2014-geothermal-opportunities-usa

OPPORTUNITIES FOR UTILIZING
GEOTHERMAL RESOURCES IN THE
UNITED STATES
Contents
Acknowledgements....................................................................................................................................................2
Abstract ......................................................................................................................................................................3
Introduction................................................................................................................................................................3
Renewable Energy Generation in the United States..................................................................................................4
Centralized Plants...................................................................................................................................................5
Distributed Generation...........................................................................................................................................7
State of the U.S. Solar Industry ..............................................................................................................................7
A Study of Renewable Energy Production in LEED-NC Certified Projects in the Northern United States .............8
Research Methodology.......................................................................................................................................9
Results ............................................................................................................................................................. 10
Conclusion ....................................................................................................................................................... 11
Geothermal Energy Resources ................................................................................................................................ 11
Applications......................................................................................................................................................... 12
Direct Use ........................................................................................................................................................ 12
Hydrothermal Power Generation.................................................................................................................... 14
Cogeneration................................................................................................................................................... 15
Enhanced Geothermal Systems....................................................................................................................... 16
Geothermal Heat Pumps................................................................................................................................. 17
Benefits and Costs............................................................................................................................................... 19
Direct Use ........................................................................................................................................................ 19
Hydrothermal Power Generation.................................................................................................................... 21
Cogeneration................................................................................................................................................... 23
Enhanced Geothermal Systems....................................................................................................................... 23
Geothermal Heat Pumps................................................................................................................................. 24
Case Study: Geothermal Energy Utilization in Iceland............................................................................................ 25
Gretchen Heberling, Author
MAP Sustainable Energy Fellow
U.S. Green Building Council
Research sponsored by the
U.S. Green Building Council, Summer 2014
http://insight.gbig.org/author/gretchen-heberling/

Development of Geothermal Power and District Heating .................................................................................. 25
Development of Other Geothermal Applications ............................................................................................... 28
Geothermal Energy Today................................................................................................................................... 29
Legal & Regulatory Environment..................................................................................................................... 29
Recommendations for Implementing Geothermal Systems in the United States.................................................. 31
Widespread Utilization of Heat Pumps ............................................................................................................... 31
Market Growth................................................................................................................................................ 31
Barriers to Increased Adoption ....................................................................................................................... 33
Steps for Implementation................................................................................................................................ 34
Increased Geothermal Capacity Additions.......................................................................................................... 35
Market Growth................................................................................................................................................ 36
Regulatory Barriers.......................................................................................................................................... 36
Supportive Policies and Funding ..................................................................................................................... 38
Strategy #1: Replace Retiring Coal Plants with Geothermal ........................................................................... 38
Strategy #2: Expand U.S. District Energy Infrastructure.................................................................................. 40
Strategy #3: Deploy EGS with Cogeneration & District Heating...................................................................... 41
Appendix.................................................................................................................................................................. 43
Acknowledgements
Many thanks to Dan Winters, Chris Pyke, and the rest of the research team at the US Green Building Council for
their help and support.
Information on recent developments in the geothermal energy industry were provided at the 17th
Annual
Congressional Renewable Energy and Energy Efficiency Expo + Forum on July 31st
, 2014. Supplementary data and
commentary regarding geothermal heat pumps were provided by Ryan Dougherty of the Geothermal Exchange
Organization. Recent data on geothermal power production and regulatory barriers were provided by Karl
Gawell and Benjamin Matek from the Geothermal Energy Association.

Abstract
Renewable sources of energy are slated to comprise an increasing share of energy generation in the United States,
and a larger number of distributed generation systems are being installed each year. The purpose of this white
paper is to investigate renewable energy production in America, with a focus on building projects eligible to
achieve Leadership in Energy and Environmental Design (LEED) certification. A study of projects receiving the
Renewable Energy Production credit revealed that projects in the northern U.S. primarily utilize solar photovoltaic
(PV) panels to produce energy on-site, despite lower solar radiation in these regions. Geothermal technologies
and applications are presented, and their associated environmental, social, and financial costs and benefits are
reviewed. A case study covering the development of geothermal energy resources and the regulatory
environment in Iceland is used to inform and support several suggestions for increased adoption of geothermal
technologies in northern building projects.
Introduction
Renewable energy resources are defined by the U.S. Energy Information Administration as “naturally replenishing
but flow-limited. They are virtually inexhaustible in duration but limited in the amount of energy that is available
per unit of time.” The U.S. electric grid is incorporating increasing amounts of renewable energy resources to
offset both base and peak loads; renewable sources now account for 14% of total energy generation. Additionally,
many building projects are successfully meeting their energy needs and reducing reliance on supplied electricity
by installing on-site renewable energy technology. This paper begins by describing the state of the centralized and
distributed renewable energy industries in the United States, and investigates the renewable energy sources that
a sample of northern U.S. building projects achieving LEED certification employed.
This paper proposes an increased utilization of geothermal energy resources, especially for regions in the northern
U.S. that have high heating demands. Geothermal energy resources of various kinds are available across the U.S.,
and many are co-located within communities. Geo-exchange, which uses heat exchangers to provide energy-
efficient heating and cooling, can be accomplished in any state in the U.S. Geothermal energy is optimal for
projects in the northern U.S. for several reasons:
a) it can offset both electricity and space heating energy use,
b) it is a consistent source that does not vary with time of day or season,
c) it is not affected by weather, and
d) it has the highest capacity factor of any renewable technology.
Currently available geothermal technologies are described and their applications are presented.
Iceland serves as an example of a country that employed quick and effective construction of geothermal
infrastructure to achieve energy independence, lower CO2 emissions, and improve air quality. A case study of
Icelandic geothermal combined heat and power and district heating technology in the capital city of Reykjavík is
presented, and the country’s regulatory environment and implementation procedures are discussed.
Using Icelandic policy and technology execution as inspiration, recommendations for the United States electric
grid and building projects to successfully utilize geothermal resources are offered.
Note: For clarification on energy terms or units of measurement, please consult the Energy Information
Administration’s comprehensive glossary.

Renewable Energy Generation in the United States
Renewable energy resources –
including solar, wind, biomass,
geothermal, hydroelectric, and
municipal solid waste/landfill
gas (MSW/LFG) – are becoming
a larger part of the American
energy portfolio. Some of these
sources, like geothermal, bio
power and wind, can be used to
offset base-load generation,
while solar and hydroelectric
power can be dispatched to
satisfy varying peak loads over
the course of the day (see
Figure 1).
In the Energy Information
Administration’s
Annual Energy
Outlook for 2014,
renewable
generating capacity
is predicted to grow
by 52% from 2012 to
2040 (see Figure 2).
Wind and solar
resource utilization
are slated to nearly
double, and account
for most of this
growth. Although
geothermal capacity
is anticipated to
more than triple, and
biomass capacity
nearly doubles in the
projection,
combined they
account for less than
15% of renewable
capacity additions.
Figure 2 – Renewable Electricity Generating Capacity by Energy Source (GW) from “Annual Energy Outlook 2014”
Figure 1 – Electricity Generation Dispatch Curve from “Renewable Electric Generation Technologies”

Centralized Plants
Much of U.S. electricity generation occurs in centralized power plants; energy is produced in large, remotely
located facilities, and distributed to users in population centers via transmission lines. An interactive map of U.S.
power plants, transmission lines, and other energy assets (refineries, fuel storage, etc.) shows that a variety of
fossil fuel and renewable sources are used for electricity generation, with certain sources predominantly produced
in specific regions of the U.S.
Power production in the U.S. has been operating under a centralized model for the last century for several reasons.
The advent of steam turbines allowed plants’ turbines to increase in size while decreasing the cost of electricity,
contributing to more favorable economies of scale, and these higher-capacity facilities could now achieve higher
temperatures and pressures, leading to higher energy efficiency. Also, by grouping generators together, individual
customers were less affected by outages of specific generators. Innovations in transmission technology enabled
electricity to be transmitted over increasing distances, which allowed plants to respond to new environmental
concerns about pollution, and move to more remote locations.
However, this centralized system also has large inefficiencies: on a global scale, fossil fuel-sourced power
generation results in considerable thermal energy losses (67% of primary energy is lost to heat) and distribution
losses (an additional 9% of primary energy is lost through the transmission process). The U.S. Department of
Energy’s Monthly Energy Review of national electricity flow for 2013 reported that conversion accounts for losses
of 62% of primary energy, and transmission and distribution losses account for almost 7% of gross electricity
generation. This has led many energy professionals to recommend a concerted effort to move the U.S. towards a
more distributed, “smart” grid. Distributed generation is discussed in more detail in the next section of this paper.
Figure 3 shows the United States’ net electricity generation over the past 60 years. Fossil fuel-sourced energy has
always comprised, and still currently comprises, the majority of energy produced for electricity in the United
States.
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Coal
Figure 3 – Electricity Generation in the United States (million kWh) from “Monthly Energy Review August 2014”

