Is geothermal heating and cooling the next solar? To answer that question, we first need to understand the factors that transformed the residential solar industry and see if those same factors are at play today within the home geothermal industry.
Lessons from the Rise of Solar
Bell Labs invented modern solar panels in 1954. Yet home solar didn’t surge in popularity until the last decade, when companies like SolarCity, Vivint Solar, and Sunrun entered the market. Since 2012, the number of U.S. solar employees has more than doubled to over 242,000. By 2018, installers were completing a new solar project every 100 seconds. It’s easy to see how pervasive solar energy has become when driving around a typical neighborhood and observing the paneled roofs. If companies like SolarCity didn’t invent solar panels, how did they completely reinvent the industry? The answer is standardizing and streamlining the sales and installation process.
In the past, getting solar meant working with a small business. The installer may or may not have specialized in solar. They typically installed only a few niche, custom-designed systems each year. As a result, costs were high and installation was slow. SolarCity and its competitors changed that. They introduced vertical integration, standardized solutions, and streamlined sales and installation. They also used economies of scale to reduce costs and make solar easier to adopt.
Why Geothermal Has Lagged Behind
Home geothermal technology was developed more than 50 years ago. Despite its advantages, it has not reached widespread adoption. On average, geothermal is 48% more efficient than furnaces using gas and 75% more efficient than furnaces using oil. Many HVAC companies sell geothermal heat pumps, but they install only a handful of custom systems each year. This limited experience gives them little chance to refine the specialized skills needed for peak performance. It also prevents them from identifying and managing inefficiencies at scale.
Dandelion Energy’s Streamlined Approach
That’s why Dandelion Geothermal, formerly incubated at Google’s X Lab, is on a mission to make geothermal heating and cooling affordable for homeowners by creating a totally streamlined process from start to finish.
We’re just bringing a similar mind-set to geothermal, which today is very much where solar was a decade ago. We want to sell a standard system.
Not only does Dandelion sell, install, and service our own heat pump, we’re also fully integrated. Our energy consultants work directly with our site survey and design teams to integrate load calculations, ground loop layouts, and other parts of the design process. Unlike traditional heating systems, Dandelion’s heat pump has remote monitoring capabilities. That means that by using wifi and secure cloud storage, we collect data about how every part of the system is operating and make recommendations so it can operate even better. These efficiencies have reduced installation time while increasing quality and performance,
Making Geothermal Affordable
Cost has historically been the biggest hurdle for widespread solar and geothermal adoption, despite the potential for huge savings over time. This cost has decreased and become more manageable in part due to economies of scale, innovative financing options, and extensive state and federal incentives.
In the past, homeowners faced prohibitively high upfront costs to install solar or geothermal. Solar could cost as much as $50,000. Bespoke geothermal systems could run up to $100,000. This changed when solar companies introduced innovative financing. Homeowners could lease a system with no money down or choose a low-interest loan with fixed monthly payments. Suddenly, homeowners who were formerly priced out of solar could access the technology and its significant savings – right away.
At Dandelion Geothermal, we like to keep financing simple, with several flexible options for homeowners to choose from, including low-interest monthly loans with $0 down.
Federal and State Incentives Boost Savings
Both solar and geothermal also benefit from Federal and State incentives. Congress created the initial federal investment tax credit through the Energy Policy Act of 2005. The law aimed to solve energy problems and provide tax incentives for existing and new types of energy production, including wind and solar. In 2008, lawmakers broadened the program to include geothermal heating and cooling systems. The federal tax credit lets homeowners claim 30% of the cost of purchasing and installing solar or a geothermal heat pump system on their federal income taxes. In addition, the New York State Energy Research and Development Agency (NYSERDA) offers extra incentives. These include $1,500 per geothermal heat pump ton, or about $7,500 for a typical system.
Thanks to these cost-saving factors, Dandelion’s geothermal system can cost anywhere between $18,000 and $25,000 with incentives.
Payback Period and Long-Term Value
According to Energy.gov, the payback period for installing geothermal is typically within 5 and 10 years but can be as short as three years! Especially as utility rates continue to climb, the price for getting out of dependency on these resources will pay off more and more over time.
Studies show that renewable energy is not only good for the environment, it’s also good for your wallet. On average, homeowners who install solar increase their home value by 3-4%, and while there are fewer studies analyzing geothermal’s effect on home values, early indicators are positive. For example, an appraiser-led study found that green-certified homes in California were priced 2.19% higher than non-certified homes.
It’s easy to see why homebuyers would pay a premium for homes with improvements that lower their overall energy bill, especially in areas with high utility costs. Homeowners who upgrade to geothermal heating and cooling can reduce costs by 30, 40, or even up to 65%. A typical furnace might burn thousands of dollars of oil or gas each year, but with geothermal, any money spent is invested right back into your home.
Now that we’ve examined some of the factors that helped popularize solar, let’s revisit our initial question – is geothermal the next solar? Thanks to operational efficiencies, affordability, and potential for savings, we believe it is.
This article was previously published on the New York Real Estate Journal.
