This is the first in a multi-part series on the history of geothermal heating and cooling in the United States and beyond. It focuses on the efforts of two men: Dan Ellis and David Hatherton, the latter having trademarked the WaterFurnace name back in 1981 in Ontario, Canada.
David Hatherton is the son of a water well driller with business operations located in Ontario, Canada. David first noted the energy available in the ground during one particularly cold winter day in Ontario. He still remembers inadvertently placing his hand into the water flowing from a newly drilled water well. He recalls how startled he was that it felt so warm. That’s when he realized that there was truly thermal energy available in the ground. He realized that this is an unlimited resource; if only he could just figure out how to tap it and turn it into heating for home buildings.
In 1980, David’s father passed away, and David did not want to continue in the drilling business. Instead, he put together a water source heat pump that he tied into one of the water wells on his property. Shortly after that, he came up with the name “WaterFurnace,” and trademarked it in Ontario, Canada.
Interestingly, many folks did not like the name WaterFurnace. But as Dave shared, the name told the story of the water source heat pump. Instead of a furnace that combusted some type of fuel, the WaterFurnace heat pump used the energy from water in the earth to provide heat.
Meanwhile, Dan Ellis was in the business of saving oil and energy. Starting in 1978, a year of double-digit inflation, Dan was working out of an old van and had started a company called “Genesis Energy Systems.” His idea involved a water source heat pump with a solar thermal boost. You can see the first article that ran in 1982 about that system in the Air Conditioning, Heating & Refrigeration News.
This article piqued David’s interest, and he traveled to Fort Wayne, Ind., to meet Dan Ellis at the office of a successful HVAC contractor, Command Air, at which Dan was a division manager. They had dinner with Harmon Hensley https://www.ahattersley.com/our-story , President of Hattersley and Sons in Fort Wayne, a man of means that caught this vision of what they wanted to do.
About the same time, the late Dr Jim Bose of Oklahoma State University (OSU) started working with Gerald Parker on geothermal closed loop science, coming up with the first equations for piped heat transfer in a horizontal closed loop exchanger. That effort eventually spawned the International Ground Source Heat Pump Association (IGSHPA) in 1987 https://igshpa.org/about-us/.
When you consider the date on Dave’s certificate for successful completion of the Closed-Loop Earth-Coupled Heat Pump Workshop, which was signed by Dr Jim Bose, it gives an idea of how far ahead they were. The date of Dave’s attendance is February 24, 1983, and IGSHPA was organized at Oklahoma State University 4 years later in 1987, with Dr. Jim Bose as the Executive Director.
The pair was set to be a prime distributor for Command Air, on which they planned to affix the new ‘WaterFurnace” label, but the deal did not materialize. They went on to work with investors to create WaterFurnace International in April 1983 in what they affectionately call the “carpeted warehouse.” You can see the harvest-gold carpet in the image in which they are standing proudly in front of the first WaterFurnace booth.
Dan wrote a letter to get Dave a visa to come to U.S. to work as the Executive VP of WaterFurnace. By January of 1984, according to the letter, Dave’s distribution company in Ontario had sold $500,000 worth of WaterFurnace equipment and was the largest single distributor in North America. As a result of their alliance, during 1984, WaterFurnace set up about 20 distributors, enlisted the support of electrical coops to monetize geothermal heat pump rebates in their areas, and had completed some significant commercial projects involving as many as 324 vertical boreholes.
At this time, the Carter Administration still had federal tax credits on the rolls for heat pumps, but those were eliminated by the new administration in 1984. Even with that, WaterFurnace sold $2.2 million in geothermal heat pumps by the end of 1984, showing a $300,000 profit.
When the Command Air part of the deal failed, Dan Ellis arranged for the purchase the water-source division of McQuay with the help of investors, which bootstrapped WaterFurnace fully into the manufacturing business in 1985.
In the next segment, we’ll share information on Dave moving back to Ontario where he worked with the utility to get 7,300 systems installed in three years, Dan moved over to ClimateMaster, and guided them from the red to a $200M company in 10 years.
Jay Egg is a geothermal consultant, writer, and the President of Egg Geo, LLC. He has co-authored two textbooks on geothermal HVAC systems published by McGraw-Hill Professional. He can be reached at firstname.lastname@example.org