However, renewable energy sources in the 2010s are
generating more energy than in the 2000s (see Figure
4).
Figure 4 also shows that conventional hydroelectric
plants are the primary renewable energy source
utilized by the United States, but that other sources
that have been introduced over the past few decades
are increasing their capacity.
In 2013, power produced from wind turbines
amounted to a 30-fold increase over production in
2000. Similarly, solar power experienced considerable
increases as well; 2013 generation was 19 times the
solar power generation in 2000.
Figure 5 shows that over the fourteen years that
annual data has been produced, renewable energy
sources have been accounting for an increasing
portion of centralized electricity production.
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Conventional Hydro
Figure 4 – Renewable Electricity Generation in the United States (million kWh) from “Monthly Energy Review August 2014”
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Figure 5 – Percentage of Total Electricity Generation in the United
States Produced by Renewable Sources from “Monthly Energy Review
August 2014”

Distributed Generation
Distributed generation refers to
energy generation technologies that
are co-located with the projects that
they serve, either on the project site
or in close proximity to the end user,
perhaps at a nearby community
energy facility. Several definitions
provide upper limits on the
maximum capacity of distributed
generators, and some require that
generators be connected to the
electrical grid (if they are not, they
are termed ‘dispersed generation’).
Renewable distributed energy
generation technologies have been
predicted to grow from $69 billion in
market value in 2012 to nearly $86 billion in 2017.
Figure 6 shows that photovoltaic panels are the distributed renewable energy source of choice for building
projects, and installations are projected to increase steadily due to continued decreases in system price.
State of the U.S. Solar Industry
The solar industry has experienced over a decade of substantial growth due to lowered system costs, higher
efficiency ratings, and favorable financial incentives through federal tax credits. In 2013, the cost to install solar
power generation systems decreased further, dropping 15% below 2012 levels. Since the 2006 expansion of the
Business Energy Investment Tax Credit, solar installations have been eligible to receive credit for 30% of system
costs, enabling solar companies to invest in and proliferate solar technology while at the same time reducing
system prices for
consumers.
As a result, in 2013,
4,751 MW of new
photovoltaic panels (PV)
were installed –
including both
centralized and
distributed systems –
almost fifteen times the
amount installed in
2008. This is an increase
of 41% over 2012 levels.
Figure 7 shows the
installations from the
different segments of
the PV market over the
Figure 6 – Projected Installed Buildings Sector Distributed Generation Capacity, (GW) from
“Modeling distributed generation in the buildings sectors”
Figure 7 – United States Photovoltaic Installations (MW) from “U.S. Solar Market Insight Report”

past four years. The residential market has seen steady growth without much cyclical or seasonal behavior. The
non-residential segment has risen and fallen, but has an overall upward trajectory. This portion of the market is
most affected by the general decrease in financial incentives for PV, but it is anticipated to rebound nonetheless.
The utility sector can be volatile and generally experiences a boom in the fourth quarter, which explains the
sporadic spikes in installations.
Though the Sun is providing essentially “free” energy, there are downsides to PV systems. Firstly, solar is an
intermittent renewable resource; panels only operate during sunlit hours, and on cloudy days, produce as little as
2-15% of nominal installed capacity. The variable nature of solar energy makes the availability and maturity of
building- and grid-scale energy storage closely tied to the cost competitiveness of both centralized and distributed
PV. Research and development for more effective storage technologies continues; storage infrastructure adds
value for PV, but also increases the cost of solar installations.
Solar technologies are also one of the least efficient renewable technologies, with average capacity factors of 25%.
Additionally, the efficiency of solar cells in a PV system is affected by several factors: dust, snow, temperature,
and insolation. Dust and snow that may
accumulate on panels will block cells, and
panels can overheat in high temperatures,
both of which reduce overall panel
efficiency.
The insolation (i.e. the solar radiation energy
received on a given surface area) where the
system is installed varies greatly with
location. With lower insolation comes lower
panel efficiency, increasing overall system
life cycle costs and payback periods.
Figure 8 shows insolation levels in the United
States. The color scale at the bottom right
shows that if the same PV system is installed
in both Arizona and Minnesota, the
installation in Arizona will convert almost
twice as much solar radiation into electricity
as the installation in Minnesota.
A Study of Renewable Energy Production in LEED-NC Certified Projects in the
Northern United States
Of the nearly ten thousand projects achieving LEED certification (under the LEED-NC v2.2, NC v2009 and Schools
v2009 rating systems), just over 20% (2,090 projects) were awarded the LEED EAc2 – On-site renewable energy –
credit. Some of these projects are located in areas with less favorable solar radiation values (Figure 1: light
yellow and green shaded areas). This begs an important question: “Is PV the optimal renewable energy source
for these areas?”
To answer that question, an oft-neglected part of energy consumption must be considered, namely energy
consumption for heating purposes. Energy use for heating accounts for 47% of global energy use, more than
electricity or transportation, and the buildings sector is responsible for 50% of final energy use for heat worldwide.
Since buildings consume so much energy for heating applications, buildings in climates with high heating needs
should be considering renewable energy sources that not only offset electricity use, but also heating energy use.
Figure 8 – Solar Insolation Levels in the United States (kWh/m2/day)

Figure 9 illustrates the
variety of climates in the
United States, and
separates the nation into
five zones, defined based
on a region’s cooling and
heating degree days. A
“degree day” is a measure
of heating or cooling energy
demand based on the
average daily temperature
and a desired indoor
temperature (usually 65
°F). The map shows that
many regions with lower
insolation also have higher
heating demands. Since
projects located in the
northern U.S. receive less
solar radiation and have
greater heating needs, it
follows that renewable
energy sources that offset
both electricity and heating
demand would be more
appropriate than employing PV alone.
Research Methodology
When using LEED Online to investigate projects
with substantial heating needs, only projects in
locales with >5,500 heating degree days (Zones
1 and 2) were included in the set. To
meaningfully narrow the data sample, projects
achieving the maximum number of LEED points
on EAc2 were selected, and the remainder
removed from the set.
These restrictions reduced the sample to 171 LEED certified
projects located in 24 states (see Figure 10), with the largest
number of projects located in CO, MA, NY, and OH.
Figure 9 – Climate Zones in the United States from “Leveraging Natural Gas to Reduce Greenhouse Gas
Emissions”
Figure 10 – Location of Sample Projects
19%
4%
4%
5%
1%9%
1%4%
4%4%
1%3%
13%
9%
1%
2%
2%
1% 4%
2%
4%
3% 1% 2%
CO
CT
IA
IL
IN
MA
ME
MN
MT
ND
NH
NV
NY
OH
OK
PA
RI
SD
UT
VT
WA
WI
WV
WY
Figure 11 – Map of Sample Projects

Table 1 shows the number and square footage of projects achieving the different levels of LEED certification.
Table 1 – Certification Level and Square Footage of Sample Projects
Information from EAc2 submittal documents was employed
to determine renewable energy source utilized, annual
energy generated, and annual cost. This data was used to
determine cost per kWh of the installed renewable energy
system.
The cost effectiveness of the renewable energy system was analyzed by comparing project energy costs with
average state grid-sourced electricity prices. Utility costs in these 24 states ranged from $0.0717/kWh in
Washington to $0.1687/kWh in Connecticut with a median price of $0.0938/kWh.
See Appendix for more detailed maps that include project certification years and data regarding renewable energy
sources.
Results
PV panels are the preferred renewable energy source utilized by the 171 LEED certified projects represented in
the data set. 150 of the projects (88%) utilized a photovoltaic system; 118 projects used PV alone, while the
remaining 32 projects employed PV in conjunction with another renewable strategy (i.e. solar thermal water
heating, wind, or biomass).
Solar thermal water heating lagged far behind PV as the second most preferred renewable energy source. 27
projects used solar thermal systems, and 25 of these projects were in conjunction with wind or PV installations.
Wind turbines were the third most preferred source, and they were used for 23 projects; in 11 projects, wind
turbines were used alone.
Variations of biofuel sources (e.g. landfill gas-powered micro turbines, or biomass boilers) were used for 7
projects. Two of these projects were combined heat and power plants, generating both electricity and heat. One
project used a geothermal system (direct use of a local hot spring), and one project utilized a micro hydro
installation, using a local river as a source.
53 of the projects achieved grid parity. The remaining projects paid more or less than the state grid price; their
cost performance is summarized in Table 2 below.
Table 2 – Renewable Energy Source with Associated Losses and Savings Compared to State Electricity Grid
Source Number of
Projects Paying
More than
State Grid
% of Total
Projects of
that Type
Average
Negative
Differential Cost
($/kWh)
Number of
Projects
Paying Less
than State
Grid
% of Total
Projects of
that Type
Average Positive
Differential Cost
($/kWh)
PV alone 39 33% $0.03 36 31% $0.03
PV with other
sources
8 25% $0.02 14 44% $0.03
Solar thermal - - - 2 100% $0.05
Solar thermal
with other
sources
4 16% $0.02 16 64% $0.03
Wind alone 3 27% $0.03 4 36% $0.02
Wind with
other sources
3 25% $0.03 9 75% $0.02
Biofuel alone - - - 4 100% $0.07
Biofuel with
other sources
1 50% $0.01 1 50% $0.03
Certification Level Count Gross Square Feet
Certified 9 98,935
Silver 26 2,166,666
Gold 72 2,135,629
Platinum 64 564,122

