homes.

John: Wow, to heat and cool?

Jim: I think that is fantastic. Yes, to heat and cool.

John: Mercy! Just via forced air predominantly, Jim?

Jim: No, generally all of our homes are radiant in the basements and garages, and then say, forced air in the main levels.

Jim: OK.

Paul: Some of the things we are seeing that dovetail into [what Jim is saying]…we're getting a lot of inquiries in that same capacity, which we're ready to accommodate and price out. But, we're moving a little bit slower at our upshot, because I'm still looking at some of this equipment--like second and third generation equipment--still doesn't have all the bugs quite worked out of it [in that], even if a correctly-sized system is employed, we're seeing cycling issues.

I'm concerned for the long term. What kind of cycle life are we going to expect out of this equipment? So, inquiries are there, but I'm dragging my heels a little bit until I see a little bit more longevity in these systems we're installing. What would your response be to that, Jim?

Jim: In regards to the short cycling issues, this is not a problem that is just associated with geothermal. Look at all of these...

Paul: Absolutely.

Jim: ...low mass boilers that are improperly installed. They don't have buffer tanks, and they've got micro zones. That is the exact same thing that is going to happen with geothermal. You don't have modulation on geothermal equipment, so you design and size the proper size buffer tanks so you get the minimum run time on that heat pump. That reduces any short cycling. It's impossible to short-cycle them if you're properly sizing those buffer tanks.

I definitely wouldn't be scared of it. You've got to do your homework and make sure you put them in right. Obviously, there are a lot of guys out there looking for work and they see this as a neat avenue to go out and try.

John: Jim, when you first started getting into geothermal, what did you have to go through? What did you have to learn? What did you have to go with it?

Jim: I don't even recall the first one we did, but, I know it took a while. I went through, say, a week's training at the manufacturing facility. Then, at that point, you're just cobbling it to our regular distribution system, you know, our hydronics or forced air or whatever we're doing with it. It's not really an unusual system, it's just a complex system. Everything's got to marry together, because you've got to bring in what you can distribute. So, you've got to do your homework and be very thorough on that and these systems just go together great. You can't short cut anything.

John: Do you do mostly wells or do you put the coils in the ground? And, what's the difference? That's something I've always wondered about.

Jim: The majority of ours are horizontal. Most of them go out in the country where there's a lot of land available to do trenches. The problem with that, we're seeing, is we're not getting the snow cover we used to, so the frost is driving deeper and our loop temps are getting colder than they had been in years past. So, we've dropped our trenches a foot. Now we're down at eight feet instead of seven.

However, the verticals, in my opinion, are the ultimate. I think that's the absolute best, because you're down 150 feet vertically, and the frost really isn't giving us much trouble on those kind of systems. But, when you're doing verticals you've got a lot of extra expense to install that in a system. You get to a point with geothermal that you're really getting up there in price sometimes, and that is one of the things that might have to be changed and go to a horizontal field.

John: So your well, your vertical system, is going to be a bit pricier to install?

Jim: Yes.

John: Do you get "sticker shock" with your customers on those, Jim? On either system?

Jim: Occasionally you do, but like I said, the majority of the people that come to us know they're going to be spending a chunk of change to get this done. They almost have their minds set up: "This is what we're going to do, we're going to invest this money, we're going to be here for a long time." But you [also] get the people that are tire kicking and you learn over time who those people are and you learn how to address that before you get into it too far.

John: What's the primary buyer motivation for geothermal? Is it low energy bills? Is it protecting the environment? Or is it something else, like they're just angry at the utility companies?

Jim: All of the above. It's funny, because all three of those scenarios are very common. For instance, around our area, we have some private colleges. We have a tremendous number of professors around, and they are definitely all about conserving energy. It's amazing, they're really into green. Then you have the guy that is so mad at the LP gas provider for what he's charging for a gallon of gas. Last year we had a guy, he called and was so mad at the LP company, that he bought a wind generator. I have no idea how much he spent on this wind generator, but he put in a wind generator, and we put a geothermal system in. He totally was nondependent on LP gas, and that was his sole reason for doing this. It wasn't about conserving energy or being green or anything, it was so he had to spite his LP company.

[laughter]

Jim: You never know where these people are coming from. It's amazing. It's pretty fun and exciting, actually.

John: Here's a little bit, guys: As I said at the CIPH Show in Toronto, there were tons of booths featuring solar equipment: Panels specifically, some had solar controls. One company, Viessmann, had the whole, integrated package, where they would sell you the tank, the control, and the collector. All you had to do was pipe it up, and they had different packages available.

What are your feelings about solar and where do you think it's going? And we'll go with Paul.

Paul: I think we're on the verge--it is reemerging, obviously, and I think a lot of the mistakes they made in the late 70's, when I was still a pup... I knew there was a sun in the sky, but that was about it. I wasn't concerned back in the 70's. But, from the mistakes they've made, I've seen the new training programs coming out, the equipment that is built more for the long term, not just for the tax incentives, [and] to get in and get out. I'm pretty excited about what we have to offer.

I think integrating systems, or even setting up a system now, even retro-ing a new boiler system into an older home, we're going to set out the taps. We're going to establish that primary loop, so down the road we do have a place to plug and play, this solar equipment. I think that is how they're correctly addressing the market. It is something that we can retro after the fact, even after we've updated X system. I'm pretty encouraged by how they're going to market with this equipment.

John: Have you looked at any different products out there? What have you seen?

Paul: I'm pretty impressed by the evacuated tube [solar absorber] out there. I still haven't landed it, versus the flat panel.

