The US Department of Energy (DOE) states that building energy use accounts for 36% of all primary energy used in the US and 40% of the total energy used in those buildings is for space conditioning (heating & cooling) and water heating.
The primary GSHP market failure is the expectation that the building owners finance the “GSHP infrastructure” or the outside-the-building portion of the GSHP system, the ground loop heat exchanger (GLHE).
The recent passage of the President’s wide ranging domestic policy package commonly known as the “One Big Beautiful Bill” was ambitious and for the commercial side, Sec. 48a Investment Tax Credit remained at 30% for commercial projects until 2033. Additionally, the law creates an exemption from the longstanding IRS policy known as limited-use property doctrine and allows commercial geo systems to now be leased by third parties, including leases to homeowners.
This opens the floodgates for utilities, developers, builders, ESCOs and financial institutions that want to take advantage of owning a fifty-year renewable asset.
The geothermal Ground Loop Heat Exchanger (GLHE) is not only renewable, it is sustainable and will outlive the building and many generations of heat pumps and is the same as utility infrastructure (poles, wires and underground gas piping) but has the bonus of adding to the third-party owner’s renewable portfolio.
A 2016 report from Oak Ridge National Labs (ORNL) on the use of GSHPs in commercial buildings states a national deployment of GSHPs would significantly decrease energy consumption, energy costs and emissions related to space conditioning and water heating for small commercial buildings and individual commercial building spaces.
Assuming an alternative financing option for the GLHE where the local utility (or other entity) installs and owns the ground loop and amortizes the cost via a surcharge on the utility bill, the payback could be reduced to one year or immediate, depending on the savings.
The latest DOE report, “Pathways to Commercial liftoff, Geothermal Heating and Cooling.” January 2025, states that “GHPs are a technology readiness level 10, commercially available across the US and if widely deployed could result in reducing wholesale payments for electric grid services by at least $300 billion through 2050.”
This report also stated that because less grid infrastructure investment is required with the large-scale deployment of GHPs, it would reduce the cost of power for all grid consumers, even those who do not have the technology installed.
These reports recognize the value that GHPs deliver and should be the catalyst that would allow third party owners such as Electric, gas or water utilities to own the ground loop as a renewable asset.
The designation of a ground loop as a qualified Distributed Energy Resource (DER) would assist in deferring or avoiding utility investments in distribution equipment and infrastructure by providing “contracted” loop installation services to the end user (heating & cooling) through utility owned assets.
There is also an opportunity to recognize the renewable storage value of the earth, which is not dangerous or does not take up any room in the facility and which can become part of the utility’s “storage” portfolio.
The major benefit of the ground loop is that it provides for the deferral of larger capital projects that can save the investors or third party owners $$$ while supporting a stronger grid, reducing emissions, lowering peak demand and creating jobs. (a large geothermal project touches 22 job classifications, 90% of which are in trades, 10% are design professionals, sales etc.)
This could have a major impact on a gas utility that is getting constrained in extending their gas lines. This technology offers an option that has zero onsite emissions and allows them to increase its revenue by delivering cooling as well as heating to a facility. Allowing the utility ownership of the GLHE, (the underground infrastructure) would enable this technology to support a stronger electric grid, reduce the cost of energy in buildings and create jobs.
The ground source / geothermal heat pump industry (IGSHPA, GEO & Mission Geo) is fully prepared to support third party ownership with trained individuals and continue to develop a stronger infrastructure needed to sustain the initiative through workforce development using the training curriculum already established by the International Ground Source Heat Pump Association (IGSHPA).
Please call me if you have any questions or need further information, 610-659-4998.