Geothermal - - - 1 100% $0.06
Micro hydro - - - 1 100% $0.03
Conclusion
An obvious weakness of this study is the lack of a large data sample for non-PV renewable energy sources. That
said, according to this set of data, a larger portion of northern U.S. projects that use PV alone pay more for
electricity than projects using any of the other sources. Additionally, projects using renewable energy sources like
solar thermal, biofuel, and geothermal have more favorable differential costs than projects using PV alone and in
conjunction with other sources. Finally, more projects using non-PV sources – either alone or with other sources
– paid less than the state grid than the amount of projects that did so using PV (alone, or accompanied by other
renewables).
It is apparent that northern U.S. projects are not taking full advantage of the variety of renewable energy sources
available today, most likely due to less support from federal and local policy and financial incentive programs
compared to that of solar. Much of the attention given to renewable energy generation has been focused on
offsetting electricity use, but in colder climates, a renewable energy source that offsets both electricity and
heating use would be more prudent. Most projects located in cold climates are not pursuing sources that can
offset their heating energy needs, possibly due to a lack of policy concerning thermal renewable energy
technologies and higher technology and installation costs. Policies and financial incentives to encourage the use
of thermal sources like geothermal, solar thermal, and biomass help to make these renewable sources more cost
competitive and transform the market in the northern United States. This would accomplish two important things:
reduce project energy bills and offset energy use from both electricity and heating. Regulatory and policy support
and barriers and three strategies for increased utilization of geothermal resources are described in the last section
of this paper.
Geothermal Energy Resources
There are several types of geothermal systems, and their various characteristics determine the manner of
applications for which they can be utilized, as well as the feasibility and cost of accessing the resource. The
technological installations used to harness geothermal energy can be centralized plants or smaller, distributed or
dispersed systems.
Resources are characterized by
temperature at a depth of 1
kilometer; a system is
considered high temperature if
reservoir temperatures exceed
200 °C (392 °F), and low
temperature if temperatures are
below 150 °C (302 °F). Reservoir
temperatures that lie between
150 and 200 °C are designated as
intermediate temperature
resources. Figure 12 shows that
the bulk of the United States’
high-temperature resources
(areas with correspondingly high heat flow) are concentrated in the western states.
Figure 12 – Geothermal Heat Flow Map of the Continental United States from “A New Geothermal Map
of the United States”

The most conventional form of geothermal
systems are naturally-occurring
hydrothermal reservoirs (see Figure 12).
These are comprised of three components:
heat stored in the Earth from solar
incidence and decay of radioactive
elements in the crust, permeable rock, and
a reservoir of fluid (usually groundwater).
These systems generally occur near
tectonic plate boundaries, where the crust
is thin and allows larger heat flux to the
surface.
Other types of geothermal systems, and
the technologies used to access them, are
described in later sections.
Applications
The steam and hot water from subterranean geothermal
reservoirs can be tapped and used in many applications,
some newly developed and some dating back to the
Paleolithic era. The Líndal diagram (Figure 13) shows a
range of geothermal resource temperatures and their
corresponding best applications.
Direct Use
For centuries, thermal resources from the Earth have
been directly utilized for recreation, using easily
accessible hot springs. Chinese societies used hot
springs to feed spas, and the Romans used them to
feed public baths and heat floors. These systems
were rudimentary, and involved little more than
drilling wooden piles and installing piping to route the
hot water to the desired location.
Since then, geothermal direct use applications have
evolved. Figure 14 shows the types of activities
thermal reservoirs are used for in America (excluding
geothermal heat pumps, which will be addressed separately).
Figure 14 – Direct Use Applications in the United States from “The United
States of America Country Update 2010”
15%
34%
28%
9%
8%
3%
2%
1%
Space Heating
Aquaculture
Balneology
Greenhouse
Heating
District Heating
Agricultural Drying
Industrial Process
Heating
Snow Melting
Figure 12 – Hydrothermal Geothermal Reservoir Diagram from “What is geothermal
energy?”
Figure 13 – Geothermal Utilization at Different Temperatures from
“What is geothermal energy?”

As of 2010, aquaculture has become the predominant direct use application in the United States, with 51 sites in
11 states utilizing geothermal energy for fish farming. Baths and spas, though difficult to quantify due to their
distributed nature, account for the second most popular use; 242 facilities in 17 states were identified. Direct use
space heating for individual buildings is relatively uncommon, and is concentrated in Klamath Falls, Oregon and
Reno, Nevada, where downhole heat exchangers are installed in shallow wells and boreholes.
Direct use geothermal district heating systems (GDHS), which tap geothermal reservoirs and distribute the hot
water to multiple buildings for a variety of uses, are also uncommon in the United States, but have existed for
over a century.
In 1890, the first wells were drilled to access a hot water resource outside of Boise, Idaho. In 1892, after routing
the water to homes and businesses in the area via a wooden pipeline, the first geothermal district heating system
was created.
As of a 2007 study, there were 22 GDHS in the United States. As of 2010, two of those systems have shut down.
Table 3 describes the 20 GDHS currently operational in America.
Table 3 – Direct-Use Geothermal District Heating Systems in the United States from “U.S. Geothermal District Heating: Barriers and Enablers”
System Name City State Startup
Year
Number of
Customers
Capacity,
MWt
Annual
Energy
Generated,
GWh/year
System
Temperature, °F
Warm Springs Water
District
Boise ID 1892 275 3.6 8.8 175
Oregon Institute of
Technology
Klamath Falls OR 1964 1 6.2 13.7 192
Midland Midland SD 1969 12 0.09 0.2 152
College of Southern
Idaho
Twin Falls ID 1980 1 6.34 14 100
Philip Philip SD 1980 7 2.5 5.2 151
Pagosa Springs Pagosa
Springs
CO 1982 22 5.1 4.8 146
Idaho Capital Mall Boise ID 1982 1 3.3 18.7 150
Elko Elko NV 1982 18 3.8 6.5 176
Boise City Boise ID 1983 58 31.2 19.4 170
Warren Estates Reno NV 1983 60 1.1 2.3 204
San Bernardino San
Bernardino
CA 1984 77 12.8 22 128
City of Klamath Falls Klamath Falls OR 1984 20 4.7 10.3 210
Manzanita Estates Reno NV 1986 102 3.6 21.2 204
Elko County School
District
Elko NV 1986 4 4.3 4.6 190
Gila Hot Springs Glenwood NM 1987 15 0.3 0.9 140
Fort Boise Veteran’s
Hospital
Boise ID 1988 1 1.8 3.5 161
Kanaka Rapids Ranch Buhl ID 1989 42 1.1 2.4 98
In Search Of Truth
Community
Canby CA 2003 1 0.5 1.2 185
Bluffdale Bluffdale UT 2003 1 1.98 4.3 175
Lakeview Lakeview OR 2005 1 2.44 3.8 206

In addition to the 20 district heating systems described in the table above, as of a 1996 assessment, there were
over 100 sites in 16 states that employ single wells to heat individual commercial buildings, schools, or residences.
It can be safely assumed that this number has increased in the past 18 years; since a new survey has not been
conducted since, this is uncorroborated.
Hydrothermal Power Generation
High-temperature geothermal resources are currently used across the United States to generate power for the
nation’s electric grid. By utilizing hot water and steam from underground reservoirs, centralized plants convert
this thermal energy to mechanical energy via different types of turbines, and generators convert it once more to
electrical energy.
Different types of power plants are
used depending on the
temperature of the geothermal
system and the ratio of hot water to
steam of the reservoir. Dry steam
plants are the oldest and simplest
type of plant; they directly use
geothermal steam to power a
turbine. But, not every geothermal
system delivers steam alone.
Introduced in 1958, flash steam
plants take pressurized hot water,
reduce the pressure further, and
run the water and steam mixture
through separators, where the
‘flashed’ steam is then used to
power a turbine (see Figure 15,
top). Additional energy can be
extracted by performing additional
flash cycles on remaining water.
Flash steam plants are the most
common type of geothermal power
plant in operation today. Both dry
steam and flash plants require
resource temperatures greater than 150 °C.
Binary cycle plants (Figure 15, bottom) are the next generation of geothermal plant technology; developed since
1967 and introduced in the United States in 1981, binary plants have accounted for nearly all plants coming online
in America since 2007. Binary cycle plants can make use of low-temperature systems (>70 °C) by pumping hot
water through a heat exchanger, where the thermal energy is transferred to a working fluid with a low boiling
point (isobutene is commonly used).
After the source water has been cycled through the power plant system, it is often reinjected into the Earth for
several reasons. Firstly, it is often done to ensure that the reservoir recharges at a sustainable rate, and secondly,
reinjection often mitigates pressure decline and surface subsidence.
Figure 15 – Schematic Diagrams of Flash Steam and Binary-Cycle Geothermal Power Plants from
“Renewable Energy Sources and Climate Change Mitigation"