Understanding the customer's need and what their expectations are, I think, is always the number one platform to operate from, and to give them a solid base of a radiant system, and then integrate the solar to match their needs and/or budget.

You were talking about sticker shock with geothermal--I think anyone who goes onto a lot to buy a Lexus fully knows what they're going to pay. When you start talking about solar and things like this, people are understanding that, yes this is an extra, not a necessity, but it is something that we want, that has perceived value, that they're willing to spend the money on. Again, I'm looking forward to those people parting with that money for those reasons.

[laughter]

John: There you go, because we're in business too. That's great. Again, I talked to some folks regarding solar and how they're really looking at it primarily for production of domestic hot water. The challenge is, if you want it to do some heating as well, you need more panel area. The challenge is what to do with those panels and the heat that panel produces, in spring, summer, and fall. Because, you can't focus it all to domestic hot water, it would be too hot. What are your thoughts on that, or have you not gone into that depth yet?

Paul: A concern of mine is establishing a dump zone. When we have filled up the tank with hot water, it can't get any hotter, and the tank obviously can't get any fuller. What do we do with that excess heat? So then we start talking about dump zones. I've seen a company in the northeast that designs around a dump zone, which in effect is like a whole house fan and a fan coil that starts dissipating that heat quickly.

So is that the most effective medium out there? I don't know, but it's an effective dump zone. That would be one of my concerns as well, John, but I haven't seen it successfully addressed in terms of harvesting that heat and storing it. If we're in the business of harnessing that heat, let's harness it in another way and store it for a later time. I'm not sure how to address the dump zone aspect of it.

John: Sure, because that's your summer time. I suppose you could use it instead of your main heating system in the spring and the fall, but in the summer time that heat has to go somewhere. One manufacturer I spoke to, discussed the possibility of some sort of a blind or a cover for that excess panel area.

Jim, what do you see in Minnesota in terms of solar, in terms of both customer interest and products and opportunities?

Jim: Very little. Very seldom do I ever even talk to anybody about solar. That is an avenue I'd really like to pursue. A lot of the homes that we do will have an in-ground swimming pool, well that's a perfect dump zone. I think that would be a fantastic dump zone. Maybe what we do is, do the domestic water but put the excess heat in the winter--let's go and do some snow melt with it.

There are ways of using the energy, I think. We just have to think outside the box a little bit. You can take a geothermal loop field and you could throw it out in a pond, and then when you need to dump heat you dump it in the pond through a closed system. There are ways of get rid of the heat when you don't need it. We haven't done any solar at all. It's talked very little about in our area here, anyway.

John: Maybe I'll look into becoming a pool salesman also. Hey, I'm all about diversity.

[laughter]

Paul: There you go.

Jim: We're full service here, you got it.

John: It seems to me, then, as we've gone through this podcast series and we've branched out into a lot of different topics, for a heating contractor, I'd say for the next 10 to 15 years, it can't be just about putting in furnaces or putting in boilers. It seems to me, that you need to broaden your scope some and think about a wider variety of avenues of providing heat--geothermal, solar, radiant, forced air, baseboard, and your basic hydronic. It seems to me that you can't limit yourself to just what you've always done. What do you guys think about that?

Jim: Oh, I concur 100%, absolutely. You're either, we call it production or deduction. You're part of the solution or part of the problem. So, yes, we've got to move forward, staying still isn't going to get us anywhere.

Paul: Right, and the market is changing so much. If you keep doing what you've been doing, you'll keep getting what you've been getting. As our world changes, natural gas and fuel oil, they're not anywhere close to being inexpensive anymore, so I think it's incumbent upon heating contractors to make these new technologies part of their business.

John: Well guys, I think that about wraps our discussion. Anything you guys would like to add regarding our bold new world? We'll start with you, Jim.

Jim: I was just going to address that topic you were just on. I know of two companies that are probably within a hundred miles of me here. They are totally into alternative energy sources. One of them annually puts on a huge semi-trade show in a parking lot of a large mall, and it's nothing but alternative fuel, alternative energy sources, wood boilers, pellet stoves, geothermal, and you name it. It's a great way to get into a different area that you're probably touching on by doing things like that. I agree that we all, if we want to move forward, times are changing, and you've got to look at different alternatives. That's a good way to produce more work, I guess.

John: You're either part of the steam roller or part of the pavement.

Jim: Yes.

Paul: There you go.

John: Paul, how about you? Any parting thoughts?

Paul: Yes, I'm looking forward to this emerging technology again. And, like you said, it's incumbent on us to get that information. I'm looking forward to some integrated training. Some serious training certifications that say, yes, by the numbers, we are qualified to install this type of system. Again, further separate ourselves from the pack, that maybe wants to steer down a different avenue, especially, as it pertains to LEED or green building. Let's get some more training under our belts, certifications, so that we do it right straight out of the gate, and do it in a manner that's being requested of us.

John: And we can witness our profession evolving from the plumbing and heating guy, or the heating and air conditioning guy, to truly the home environment provider, in terms of economy of operation, in terms of environmentally sound installations, as well as comfortable and efficient installations. The evolution, I hope, is starting and like I said, we have to be, as you said, Paul, part of the solution or part of the problem, part of the steamroller or part of the pavement.

All right gentleman, well thank you very much for your time on this Saturday morning and we'll throw it back to Tim Smith at Taco.

Tim: Thanks a lot guys. It was a good discussion today that was far ranging, we got a little insight into green LEED, and I appreciate your time on this day. I want to thank you all for participating and we'll talk to you next time around.

[closing music]

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