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The moment for geothermal seemed to have arrived several times since the 1970s. This time, though, could actually be different. A number of factors are forecasting wider use of this type of heating and cooling solution, ranging from rising energy costs to increased interest in finding policy solutions to environmental issues.

The policy issues lining up behind geothermal include the push for decarbonization and electrification. As cities and states move toward banning natural gas, they need new ways for people to heat their homes and their hot water, said Ed Davis, vice president of sales for Enertech Global LLC. The company recently introduced a small unit that connects to the geothermal loop and heats a home’s hot water. These are the kind of solutions manufacturers are delivering as demand increases.

“This is only going to get bigger and spread, especially as utilities either seek out or are driven toward non-pipeline solutions,” said Ryan Dougherty, president of the Geothermal Exchange Organization (GEO).

Tim Wright, Enertech’s chief strategy officer, said builders and developers are talking to his company more and more about geothermal options. Some large-scale projects help show the value of geothermal as an energy source. Dougherty points to the Whisper Valley development outside of Texas, where all the homes connect to a “geo-grid.”

“People like the idea of energy independence. People like the idea that they’re doing something that doesn’t cause more strain.”
Tim Wright
Chief strategy officer, Enertech Global LLC

Energy Independence

Whisper Valley’s developers promote it as the area’s first “zero energy capable” community. The name makes a good fit, Davis said. Geothermal creates much less noise than traditional solutions.

“You don’t hear all the compressors banging and clanging,” he said.

The main concern for most consumers isn’t the racket or even the sustainability. It’s the cost. Recent big jumps in heating costs from natural gas, oil, and propane have more people looking at geothermal. Part of that increase comes from geopolitical uncertainty, another reason more people are considering geothermal.

“People like the idea of energy independence,” Wright said. “People like the idea that they’re doing something that doesn’t cause more strain.”

Geothermal also provides lower long-run costs. It’s the higher front-end cost of installing a ground loop that holds back the industry. Tax incentives over the past decade have helped some, although they have been inconsistent and were phased out for a time. They currently stand at 26% and will decline to 22% in 2023. Dougherty said GEO is working to extend those credits.

Joe Parsons, senior product manager for ClimateMaster Inc., said a long-term tax credit — one that would be available for 10 years — would create the “longer runway” that the industry needs. Other tax rules are helping geothermal as well, Parsons said. For example, accelerated depreciation makes installing a geothermal loop much more attractive for commercial developers.


Improvements in Drilling, Heat Pumps

There are also rebates available for utilities and other sources to reduce the initial cost of installing a geothermal system. Dougherty said there has been considerable support from utility companies to expand the use of geothermal. For example, Eversource, a publicly owned utility that serves New England, is developing a geothermal micro district in the Boston area. (A microgrid consists of a group of buildings, such as a residential development or business district, connected to one ground loop to distribute heating and cooling.)

Improvements in drilling technology are also lowering the cost of geothermal installation. Dougherty said he sees more use of directional boring for geothermal. This is a technology that has been used for installing fiber optic cable for years.

The cost of drilling varies greatly by region. It depends on the ease of drilling, the cost of drilling, and the availability of drillers, Parson said. In some cases, it can be 60% less expensive to drill than in others. An abundance of fracking drillers helps, too.

“They’re really into precision drilling,” Parsons said. “They know how to drill holes and get a lot of production in a day’s time.”

The labor shortage presents a struggle for geothermal, just like every other aspect of the HVAC business. It’s a little more challenging because geothermal installation requires two trades — drilling and HVAC. Parsons said the industry lacks a large enough infrastructure of contractors, and those contractors have more work than they can handle due to a lack of employees.


Same Shortages as Everyone Else

Geothermal also faces the same supply issues as everyone else. In the fall, prices for the materials for ground loops reached an all-time high, although they have declined. Other constraints have hit heat pump production.

“Sometimes it comes down to the smallest thing,” Parson said. “An item that costs less than $5 can hold back the capability to build a $3,000 system.”

The supply issues actually reflect a positive movement for heat pumps that makes geothermal more viable. Twenty or 30 years ago, Wright said, heat pumps carried a questionable reputation. Today, heat pumps are much more effective and efficient.

They are also much smarter. Connected units provide real-time data on the performance of a geothermal systems. This allows home owners, building operators, and HVAC contractors to make adjustments and perform maintenance to keep them at their peak. It also validates the savings promised to offset the initial cost.

“The customer like to be able to see how their system is doing,” Parsons said.

A major focus for the geothermal industry now is to provide more training for HVAC contractors who want to take advantage of this opportunity. Wright said it’s easier to attract interest today because more people seem to know someone who has a geothermal hook-up. That makes contractors more comfortable with the idea that there is a market for this solution. The goal is to continue this trend moving in the right direction.