As of early 2014, the
United States leads the
pack in installed
geothermal capacity, with
3,442 MW installed and
2,500 MW planned. Figure
16 is a map of installed and
planned power plants in
America, using data from
2013. See Appendix for
exact locations of plants in
operation and those
planned for development.
The United States
California’s Geysers
geothermal complex –
comprised of 22 dry steam
plants – is the largest
geothermal field in the
world, and accounts for
most of the United States’
installed capacity.
The Energy Information Administration
reports the capacity factors of all utility-scale
generators (see Figure 17). Over the past few
years, the average capacity factor for
geothermal power plants has decreased
from almost 75% to 66%. Regardless,
geothermal generator units greatly
outperform fossil fuel generators, and have
one of the highest capacity factors of any
renewable power source.
Cogeneration
Geothermal resources are capable of providing both heat and electricity simultaneously, a process called
‘cogeneration’, or ‘combined heat and power’ (CHP). Conversion of primary energy from a fuel source to usable
electrical energy usually produces waste heat, and cogeneration improves the energy efficiency of power plants
by using the excess heat produced for useful applications, such as space heating.
As noted previously, 67% of global primary energy is lost to heat during the energy conversion process. Couple
this with the fact that heat represents the largest portion of world final energy consumption (47%), and it can be
seen that cogeneration is a practical way to make use of the heat that is typically lost.
Figure 16 – Current and Planned Geothermal Power Generation Capacity in the United States
Figure 17 – Annual Capacity Factors for Selected Fuels and Technologies, 2011-2013
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2008 2009 2010 2011 2012 2013
Nuclear
Hydro
Wind
Solar PV
Geothermal
Natural Gas
Combined Cycle
Coal

Following the passage of the Public Utilities Regulatory Policies Act in 1978 and the introduction of tax credits for
combined heat and power projects, cogeneration projects cropped up across the country. Recent developments
like the Energy Improvement and Extension Act of 2008 and the American Recovery and Reinvestment Act of 2009
encouraged deployment of cogeneration, as well. So far, cogeneration capacity in the U.S. is primarily practiced
in natural gas power plants.
There is limited implementation of geothermal cogeneration on a distributed scale: Empire Energy in Nevada
provided excess heat from power production for a vegetable dehydration plant until it closed in 2010, and the
Oregon Institute of Technology’s small-scale CHP plant began serving the university and community of Klamath
Falls in 2010. Unfortunately, there are no centralized geothermal power plants in the United States that utilize
cogeneration. Geothermal is a resource that is well suited for cogeneration; the remaining hot water from
electricity generation can be routed to district heating systems or other direct use applications.
The absence of cogeneration in centralized U.S. geothermal power plants may be due to their remote location.
Since heat cannot be transmitted long distances, a CHP geothermal plant would need to be located nearby a
community or industry with high heating demands. This will be discussed later in this paper.
Enhanced Geothermal Systems
While conventional hydrothermal resources are naturally
occurring, located near to the surface, and contain the three
necessary components for utilization (heat, porous rock, and a
reservoir of working fluid) there are considerable thermal
resources that lie deeper in the crust, but lack other necessary
components (the hot rock may be impervious or dry, or both). To
harness the thermal energy of these “hot dry rock” geothermal
systems, engineering is required to fracture the rock and a
working fluid must be pumped underground to create a man-
made reservoir (see Figure 18). The processes for creating these
reservoirs are called “enhanced geothermal systems” (EGS).
There is a fundamental difference between natural gas “fracking”
and the EGS injection process. Whereas natural gas fracking
involves injecting a mixture of water, sand, and chemicals into the
Earth at pressures greater than 9,000 psi, injection for EGS
reservoir development uses the temperature difference between
cold water and the hot dry rock to cause ‘slips’ and increase
porosity. Water is injected at much lower pressures of 1,000-2,000
psi for EGS reservoirs.
Figure 18 – Diagram of an EGS Power Plant from
“Renewable Energy Sources and Climate Change Mitigation”

EGS is a nascent technology, and is still in the research, development, and demonstration phase. American EGS
efforts began in the 1970s with the Fenton Hill, New Mexico demonstration project, which paved the way for the
unique drilling techniques required
to make EGS feasible. Ongoing
federal funding for research and
development of EGS technologies
has been provided over the past five
years to lower system costs.
Currently there are no operational
commercial-scale EGS plants, but
there are five pilot projects in the
United States in various stages of
development, and a new project in
Arizona is slated to begin this year.
Figure 19 shows the areas of the
country where EGS would be most
effective. Though, it is important to
note that EGS is technically viable
anywhere in the United States; East
Coast projects may require deeper
wells to reach adequate thermal
reservoirs.
Geothermal Heat Pumps
The outer layers of the Earth experience very little seasonal temperature variations compared to outside air, due
to thermal inertia from the large mass of the planet, solar heat gains stored in the crust, and radioactive isotope
decay which replenishes heat losses from the surface. Geothermal heat pumps (GHPs) take advantage of these
moderate temperatures by drilling shallow boreholes into the surface of the Earth and using the favorable
temperature difference to either utilize as a heat source or heat sink, depending on the season.
There are three main types of GHPs: direct exchange, closed loop, and open loop systems. Each type of system
will be described below, and the most recent available market data will be provided. Data was voluntarily self-
reported to the Energy Information Administration by GHP manufacturers and thus doesn’t provide a
completely accurate picture due to the large degree of extrapolation EIA had to undertake. After budget cuts in
2009, the EIA has not received the necessary funding to support tracking of the heat pump industry, so data
cited is from 2009.
Direct exchange heat pumps are the oldest form of GHP technology, and are not widely used today. While not
the most prevalent type of system, they do have extremely well-suited residential and commercial applications
today. Direct exchange technology has advanced significantly in recent years and there is an important
subsector of the industry that dedicated to R&D, manufacturing and sales.
Figure 19 – Ideal Locations for Enhanced Geothermal Systems in the United States

In a direct exchange heat pump, copper piping is buried underground, and refrigerant is circulated through the
tubes, exchanges heat directly with the ground, and returns to the heat pump. After years of decreasing
shipments, in 2009, direct exchange heat pumps accounted for 0.65% of GHP shipments. This number is most
likely an underestimation, for direct exchange systems occupy a niche in the marketplace, and as such, the smaller
manufacturers may not have participated in the EIA survey.
Closed loop systems employ two loops: the first circulates a mixture of water and propylene glycol (anti-freeze)
through high-density polyethylene pipes buried in the ground, and the second loop, filled with refrigerant, is
contained in the heat pump cabinet and exchanges heat with the water solution from the ground loop. Figure 20
shows that the ground loop can be oriented horizontally or vertically in the ground (called ‘ground source’ heat
pumps, or GSHPs), and may also be submerged in nearby bodies of water, like ponds or lakes (these are referred
to as ‘water-source’ heat pumps). Generally, horizontal loops are installed 4-7 feet deep, while vertical loops
require deep boreholes ranging from 30 to 800 feet in depth. In 2009, water-source heat pumps comprised 19%
of GHP sales.
Open loop systems pump groundwater, well water, or water from a nearby
body of water directly into the heat pump where heat is exchanged with a
refrigerant loop (Figure 21). These systems, referred to as ‘groundwater’ or
‘ground water-source’ heat pumps, require good water quality with low levels
of salt, minerals, or bacteria, so as to avoid clogging the system. Groundwater
and GSHPs were grouped in the same category by the EIA survey; together they
accounted for 76% of 2009 geothermal heat pump shipments.
GHPs are the most efficient heating, ventilation, and air conditioning (HVAC)
system available in the market today. There is debate over whether or not heat
pumps should be considered renewable energy sources, but the industry
contends that the technology meets the criteria.
Detractors argue that a GHP is no different than a refrigerator or air conditioner, because it requires electrical
energy to pump the working fluid through the pipes and perform vapor compression cycles. Currently, LEED v4
does not consider heat pumps to be eligible for the Renewable energy production credit; only direct use
geothermal installations qualify. The technical advisory group in charge of the Energy and Atmosphere credits
contend heat pumps do not generate energy, and that anything with a vapor compression cycle is considered non-
renewable.
Figure 20 – Schematic Diagrams of Three Common Closed Loop Geothermal Heat Pumps
Figure 21 – Schematic Diagram of an Open
Loop Geothermal Heat Pump

