Steamboat Springs City Council faced a million-dollar question during its meeting on Tuesday, Oct. 11.
Council members and city staff discussed which heating ventilation and air conditioning system to install in the new fire station and city hall building, forcing City Council to consider how to balance the city’s budget and sustainability goals.
Four different HVAC options were presented to City Council on Tuesday, but two were the subject of debate — a geothermal system and a natural gas heat pump system equipped with energy recovery ventilation. City staff recommended the latter.
“I am really wanting to be on the forefront of geothermal,” Council member Michael Buccino said. “I would want to lead by example on geothermal.”
A geothermal system would save energy but has an upfront cost that is $1.4 million more than the natural gas system. The natural gas heat pump system is estimated to cost around $4.7 million, while a geothermal system is expected to cost about $6.1 million.
The geothermal system doesn’t burn any fossil fuels and is estimated to use about 13% less energy than the natural gas option staff recommended. However, geothermal systems draw electricity to power the pumps, and a natural gas generator would be on-site in case of emergency, regardless of the chosen HVAC system.
Geothermal systems also require crews to bore deep holes, which accounts for a large portion of the systems’ higher costs.
Oftentimes, geothermal systems can help offset high installation costs by saving money on utility bills in the long run, but preliminary energy-modeling data for the new fire station and city hall suggest that the yearly cost would be almost identical between geothermal and natural gas.
Buccino said outfitting the proposed fire station and city hall with geothermal could help the city better understand how the system works before deciding how to equip the Yampa Valley Housing Authority’s Brown Ranch development, for which the city is also considering geothermal energy.
“All things being equal, if it costs the same — or close — to have geothermal, I’m saying yes,” Buccino said.
President Joe Biden signed the Inflation Reduction Act in August, which promises a tax credit of up to 30% of the installation cost of geothermal systems, and municipalities are eligible for direct payments instead of tax credits.
“Thirty percent of $1.4 (million) is not a small number,” Deputy City Manager Tom Leeson said.
But city staff were reluctant to assume the city would receive the full 30%. The Inflation Reduction Act hasn’t been fully implemented, and Colorado was only awarded $12 million to distribute across the entire state.
Steamboat Springs City Manager Gary Suiter said the guidelines and criteria for the Inflation Reduction Act may be available early next year, but Leeson warned council members that postponing building the fire station and city hall would rack up costs as well.
“It’s a roll of the dice,” Suiter said. “Think back to the Cares Act and how long it took the United States Treasury to come up with implementation guidelines, and then the state was confused.”
During her remarks, council member Gail Garey said that both HVAC systems carry risk, warning her fellow council members that future regulations might impose taxes or fees on natural gas.
“We’re already seeing an increase of the natural gas prices,” Garey said. “There are communities that are already banning natural gas.”
Caitlin Anderson, an energy-modeling specialist who presented the city with the HVAC systems’ forecasts, said it is possible for the cost of natural gas and electricity to shift enough to affect cost estimates.
Anderson said that electric HVAC systems, unless solar powered, also negatively impact the environment. Coal, especially in Colorado, still powers a large share of the state’s electrical grid, Anderson explained.
“Right now, the Colorado electric grid is not cleaner than natural gas,” Anderson said. “It’s actually dirtier.”
Anderson continued by saying that electric power in Colorado may become cleaner in the future, as Xcel Energy has set goals to source 80% of its energy from renewables over the next decade.
All of the HVAC systems the city is considering can be attached to solar panels to help offset energy costs, but the city is still talking with two different solar companies to better understand how much money the city could save in energy costs compared to the cost of installation.
A fully electrical HVAC system was considered by city staff, but the snowmelt system in the fire station and city hall’s design would draw too much power for electric boilers to be a viable option. City Council was advised that a natural gas system could be retrofitted with electric heat pump boilers in the future if the technology improves.
A majority of City Council supported the natural gas system by the end of the discussion, with council members Robin Crossan, Heather Sloop, Eddie Briones and Buccino agreeing with staff’s recommendation.
“This is not our money,” Sloop said. “This is the people’s money.”
Even though Buccino supported the geothermal system initially, over the course of the discussion, he changed his mind.
“It’s about the cost,” Buccino said. “If I can guarantee that our cost would be similar, I think all of us would go with geothermal.”
Council members Gail Garey and Dakotah McGinlay supported the geothermal option.
“(The natural gas system) is going directly against the Climate Action Plan, which I know at least a couple of us were elected on,” Garey said.
Council Member Joella West wasn’t in attendance.
No formal decision was made, but City Council instructed staff to proceed with designs that include the natural gas heat pump system. Council members also requested more information about costs and benefits of adding solar and whether electric boilers, even if just to heat the building and not the snowmelt system, would be viable.
To reach Spencer Powell, call 970-871-4229 or email him at spowell@SteamboatPilot.com
