Someone recently suggested to Del Overholser, president and CEO of Elk River–based Econar, which manufactures geothermal heat pumps, that he had launched his business at the right time, given the burgeoning green movement. Overholser’s reply: “Actually, I think we got into the business 20 years too soon.”
Overholser, who became interested in renewable energy while a student at the University of Minnesota in the late 1970s, founded Econar in 1986. Geothermal heating and cooling systems work by collecting the earth’s natural heat in piping installed below the ground. Water circulates through the pipes and gathers heat from the ground; Econar’s heat pumps extract the energy and distribute heat throughout the house. In the summer, the system extracts heat from the house and expels it into the earth.
“I thought I couldn’t put this product together fast enough because overnight the world would want my heat pumps,” Overholser recalls. “I couldn’t have been more wrong.”
Econar produced heat pumps in Coon Rapids until 1990, when Fergus Falls–based Otter Tail Power, whose economic development arm helps outstate communities lure new businesses, wondered whether Overholser would be interested in relocating a production facility in Appleton, in western Minnesota. Using Otter Tail funding along with loans from Appleton-area banks, Overholser built a facility that now employs 42. A second plant will open in Appleton in August or September.
Still, Econar struggled throughout the 1990s as prospective customers remained skeptical of the technology. Only a few forward-thinking homeowners and businesses bought the systems, though that was enough to keep Econar afloat.
Then, in 2001, sales mushroomed as a result of a new marketing strategy targeting higher-income green buyers, and as news spread of Econar’s “cold climate” heat pump as well as geothermal’s ability to deliver big savings in heating and cooling bills. It’s not uncommon for a homeowner who pays $2,500 to $3,000 in annual heating and cooling costs with a traditional system to pay only $1,000 with a geothermal system, Overholser says. (Geothermal systems cost, on average, between $18,000 and $20,000, more for larger homes.)
Econar’s momentum continued throughout the decade; sales growth in 2006 was 56 percent. Overholser says that 2008 should be Econar’s best year ever. Having built just 300 heat pumps in its first year, Econar now has 19,000 heat pumps in operation throughout the world. Although most of the company’s units are in the U.S. and Canada, more and more are being shipped overseas.