Supporters contest that solar thermal water heating systems – which are routinely considered renewable energy
sources – also require electricity, have a similar coefficient of performance (COP), and source their energy from
solar heat gains as well. Legislators seem to agree; there is a growing number of states that recognize geothermal
heat pumps as renewable energy sources, and have added the technology to their statutory definitions and
renewable portfolio standards.
Regardless of how GHP technology is characterized, they conserve energy. Heat pumps have COPs of 3.5-5.3,
which means that for every unit of electricity they consume, they produce 2-4 units of thermal energy,
corresponding to efficiencies of 300-500%. Residential GSHP units, when compared to typical air-source heat
pumps, can achieve energy savings of 25-50%, up to 30% compared to typical furnaces, and up to 72% when
compared with electric resistance heating with standard air-conditioning equipment. High-efficiency GSHPs can
do even better, achieving energy savings of up to 70% over air-source heat pumps, and 60% when compared to
furnaces. GSHPs used for commercial applications can achieve similar ranges of energy savings.
Benefits and Costs
Geothermal resources of varying temperatures are bountiful throughout the United States, and energy from
geothermal has the potential to provide consistent, secure, and indigenous base load heat and electricity for the
United States with negligible greenhouse gas emissions. For this reason, increased utilization of geothermal
technologies offers an avenue for climate change mitigation. The different applications for geothermal resources
are all beneficial in terms of energy use reductions, but the varying technologies they employ have different
environmental, social, and financial costs. The advantages and disadvantages of the above applications are
described below.
Direct Use
By using geothermal heat directly, residential and commercial energy consumers can save up to 80% on their
heating bills, when compared to fossil fuel sources. Other direct use industries like aquaculture, agricultural drying,
greenhouses, and balneology can all reduce their energy bills by sourcing their heat from geothermal sources
rather than purchasing fuel. The energy use of all direct use applications combined was nearly 5.8 million MJ in
1996, which is equivalent to almost 1.6 million barrels of oil. By using geothermal resources instead of oil, direct
use systems prevented almost 600 million kg of CO2 emissions. The 1996 assessment also found that there are at
least 270 collocated cities within 5 miles of a geothermal resource that have potential for direct use applications.
If these communities were to employ direct use technologies, they would potentially displace 18 million barrels
of oil annually.
There are very few disadvantages to direct use applications, if any. The risks of relying on geothermal for heating
needs are small if the thermal resource is adequate and the user can afford the upfront costs required for
infrastructure and transmission. After the initial capital investment, there are no variable fuel costs and operations
and maintenance costs are minimal, but it depends on the installation. In addition to financial energy savings, the
value of energy independence for the user most likely would exceed any routine maintenance costs.

Table 4 describes the investment costs and levelized cost of heat for various direct use applications (including
geothermal heat pumps, which will be addressed again later in this section). Natural gas heating has a levelized
fuel cost of $0.043/kWhth, which amounts to $11.94/GJ. Note that this cost considers consumer fuel prices alone,
and does not account for external costs for resource extraction, transportation, and processing. There are over
150,000 MWth of potential undiscovered hydrothermal resources with a levelized cost of under $30/MMBtu, with
around 30% of those resources with levelized cost of heating lower than the EIA average for natural gas heating.
Overall, current levelized costs of heat from direct use of geothermal heat are competitive with market energy
prices.
District energy systems provide diverse benefits. An assessment conducted in 1996 found that municipalities using
geothermal district heating systems saved customers 30-50% in heating bills. District energy systems cut down on
transmission losses – which can account for up to 10% of primary energy consumption – by consuming energy
close to where it is generated.
From the customer’s perspective, there are many benefits to utilizing a district energy system, including: simplified
building operations, avoided capital costs for on-site HVAC equipment, reduced labor, maintenance, and repair
expenses, reliable heat supply, and extra space in the building for alternative uses. A geothermal district energy
system enhances these benefits. There are no fuel costs, which shields consumers from the volatile price
fluctuations of fossil fuels and provides communities with increased energy security. Additionally, there is no need
for combustion equipment like boilers and gas vents, which can reduce capital and operations costs.
By creating a piping network (referred to
as a ‘thermal grid’), it is easier for a
community to adopt a renewable energy
source like geothermal, which is more
difficult to implement on an single-
building basis. The thermal grid for a
district energy system requires
considerable capital investments of
millions of dollars, and constructing the
infrastructure can prove to be complex,
depending on the community in question.
The thermal load density (heating load per
unit of land area) is a key factor for the
feasibility of district heating because it
determines the capital required for the
thermal grid as well as operating costs for
the system. Additional factors that Figure 22 – Map of District Energy Systems in the United States, 2009
Table 4 – Investment Costs and Calculated Levelized Cost of Heat (LCOH) for geothermal direct use applications, 2005 dollars

determine suitability include quantity and quality of heat demand, population density, and local heating fuel prices
and availabilities. The costs for installation of the thermal grid vary on location, but a 2009 study estimated that
connecting one dwelling to a district heating network would range from $5470-$7500 for all heat mains, internal
piping, meters, and installation costs.
These costs and risks can be abated by economies of scale; the larger the community, the less expensive the grid
will be as expenses are borne by a larger number of dwellings. Additionally, there are existing thermal grids in
many large American cities (see Figure 22), and these could be retrofitted and adapted for a geothermal heat
source. This would benefit the economies of these cities: geothermal is a local resource, and therefore keeps
energy expenses inside the community. This is addressed in more detail in the last section of this paper.
Hydrothermal Power Generation
Electricity from geothermal energy is favorable in many ways, even when compared to other renewable resources.
Geothermal energy is reliable and is not
affected by climate or local weather
conditions; therefore, it makes an
appealing energy source for base load
electricity production, especially as fossil
fuel plants retire. Conventional
geothermal technology is mature and
reliable, which reduces risk.
Hydrothermal resource potential was
estimated to be 140,000 EJ in 2005 –
orders of magnitude greater than the
primary energy supplied globally in 2008
(73 EJ) – so theoretical potential is not a
limiting factor for geothermal
deployment.
Geothermal plants consume very little
energy: Figure 23 shows the energy
consumption on a per kWh output basis
for conventional and renewable fuels
(hydrothermal is abbreviated as HT).
Infrastructure accounts for all of the
energy use for hydrothermal plants, but
they consume less energy than even
wind.
Life-cycle greenhouse gas emissions for a
modern closed-loop power plant are four
times lower than a photovoltaic system.
Figure 24 shows the total equivalent
greenhouse gas emissions for the same
technologies as Figure 21 (PWR and BWR
refer to two types of nuclear reactors).
Figure 23 – Total Energy Consumption (kWh) per kWh Output for Different Power-
Generating Technologies from “Life-Cycle Analysis Results of Geothermal Systems in
Comparison to Other Power Systems”
Figure 24 – Greenhouse Gas Emissions (gCO2e/kWh) by Life Cycle Stage for Different Power-
Generating Technologies from “Life-Cycle Analysis Results of Geothermal Systems in

Other gaseous emissions like hydrogen sulfide, methane, hydrogen, sulfur dioxide, and ammonia are often
encountered in low concentrations, but can be managed through process design and fluid reinjection. Overall,
gaseous emissions from hydrothermal power production are benign in comparison to those of coal, oil, and gas-
fired plants.
Geothermal plants have small footprints: a plant may take up only 1-2 acres, with wells occupying 100-200 acres.
Land used by wells and piping networks can still be used for agriculture, conservation, or forestry. An average
geothermal field uses 1-8 acres per megawatt, compared to 5-10 acres for a nuclear plant and 19 acres for a coal
plant. Land requirements for geothermal are even smaller than other renewable technologies like large-scale
photovoltaic installations, concentrated solar, and wind. Geothermal plants can also blend into the surrounding
landscape, thereby minimizing their aesthetic impact.
Geothermal power plants consume less water
than most conventional generation
technologies. The construction of a
geothermal plant requires millions of gallons
of water – mostly for drilling, well stimulation,
and concrete – but the brunt of the water
consumption of a geothermal plant originates
from operations. When compared to other
power generation technologies, hydrothermal
geothermal options are on the low end of the
water consumption spectrum (Figure 25, blue
triangles at right).
Ground subsidence is possible due to the
pressure and temperature changes caused by
well stimulation, but targeted reinjection of
working fluids helps to maintain subterranean
pressure levels. Induced seismicity is also of
concern, but more so for EGS plants, which will be addressed in a later section of this paper.
Capital investment costs for geothermal are high, mostly due to expensive exploration and well drilling activities;
the plant facilities themselves account for no more than 20% of the investment for the plant. Overnight capital
costs for geothermal plants range from $20124300-6300/kW, higher than most other types of power plants.
Compared to fossil fuel electricity generating technologies, geothermal plants are not as complex, operate at
lower temperatures and pressures, and have few auxiliary facilities. Operations and maintenance (O&M) are
challenging for a geothermal power plant primarily due to the underground infrastructure and particulates in the
working fluids. Scaling and corrosion caused by impurities in hydrothermal fluids are major contributors to high
fixed O&M costs. These costs range from $100-140/kW-year, depending on the type of plant, higher than coal,
natural gas, solar, wind, hydroelectric, and even nuclear plants.
Despite high capital and O&M costs, the levelized cost of electricity for geothermal is predicted to be
$201244.5/MWh in 2019, lower than any other generation technology. Geothermal power also provides direct
financial benefits that are not available from technologies like wind or solar. For instance, since around half of the
geothermal plants in the United States are located on public land, royalties and property taxes generate revenue
Figure 25 – Water Consumption (gal/kWh energy output) for Different Modes of
Electric Power Generation from “Life-Cycle Analysis Results of Geothermal Systems in

