Cash incentives can hurt the GCHP industry

Giving someone cash to convince them to install a GCHP system can actually hurt the industry. Incentive programs in the ground coupled heat pump (GCHP) industry can to more harm than good. In the early 1990's Ontario Hydro gave residential customers $2,000 to install a system. Unfortunately a lot of people found out there would be an incentive 6 months before it was put in place. Guess what...they stopped buying till it was available. Then a lot of contractors with little experience started installing systems when the incentive was available, and not all of them knew how to install them properly. A lot of systems were badly installed...in fact one system received the incentive for a system without a ground heat exchanger (GHX). 

---

The problems caused the utility to cut off the incentive program. Guess what...sales almost stopped and it took several years for the industry to recover. 

More recently, the Canadian ECOenergy program made a larger incentive available. It was available from about April 2007. Sales increased and suppliers and contractors geared up to deal with the increased sales. Suddenly, in early 2011, it was announced the incentive would no longer be available. The timing was unfortunate. In Canada, it's difficult to install a GHX during the winter in most of the country. People considering a GCHP system decided that because the incentive was no longer there, that they would stick with a conventional gas furnace. Suppliers and contractors who were just gearing up for a busy summer season were stuck with inventory they couldn't sell and employees who had just finished training courses in the winter they could no longer employ. 

Then, with even more unfortunate timing, the program was reinstated. The problem was that contractors who had laid off employees because there was no incentive to drive the market, couldn't keep up with the sudden demand. And people who had installed systems in the interim wouldn't get the incentives. Finally, in early 2012, the program was put out of it's misery. Since then, the residential retrofit market has slowly been picking up. I suspect if the incentive had not been in place at all, the market would be better now.

In the Province of Manitoba, the Provincial government and Manitoba Hydro have had a financing program in place since late 1999. The program allows a homeowner to finance the additional cost of the GHX on their utility bill. The program has been pretty consistent since its inception. It has driven the market in Manitoba to the point where there are more residential GCHP systems installed per capita than any other jurisdiction in the country. 

The point is, depending on the energy rates of electricity versus alternative fuels, a GCHP system can provide a decent return on the owners investment. The systems don't really need cash incentives. What they need is a method to overcome the higher up front cost of installing the GHX...the energy supply for the system.