Governor Vetoes Geothermal Bill Again, But Momentum Grows

Last Tuesday, Governor Andrew Cuomo received a letter pressing him to sign a bill incentivizing geothermal energy use. The bill would allow a tax reimbursement of up to $5,000 for residential geothermal heating and cooling systems. Yet Governor Cuomo again the bill, as he did last year. His reasoning is on the financial grounds that both bills impacted state revenues for the 2016 budget, costing about $3 million.

Environmental groups and lawmakers favor geothermal energy as a unique kind of renewable source with a particular advantage over wind and solar. Since the Earth’s thermal energy output is constant, geothermal generation occurs at a constant rate, whereas wind and solar generation vary with weather conditions. Having geothermal energy in New York’s energy portfolio introduces more reliability, ensuring that a baseline amount of energy will be accessible no matter the performance of wind and solar farms.

The US currently accounts for 30% of total global geothermal energy production, making it the world leader. Most American geothermal energy is collected in California; less than 1% of New York’s energy portfolio comes from geothermal sources. Geothermal systems for buildings rely on underground pumps beneath individual buildings, so each individual building owner has the choice of installing them. The main impediment to building geothermal systems is the cost, because users must pay, on average, $6,500 for the system upfront before getting any positive feedback. Depending on size, some geothermal systems can cost upwards of $20,000. Other states and countries have had success with geothermal projects by granting tax breaks for their installation, making it an affordable choice for building owners. NYLCV feels New York could have similar success by stepping in and incentivizing geothermal installation.

There are several different ways to generate geothermal energy, but the central principle is drilling thousands of feet underneath or nearby a building to access heat deep in the Earth’s crust. The heat is either pumped upward directly to warm the building, or used to heat steam that can turn a turbine.

Open Loop Systems: Groundwater heated underground is pumped directly from the Earth into the system, used once for heat exchange (contact with the hot water provides the heat to the heating system), then either discharged outside as steam or back underground.

Closed Loop Systems: A special fluid is pumped between the underground heat source and the Earth’s surface in a continuous circuit. When traveling up, the fluid is hot from being in contact with the heat source, and the system incorporates that heat through heat exchange. Once cooler, the fluid is pumped back down to be re-heated. There are no emissions at all.

Standing Column: A narrow, hollow well is drilled into the Earth with a pump at the bottom like a well. During drilling, fractures in the rock will cause underground water to fill the space. The hot water is pumped up to the surface, used for heat exchange, then pumped back down into the top of the well. Hotter water beneath the used water is pumped to the top, so the used water replaces it at the bottom of the well, and is again re-heated. This cycle continues indefinitely.

The primary benefit of geothermal energy is that it’s clean and renewable. Unlike other renewables, though, its power is not dependent on external factors. Wind and solar production need favorable weather to operate at their full capacities, and hydroelectric dams’ production can vary with reservoir depth and river conditions. The output from geothermal pumps is constant, unaffected by environmental dynamics. Also, installing geothermal energy systems has a smaller environmental impact than other renewables. To get comparable production, installing solar and wind requires large amounts of land, and building dams causes flooding upriver and ecosystem disruption.

Geothermal installation is expensive, but after installation, geothermal is competitive with other energy sources. In 2009, investment bank Credit Suisse calculated that geothermal power costs 3.6 cents per kilowatt-hour, versus 5.5 cents per kilowatt-hour for coal, if geothermal receives loans with lower rates than offered by the market.

Although the Governor vetoed this critical geothermal tax credit again, NYLCV is hopeful that the momentum created in advance of the veto message will lead to its inclusion in the 2017 state budget. Empowering more New Yorkers to choose geothermal energy in their homes would help us achieve our Reforming Our Energy Vision (REV) goals, further establishing New York’s reputation as green leader.