for the communities in which they operate and give back to the governmental entities that have supported
geothermal development.
Cogeneration
Cogeneration – or combined heat and power (CHP) – plants linked to a district heating network can provide
significant value via several avenues: CO2 emissions reductions, improved energy security, improved efficiencies
of power plants, reduced need for transmission infrastructure, cost savings for consumers, and greater flexibility
due to the ability to take advantage of diverse energy sources.
Conventional fossil fuel power plants have low efficiencies of around 35%, while CHP plants offer efficiencies of
75-90%. CHP systems are projected to reduce greenhouse gas emissions by 4% by 2015, and 10% by 2030. By
using a renewable source of energy, the environmental benefits of geothermal CHP systems would be even larger
than the primarily fossil fuel-sourced CHP systems predominant in the United States today.
Cogeneration technologies generally require large capital investments, particularly because of the heat recovery
equipment. Investment costs range from $2010900-1800/kWe for natural gas cogeneration facilities; values for
geothermal CHP plants are currently not available, due to low market penetration. Despite these high values,
capital costs for a new CHP system are still lower than the average capital cost of a new central generation plant.
Cogeneration systems are also do not require electrical transmission and distribution networks, for the electricity
is generated at the point of use. When compared to the International Energy Agency’s Alternative Policy Scenario
(2007), an accelerated CHP plan resulted in a 3% reduction in overall costs by 2015 ($150B), and 7% by 2030
($795B).
It has been claimed that CHP systems may result in increased energy costs for their surrounding communities, but
this has been shown to be false; projections by the IEA showed that CHP systems provided decreased delivered
electricity costs.
Enhanced Geothermal Systems
Comparable to hydrothermal power plants, EGS plants have markedly lower adverse environmental impacts than
many fossil fuel and renewable energy generation technologies. Surface facilities are compact, and most of the
equipment is subterranean. EGS plants consume less energy than photovoltaic systems (see Figure 23), and those
practicing reinjection emit negligible greenhouse gas emissions (see Figure 24), and if supercritical CO2 were
employed as the working fluid, it is possible for EGS plants to sequester carbon dioxide.
EGS is advantageous because the technology can harness energy from low-temperature geothermal resources,
where hydrothermal cannot. EGS power could be supplied at unproductive sites in hydrothermal fields, on the
edges of existing hydrothermal reservoirs, and in areas of the United States that do not have high-temperature
reservoirs, but have low-grade resources. These resources are available across the United States, and EGS offers
the opportunity to access an estimated 2,800,000 EJ of stored thermal energy (assuming a recovery of 20%).
There are several potential environmental impacts from EGS technologies that differ from those of conventional
hydrothermal plants. The topics of greatest concern for policymakers are: water pollution, water use, land
subsidence, and induced seismicity. Most of these issues can be mitigated or prevented with judicious monitoring
and management.
It is possible for EGS operations to contaminate subsurface water, including freshwater aquifers, but this is
uncommon and is generally caused by defects in well casings, which can be avoided with regular monitoring and
maintenance. There is little possibility of surface contamination if the plant reinjects the working fluid.

EGS facilities use water for well drilling, reservoir stimulation, circulation, and cooling water for reinjection. As
shown in Figure 25, EGS plants use much more water than hydrothermal facilities, but still consume less than most
nuclear, coal, and natural gas plants, and drastically less than concentrated solar plants.
Early in hydrothermal geothermal technology development, reservoir management and reinjection were not
widely practiced. Due to a difference between production and recharge rates, pressure changes resulted in ground
subsidence, exacerbated at fields in sedimentary basins. Since EGS is likely to be done in areas with harder rock
formations, and reservoirs are kept under pressure continuously, subsidence is not expected to occur with EGS
plants.
Since the stimulation of EGS reservoirs requires shearing and slipping of rock, microseismic acoustic noise and
events can occur. Most of these ‘microquakes’ are not noticeable on the surface, but infrastructure to monitor
seismic activity and inform local communities is necessary to mitigate adverse impacts.
EGS technology is still in the demonstration phase, so the levelized cost of energy for existing U.S. projects is high,
ranging from $20060.16-$1.05/kWh. A prominent MIT study optimized the levelized costs using commercially
mature values, which reduced the levelized cost of electricity for these sites to $20060.04-0.09/kWh. As research
continues and EGS technology continues to be refined, costs will decrease.
Geothermal Heat Pumps
Geothermal heat pumps (GHPs) are the geothermal technology that is best suited for applications in individual
buildings. They can be installed in new buildings, or retrofitted into existing buildings, but it is less expensive to
implement them in new construction. As stated previously, heat pumps use 40-60% of the energy consumed by a
conventional HVAC system. As a result of their energy efficiencies, GHPs contribute less to climate change: a 2010
study conducted by Oakridge labs found that for every ton of GHP installed, 21 metric tons of CO2 emissions are
mitigated. Heat pumps also allow for increased humidity control – maintaining 50% relative humidity – which is
especially attractive in humid regions.
Heat pump systems are durable and long-lasting. A ground loop made of polyethylene has an expected service
life of 50-75 years, and heat pump systems require little maintenance, reducing maintenance costs by 60% or
more. The heat pump itself has a life of around 25 years.
A heat pump system has low operational costs but is capital intensive. Fortunately, renewable federal income tax
credits allow residential and commercial projects to receive a credit of 30% and 10%, respectively, of the
investment for a GHP system. In addition to the 10% tax credit, commercial installations qualify for added benefits
of 50% first-year bonus depreciation and a write-off for 100% of the purchase price (up to $500,000), however,
these accelerated depreciation benefits are currently expired. The Geothermal Exchange Organization is currently
striving to get them reinstated, and the Senate Committee on Finance recently held a hearing to discuss the
expired incentives.
Prices for heat pumps vary depending on the size and coefficient of performance (COP) of the system. A 2008
study found that the average cost of a GHP installation was $14,278, which was reduced to $12,500 due to rebates
and other incentives. An energy efficiency program that ran from 2010-2011 in Illinois found that systems cost,
on average, $15,830. Investment costs per kWth from a 2012 study are shown in Table 4. A Colorado-based
environmental technology company offers installation prices of $20,000-25,000 for a typical 2,500 square foot
home, while a 2013 article quoted several different sources, who estimated that total installation costs for a
residential heat pump system range from $30,000-50,000. Installations are much cheaper in most of the country,

and higher costs are typically exclusive to New England and the West Coast, specifically California. This is primarily
a function of unique geological conditions which increase drilling costs, the availability of qualified workforce to
complete the drilling and loop installations, and the union environment in the locale, which can affect rates
charged by drilling engineers and loop installers.
The ground loop is the most expensive component of a ground-source heat pump system, accounting for more
than half of the total cost of a GHP system. Costs are dependent on the orientation of the loops; vertical loop
systems are the most common type of ground loop, as they take up less surface area.
Despite higher costs than a conventional HVAC system, GHP installed in new homes can provide positive cash flow
from day one, as the increased debt service on the mortgage is considerably less than the energy savings from the
heat pump system. A case study on a 2009 residential GHP installation in Pennsylvania showed that, after tax
credits, total system costs amounted to $18,200, annual savings were $2,820, and the system’s payback period
was 6.5 years. Retrofitting buildings is also financially sound: a 2010 report assessing the potential of retrofitting
all U.S. single-family homes with high-efficiency GHP systems found that the investment would yield a positive net
present value over a 20-year period.
Case Study: Geothermal Energy Utilization in Iceland
Iceland’s location and geology have provided the country with a wealth of natural resources. The island is the size
of the state of Kentucky with a population of approximately 325,000, and is located over a hot spot on the Mid-
Atlantic Ridge; for this reason, the island has an abundance of naturally-occurring geothermal resources, which
have been increasingly utilized for multiple applications. The island is also quite mountainous and gets a
considerable amount of precipitation, which has led the country to harness the power of its rivers for hydroelectric
power production.
Development of Geothermal Power and District Heating
The country has not always been a role model of sustainability. Until the mid-20th
century, Iceland depended on
peat and kerosene for heat and imported coal for electricity. In the wake of the Industrial Revolution in mainland
Europe, Iceland began to develop its hydro and geothermal resources in the early 1900s to provide electricity to
Reykjavík and to further mechanize the country.
Geothermal development in Iceland began with direct use applications. In 1908, a farmer living near Reykjavík
harnessed the hot water from a nearby spring to heat his home. In 1930, a pipeline transporting hot water from
Thvottalaugar began to service two schools, a swimming pool, a hospital, and 60 homes. In 1943, the Reykjavík
District Heating Service began operations, and served 2,850 homes by the end of 1945.
Over the years, distributed space heating, spa, and greenhouse installations proliferated across the country, but
only in the late 1940s did the government show an interest in using geothermal resources on a larger scale. After
the Electricity Act of 1946 was passed, the Icelandic State Electricity Authority was created to support geothermal
development by working on hydrologic surveys and developing drilling and utilization techniques. The
construction of energy-intensive facilities like the State Fertilizer Plant (1953) and the State Cement Plant (1958)
coupled with the influx of aluminum smelting companies courting inexpensive electricity generated interest
among Icelandic energy authorities in creating new energy infrastructure.
In 1967, the State Electricity Agency was succeeded by the National Energy Authority (Orkustofnun). The National
Energy Authority sought to make geothermal utilization profitable, and so the government created the Energy

