A New Year for GEO Success

Douglas A. Dougherty, President and CEO                                           January 2012

In 2011, the Geothermal Exchange Organization (GEO) established itself as the Voice of the Geothermal Heat Pump Industry. We now have a full-time spokes-person, and we have renewed and intensified work with your Washington, DC advocacy team. Most importantly, we have begun the work of establishing GEO with numerous contacts at the State level.

We had an outstanding year at the federal level. GEO-inspired language in an appropriations bill that passed the Senate and House directs the U.S. Department of Energy (DOE) to develop a plan for research and development—and promotion—of geothermal heat pumps (GHPs). Given that 40% of all energy used in this country is for buildings, this new mandate is a huge success. It sends a very strong message from Congress that DOE must promote our technology to reduce thermal loads of buildings.

In the same bill, Congress restored funding to a cash-strapped Energy Information Administration (EIA). Restoring funding for EIA activities is a necessary win for our industry. We must have credible technical data on GHPs going forward—data the EIA collected until its funding was cut last year. Restoration of those funds should prompt EIA to continue their data collection and analysis of GHPs.

Perhaps most important for the industry during 2011 was that Congress essentially ignored tax rebates in its quest to slash the federal budget. I think we’re good for this year, but with a new Congress, 2013 may be a different story. Retaining the rebate is an issue that we must watch closely.

Also important for GEO was finding a champion for GHPs on Capitol Hill in Bernie Sanders (I-VT). He amended a bill that was passed and signed into law, directing the Economic Development Agency (EDA) to develop a pilot program for electric utility On-Bill Financing directed at GHP installations by small business. On-Bill Financing can go a long way toward reducing the sting of high upfront cost with reasonable terms and convenient installment payments.

And we continue to work with congressional staff to include GHPs in a Clean Energy Standard (CES) that Sen. Jeff Bingaman intends to introduce in 2012 as his “last hurrah” before he retires from the Senate and chairmanship of the Senate Committee on Energy and Natural Resources. GEO Chairman Dan Ellis and our Washington team met with the senator’s senior staff in early January to convince them that GHPs should be included the CES as a renewable energy source right alongside solar, wind and other renewable power technologies.

Though election-year politics will likely preclude the CES gaining any momentum in 2012, the key is for GHPs to be included in CES definitions. That’s what we are working on for this year, a “placeholder” for future congresses, putting GHPs in any such legislation from the get-go.

A key GEO function for its members is forming partnerships for the good of the industry. I believe our natural partnerships are with fellow national trade associations that have helped “carry the water” for our industry. The National Ground Water Association, American Society for Heating, Refrigeration and Air-Conditioning Engineers, Air Conditioning, Heating and Refrigeration Institute, American Council on Renewable Energy, and the American Council for an Energy-Efficient Economy—all have served as advocates for GHPs. Now that GEO is established, we are working to strengthen our relationships with those organizations and others, including the National Wildlife Federation and the Sierra Club.

For the future, I can’t stress enough the importance of electric utility support for our technology. GEO believes that that the utility industry can be a tremendous asset to us, as we can for them . The strategy is “carrot and stick.” The carrot is GHPs as an accepted as a renewable energy source. The stick is regulation at the State level for utilities to promote our technology to its ratepayers from an efficiency standpoint, while quietly reaping its baseload-building attributes.

More than 30 States have adopted Renewable Energy Standards (RES), which mandate that a certain percentage of electricity sold by a utility come from renewable sources. Yet only six States mention GHPs, and only one—Texas—recognizes our technology as a source of renewable energy. The rest states relegate GHPs to energy efficient appliances.

GEO has a lot of work to do at the State level . We must convince State officials that GHPS have a positive, dual purpose. Electric utilities can promote GHPs as a highly energy efficient appliance, and they can take credit for the renewable energy that GHPs recover naturally from the earth. GEO has achieved success already. We’ve engaged the Maryland Energy Administration, and they are very close to changing their State RES to include GHPs.

We’ve established contact with the National Association of Regulatory Utility Commissioners, and we are working with a number of State GHP associations to look at not only Renewable Energy Standards, but convincing utilities that On-Bill Financing is a good thing for GHPs. Our work at the federal level will help pave the way. A number of States have On-Bill Financing, but it’s for appliances. So there is a lot of opportunity for GEO at the State level to influence utilities to provide On-Bill Financing for GHPs and ground loops.

Before the recession, GHPs had market penetration of only 5 percent for new home construction. I firmly believe that when economic growth comes back in the latter part of 2012 and during 2013, our industry can easily capture up to 25 percent of the market. That’s because we haven’t stood still. We’ve focused on retrofits, built greater commercial acceptance, fostered awareness and knowledge about GHPs, and built a more robust dealer network with better trained installers and more drillers to install ground loops.

In addition, federal policy is starting to ensure that the energy efficiency of homes will make a monetary difference for mortgage and investments. This will also help thrust GHPs into the marketplace for new homes. And when new homes are built, and builders are installing geothermal, other builders take notice. It’s a snowball l effect that is very exciting for the future of our industry.

GEO had a tremendous year in 2011, and I have high hopes for an even better 2012. But if we are to have an even more prominent voice, we must grow. The bigger we are, the stronger voice we will have at the national and state levels. Considering our competition—the fossil fuels industry, and big renewables like wind and solar—it’s pretty clear that for GEO to make a difference, we need “buy-in” from everyone with businesses related to GHP technologies. That includes manufacturers, distributors, dealers, architects, engineers, drillers, electric utilities and cooperatives. Together, we will succeed.