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Title: Marketing the Klamath Falls Geothermal District Heating system

Abstract

The new marketing strategy for the Klamath Falls system has concentrated on offering the customer an attractive and easy to understand rate structure, reduced retrofit cost and complexity for his building along with an attractive package of financing and tax credits. Initial retrofit costs and life-cycle cost analysis have been conducted on 22 buildings to date. For some, the retrofit costs are simply too high for the conversion to make sense at current geothermal rates. For many, however, the prospects are good. At this writing, two new customers are now connected and operating with 5 to 8 more buildings committed to connect this construction season after line extensions are completed. This represents nearly a 60% increase in the number of buildings connected to the system and a 40% increase in system revenue.

Authors:
Publication Date:
Research Org.:
Oregon Inst. of Tech., Klamath Falls, OR (United States). Geo-Heat Center
Sponsoring Org.:
USDOE; USDOE, Washington, DC (United States)
OSTI Identifier:
6416521
Report Number(s):
DOE/ID/13040-T19
ON: DE93017269
DOE Contract Number:
FG07-90ID13040
Resource Type:
Technical Report
Country of Publication:
United States
Language:
English
Subject:
15 GEOTHERMAL ENERGY; GEOTHERMAL DISTRICT HEATING; MARKETING; BUILDINGS; COST; EVALUATION; GOVERNMENT BUILDINGS; KLAMATH FALLS; LIFE-CYCLE COST; RATE STRUCTURE; RETROFITTING; DISTRICT HEATING; GEOTHERMAL HEATING; HEATING; KGRA; Geothermal Legacy; 151000* - Geothermal Energy- Direct Energy Utilization

Citation Formats

Rafferty, K. Marketing the Klamath Falls Geothermal District Heating system. United States: N. p., 1993. Web. doi:10.2172/6416521.
Rafferty, K. Marketing the Klamath Falls Geothermal District Heating system. United States. doi:10.2172/6416521.
Rafferty, K. Tue . "Marketing the Klamath Falls Geothermal District Heating system". United States. doi:10.2172/6416521. https://www.osti.gov/servlets/purl/6416521.
@article{osti_6416521,
title = {Marketing the Klamath Falls Geothermal District Heating system},
author = {Rafferty, K.},
abstractNote = {The new marketing strategy for the Klamath Falls system has concentrated on offering the customer an attractive and easy to understand rate structure, reduced retrofit cost and complexity for his building along with an attractive package of financing and tax credits. Initial retrofit costs and life-cycle cost analysis have been conducted on 22 buildings to date. For some, the retrofit costs are simply too high for the conversion to make sense at current geothermal rates. For many, however, the prospects are good. At this writing, two new customers are now connected and operating with 5 to 8 more buildings committed to connect this construction season after line extensions are completed. This represents nearly a 60% increase in the number of buildings connected to the system and a 40% increase in system revenue.},
doi = {10.2172/6416521},
journal = {},
number = ,
volume = ,
place = {United States},
year = {Tue Jun 01 00:00:00 EDT 1993},
month = {Tue Jun 01 00:00:00 EDT 1993}
}

Technical Report:

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  • The new marketing strategy for the Klamath Falls system has concentrated on offering the customer an attractive and easy to understand rate structure, reduced retrofit cost and complexity for his building along with an attractive package of financing and tax credits. Initial retrofit costs and life-cycle cost analysis have been conducted on 22 buildings to date. For some, the retrofit costs are simply too high for the conversion to make sense at current geothermal rates. For many, however, the prospects are good. At this writing, two new customers are now connected and operating with 5 to 8 more buildings committedmore » to connect this construction season after line extensions are completed. This represents nearly a 60% increase in the number of buildings connected to the system and a 40% increase in system revenue.« less
  • The Klamath Falls Geothermal District Heating system was completed in 1981 and, until 1992, there was no formal marketing plan for the system. This lack of marketing and the system history of poor availability combined to reduce or eliminate interest in connecting on the part of local building owners and it served only the original 14 government buildings connected at start up. The revenue from these buildings, however, did not cover the entire cost of operating the system. As a result, the city was faced with a difficult decision - develop the revenue required to make the system self-supporting ormore » shut it down. As a result, a marketing strategy for the system was developed. A flat rate was developed in which the rate is negotiable, but for most customers approximates 50% of the gas bill. In addition, the flat rate reduced customer retrofit costs because it is not necessary to buy a meter. Finally, the flat rate is a guaranteed value for the first 10 years of the contract. To reduce retrofit costs, the new marketing plan eliminates the requirement for a customer heat exchanger. New customers are now connected directly into the distribution system with district loop water used as the building heating medium. The state operates two programs which have been used in the marketing plan. The first of these is available only to taxable entities and is referred to as the Business Energy Tax Credit (BETC). This program offers business a 35% tax credit on the costs associated with connection to the geothermal district heat system (retrofit, design, permits, etc.). The second state program is the Small Energy Loan Program (SELP). This program will loan the entire cost of the energy project to the customer. The new marketing strategy for the Klamath Falls system has concentrated on offering the customer an attractive and easy to understand rate structure, reduced retrofit cost and complexity for this building along with an attractive package of financing and tax credits. 1 tab.« less
  • The marketing strategy developed in 1992 for the Klamath Falls (OR) geothermal district heating system is described. This system designed to serve the downtown core area of a small (pop. 17,000) city distributes 180{degrees}F water to its customers. Elements of the program covered include rates, customer retrofit modifications, financing, system reliability issues and identifying man-power to carry out the marketing program. In its first 18 months, the marketing program was able to connect some eight new customers raising system revenue 40%.
  • The findings of a feasibility study performed for Basin View Heating District in Klamath Falls, Oregon are reported. The purpose of the study is to determine the physical, economic, and political feasibility of establishing a geothermal heating district to provide space heat to housing units in the Basin View Development of Klamath Falls. Of the several systems considered, all are physically feasible. The project is politically feasible if the owner compiles with governmental requirements. Economic feasibility is based on considerations of money value rates, tax rates and expected rates of return, which are dependent on government and money markets. Formore » analysis a money value rate of 21% and an owner's marginal tax rate of 35% were adopted.« less
  • The College Industrial Park (CIP) is located to the northwest of the Oregon Institute of Technology (OIT) campus. Waste water from the OIT campus geothermal heating system flows through an open ditch to the south of the Park. Being aware of this, city personnel have requested the Geo-Heat Center design a distribution network for the Park to eventually utilize an estimated 600 GPM of the 130/sup 0/F waste water. Geothermal water from each campus building is discharged into storm drains which also collect surface run off from parking lots, roofs and grounds. Waste water temperatures are generally between 120/sup 0/Fmore » and 130/sup 0/F, however, it may drop as low as 90/sup 0/F when mixing occurs with large amounts of surface run off. Peak heating load requirements for the OIT campus are estimated to be 17.8 x 10/sup 6/ Btu/hour for 567,000 square feet of space. Peak flow rate of geothermal fluid to satisfy this load is then 593 GPM based on a net 60/sup 0/F temperature differential. Three wells are available to supply the necessary flow. A Lithium-Bromide Absorption Chiller (185 ton) was installed in 1980 to provide space cooling. The chiller requires a constant flow rate of 550 GPM and discharges 170/sup 0/F water to the storm drains during summer months.« less