Fund to provide loans for exploration and drilling. If drilling was unsuccessful, the loans turned into grants. Most
likely in response to favorable policies, the first geothermal plant in Iceland was built in 1969, in Bjarnarflag (Figure
27, number 1).
During the oil crises of the 1970s, 43% of the country
used geothermal sources for space heating (see Figure
26), but over half of Iceland’s homes were still being
heated with oil and the remainder used electricity. To
achieve energy independence and protection from fuel
price volatility, energy policy began to increasingly favor
renewables. Policies supported exploration of new
geothermal resources and construction of new heating
utilities and transmission pipelines from geothermal
fields to communities.
In the wake of additional support for geothermal
development, Svartsengi and Krafla power plants were
commissioned in the late 1970s (see Figure 27, numbers
2 and 3). The Svartsengi plant produces both power and
heat, supplying the Keflavík airport and four
municipalities on the peninsula with hot and cold water
and using surplus hot water as supply water for the
popular Blue Lagoon spa complex.
Beginning in 1982, conversion of home heating systems from oil or electricity to geothermal was encouraged by
subsidizing heating costs for homes heated by electricity and oil and providing grants for residential geothermal
heating system installations.
Figure 27 – Geothermal Electricity Generation in Iceland from “Energy Statistics in Iceland 2013”
Figure 26 – Fuel Sources for Space Heating in Iceland from “Geothermal
Development and Research in Iceland”

Throughout the 1980s, the low-temperature fields near Reykjavík were sufficient to supply hot water for the
population of the capital, and 83% of the city’s space heating was supplied by the geothermal district heating
system. In response to increases in population and demand for hot water, a high-temperature field in the Hengill
area was developed and the Nesjavellir cogeneration plant (Figure 27, number 4) began supplying hot water in
1990 and served at least 40% of the capital in 2010. Electricity production began in 1998, and capacity expansions
were completed in 2001 and 2005.
The Húsavik power plant (Figure 27, number 5) was completed in 2000, and was one of the first of its kind to use
a Kalina binary-fluid generator. This small plant serves the town’s space heating and hot water needs, as well as
the local swimming pool.
By 2005, 89% of space heating needs in Reykjavík were satisfied by the city’s district heating system. The mid-
2000s were a time of construction and expansion of geothermal power plants: the Reykjanes and Hellisheiði
power plants (Figure 27, numbers 6 and 7) were constructed in 2006, and additional capacity was added to the
Svartsengi and Hellisheiði plants in 2007. In 2008, two new turbines were added to Hellisheiði, and in 2010, it
became a cogeneration plant, supplying hot water to the Reykjavík district heating system. In 2011, two more
turbines were added, making Hellisheiði the largest geothermal power station in Iceland and the world, in terms
of installed capacity.
Figure 28 shows the Hellisheiði power generation and hot water systems. The power station is a flash steam
combined-cycle heat and power plant, and has a capacity factor of 86.6%. Fluid from the geothermal reservoir is
Figure 28 – System Diagram of Hellisheiði Geothermal Cogeneration Plant

separated during the first flash cycle into steam and water, and the steam is utilized for power production. A
second flash cycle is completed at lower temperatures and pressures, and the steam is used to generate additional
power while the separated water from that cycle is used for the district heating system and for reinjection into
the reservoir.
Development of Other Geothermal Applications
Aside from power production and space heating applications, Iceland has been harnessing geothermal resources
for industrial applications, greenhouses, aquaculture, and more.
A variety of industries have used geothermal heat for drying over the years. From 1967 to 2004, a plant near a
high temperature geothermal field used steam to dry diatomaceous earth and was one of the world’s largest
industrial users of geothermal steam. Since 1976, Thorverk has used geothermal heat to dry seaweed and kelp for
meal. Since 1986, a facility in southern Iceland has been using geothermal fluid to produce liquid carbon dioxide
for greenhouses and carbonated drinks. For around 25 years, geothermal hot water or steam has been used to
dry cod heads for human consumption. Additional applications using geothermal resources include drying pet
food, retreading car tires, washing wool, curing cement blocks, and baking.
Geothermal resources began to be used for heating greenhouses in 1924, and this application of geothermal
steam is an integral part of Iceland’s food production industry. Greenhouses enclosed in glass can be heated, and
the soil can be thawed using geothermal heat as well. Greenhouse production is evenly divided between edible
produce and decorative plants.
Fish farming of arctic char, salmon, and cod is a large business in Iceland. Originally, geothermal hot water was
fed through heat exchangers to heat up fresh water for hatching and early development tanks, but once it was
discovered the dissolved solids do not harm the fish, aquaculture plants began to directly mix geothermal water
with fresh water. The young fish grow faster in warmer water, which shortens production time for the farms.
Recreational swimming and bathing facilities are quite popular in Iceland, and 90% of pools are heated using
geothermal energy.
Over the past two decades, snow melting
systems using geothermal hot water have
become more prevalent in Iceland,
especially for sidewalks and public parking
lots (Figure 29). Half of the installed systems
are in public areas, a quarter on commercial
properties, and a quarter at private
residences. 60% of the installed systems are
in Reykjavík, covering 725,000 m2
, including
50,000 m2
of sidewalks and streets. Most of
these systems are capable of using return
water from district heating or individual
space heating systems; in fact, 67% of the
energy used in snow melting applications
comes from return water.
Figure 29 – Installation of a Snow Melting System in Reykjavík

Heat pumps are not widely used in Iceland, as the inexpensive heat from the geothermal district heating system
is available to most Icelanders, and the subsidies of electric and oil-fueled heating make the large financial
investment for a heat pump unattractive. Recent legislation allows users of subsidized heating to receive funds
(amounting to the value of 8 years of their subsidies) to improve or convert their current system, which may
appeal to those residing in areas where there is not sufficient geothermal hot water.
Geothermal Energy Today
There is currently 664.6 MW of geothermal electrical
generation capacity installed in Iceland, the 7th
highest
capacity in the world. In 2010, the average geothermal
field capacity factor was 87%, the highest of any
country in the world. Iceland is also the country with
the highest amount of electricity generated per capita.
In 2013, 29% of electricity produced in Iceland came
from geothermal sources.
As of 2010, the Reykjavík district heating system served
over 204,000 customers, and as of 2011, geothermal
resources provide heat for household space heating for
90% of Icelanders.
Figure 30 shows that space
heating and electricity
generation are the main
uses of geothermal energy
in Iceland, with the diverse
industrial, agricultural, and
recreational uses described
earlier accounting for 17%
of geothermal energy
utilization in the country.
Overall, geothermal energy
accounts for two thirds of
Iceland’s primary energy
use (see Figure 31).
Legal & Regulatory Environment
Iceland’s impressive utilization of renewable energy resources was accomplished by years of conscientious
research and exploration, concerted policy efforts by governmental agencies, and the informed development of
decision-making and planning procedures for the nation’s energy projects.
As mentioned earlier, the National Energy Authority (NEA) replaced the State Electricity Agency in 1967, and is a
governmental agency responsible for advising the Icelandic government on energy-related topics and issues,
licensing and monitoring development of energy resources, regulating the operation of the electrical transmission
and distribution networks, and promoting energy research.
Figure 31 – Primary Energy Consumption in Iceland, 1940-2013 from “Energy Statistics in Iceland 2013”
Figure 30 – Geothermal Energy Utilization in Iceland from “Energy
Statistics in Iceland 2013”

After the policy shift in the 1970s that aimed to increase the utilization of renewable energy resources in Iceland,
a long-term development plan became necessary in order to address concerns about the environmental and social
impacts of new renewable energy projects. Beginning in 1999, the NEA, other governmental agencies, and working
groups representing industry, energy, and nature conservation came together to develop the Master Plan for
Hydro and Geothermal and Hydropower Development in Iceland. The results of the first phase were presented in
2003, and evaluated 24 geothermal projects and 19 hydropower projects, identifying those that had the highest
economic impact, lowest environmental impact, and positive societal impact. The ranking of the power projects
clearly showed that geothermal projects were considered to have much less environmental impact than
hydropower projects. The second phase of the master plan was completed in 2011, and evaluated 41 geothermal
projects and 40 hydropower projects. In response to the positive progress made with the assistance of the master
plan, the government elected to make the master plan a continuously refined planning tool, to be revised every
four years.
There are at several energy companies in Iceland, but only a few of them are focused on geothermal resources.
Landsvirkjun, the National Power Company of Iceland, is the largest producer of electricity in Iceland, with a 73%
market share. Landsvirkjun mostly operates hydropower plants, but also operates the Krafla and Bjarnarflag
geothermal power plants. Orkuveita Reykjavíkur (Reykjavík Energy) owns and operates the Nesjavellir and
Hellisheiði geothermal power stations. The small geothermal power plant in Húsavik was acquired by Global
Geothermal Limited, a subsidiary of Wasabi Energy in 2011, and the Svartsengi and Reykjanes plants are owned
and operated by HS Orka, a subsidiary of Alterra Power.
The Electricity Act of 2003 sought to liberalize the Icelandic electricity market and encourage fair competition for
the generation, sale, and transmission of electricity while stipulating ‘unbundling’ of generation and transmission
activities and requiring public operating licenses for power plants. The NEA restructured after the Electricity Act,
outsourcing exploration and monitoring services while taking over the administration of surveying, utilization, and
operating licenses, and the Energy Fund.
As the geothermal industry in Iceland has advanced, government support has become less necessary, and utilities
have begun to perform their own geothermal exploration and development. Research activities pertaining to
geothermal exploration are now carried out by Iceland GeoSurvey, a state-owned offshoot of the NEA’s
GeoScience Division, which contracts with Icelandic utility companies to survey potential geothermal fields.
Iceland has opted for an egalitarian, yet regulated framework for resource development. Geothermal resources
on private land belong to the owner, and on public land, belong to the State of Iceland. Resources owned by the
state cannot be sold, only leased for up to 65 years. But, according to the 1998 Act on the Survey and Utilization
of Ground Resources, the NEA can issue surveying and utilization licenses regardless of whether the owner of the
land has begun surveying activities or permitted others to survey, unless either of those parties has a surveying
license. Landowners do not have priority for a utilization license unless they were previously issued a surveying
license, but an agreement must be made if an outside party applies for a utilization license for resources on a
private landowner’s property. Operating licenses are required for the construction of power plants with a capacity
greater than 1 MW, and technical details must be submitted for plants with a capacity greater than 30 kW.

Recommendations for Implementing Geothermal Systems in the
United States
The previous sections of this paper served to provide a knowledgebase with which to face the challenge of
increasing the market penetration of geothermal technologies. The first section summarized the state of
renewable energy generation in the northern United States, and showed that solar technologies – despite being
variable and easily affected by climate and weather, offsetting only electricity use, and achieving low capacity
factors – are the predominant renewable energy source being utilized today. The second section enumerated
the types of geothermal technologies and applications available on the market today and presented their
associated environmental and financial costs and benefits, showing that geothermal technologies have the
lowest environmental impact and highest capacity factor of any renewable energy source, provide constant base
load energy generation, and when lifecycle costs are considered, are cost competitive. The third section offered
a case study of Icelandic geothermal applications, utilization, and regulatory environment, to demonstrate how
a focused effort to develop geothermal resources can result in economical clean energy for all.
The final section of this paper returns the focus to America, and offers four possible strategies for implementing
geothermal technologies in the northern U.S., while presenting the regulatory support and barriers for each one.
The National Renewable Energy Laboratory developed two documents in early 2011 that provided steps for
implementation of geothermal technologies for electricity generation and space conditioning; these have been
used as a base for the following updated policy and market recommendations.
Widespread Utilization of Heat Pumps
As reported in previous sections of this paper, geothermal heat pumps (GHPs) provide considerable energy
savings for buildings of any size and type. Increasing the number of installations of GHPs in new construction
would result in reduced energy use, lower life cycle costs, and reliable heating and cooling for buildings in the
northern United States.
Market Growth
Between 1997 and 2009 – the years the Energy
Information Administration (EIA) collected shipment data from heat pump manufacturers – the number of GHP
installations grew by over 200% (see Figure 32). Before the financial crisis and accompanying recession of 2008,
Figure 32 – Cumulative Rated Capacity of Geothermal Heat Pump
Shipments in the U.S., 1997-2009 from EIA Annual Geothermal Heat
Pump Manufacturers Survey”
0
500000
1000000
1500000
2000000
2500000
3000000
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
CumulativeCapacity,tons
Figure 33 – Geothermal Heat Pump Shipments in the U.S. by Model Type, 1997-
2009 from EIA Annual Geothermal Heat Pump Manufacturers Survey”
0
20000
40000
60000
80000
100000
120000
140000
HeatPumpUnitsShipped
Other models
ARI-870
ARI-325/330
ARI-320

shipments of heat pumps had been growing by 33-40% each year (Figure 33). Since the EIA stopped conducting
the heat pump surveys in 2009, there is now a vacuum for accessible, reliable shipment and manufacturing
statistics. Recent market data is only available through private research consulting firms. In 2011, Pike Research
reported 150,000 U.S. heat pump shipments, with 2017 shipments expected to surpass 326,000.
Growth in shipments is expected globally, too. In 2013, Navigant Research released a report stating that annual
worldwide revenue from GHP systems will grow from $6.5B in 2013 to $17.2B in 2020. Additionally, the report
stated that the global installed capacity of GHPs will grow by almost 150% by 2020, from 52.7 GWth to 127.4
GWth.
Though the number of GHPs purchased annually is increasing, market penetration must be greatly improved if it
installations are to match rates of new construction. For instance, the census reported that 520,000 new single-
family homes were built in the United States during the last year of the EIA heat pump survey (2009), and
194,000 of those houses (37%) employed a heat pump. However, some of those 194,000 homes used an air-
source heat pump, since the census data combines both air-source and ground-source heat pumps in the same
category. In 2013, 38% of newly constructed single-family homes had heat pumps, while 58% use forced-air
furnaces instead.
In addition to the 569,000 single-family homes completed in 2013, there were also 195,000 multifamily units
and 10,000 multifamily buildings completed. Of those finished multifamily units, 55% had heat pumps installed,
up from 45% in 2009. Of the multifamily buildings, 54% had heat pumps, up from 38% in 2009. As mentioned
before, an unknown portion of those heat pumps are air source, not ground source.
The number of new commercial buildings constructed each year is not monitored by the census. In 2012, there
were 5.6 million existing commercial buildings in the United States, and in 1995, there were around 170,000
new commercial buildings constructed and 44,000 demolished annually. Those rates of construction are no
longer quite accurate; either new construction has slowed or demolition of existing buildings has increased so
that there was an average net increase of around 82,000 new commercial buildings between the years of 2003
and 2012.
Data on commercial buildings is collected by the EIA using the Commercial Buildings Energy Consumption Survey
(CBECS), which has been conducted every three years until recently. The 2003 survey is the most recent
complete collection of data on the stock of commercial buildings available at this time. Of the 5,215 commercial
buildings included in the microdata sample of the 2003 CBECS, only 33 utilized a ground source heat pump, a
disheartening 0.6%. Fortunately, new data is forthcoming; the results of the 2012 survey will be available in
spring 2015, and will hopefully show that a larger portion of nonresidential buildings in the United States are
using ground source heat pumps.
Over the past decade, prominent retailers have used GHP technology to reduce energy bills and market the
sustainability of their brands. Corporate sustainable commitments to geothermal are becoming more common:
companies like IKEA, Walgreens, and McDonald’s have experimented with using geothermal heat pumps in their
stores. IKEA has vowed to be energy independent by 2020, and to accomplish that, has chosen to continue using
geothermal technologies to provide heating and cooling, employing 64 heat pumps for their Merriam, Kansas
store – the largest GHP project ever seen in either Kansas or Missouri. Walgreens has also found considerable
value in utilizing geothermal heat pumps; they reported that their stores perform better financially, their brand
is enhanced, and they are better prepared for the eventual phase-out of synthetic refrigerants.

Heat pump manufacturers are also reporting growth in the education and hospitality sectors, while anticipating
uptake in the multifamily residential, office, elder care, and municipal markets. This increased adoption is said to
be in response to the high energy efficiency (and accompanying energy savings) of GHP technologies, escalating
levels of new construction since the economic recovery, and favorable tax rebates.
Indeed, institutional entities like universities, public grade schools, and hospitals are embracing geothermal heat
pumps as a way to save money while heating and cooling their campuses. Sierra Club’s Campuses Beyond Coal
initiative has encouraged numerous American universities to divest themselves from fossil fuels and transition
to renewable energy sources for their electricity and space conditioning demands. A 2011 report showed that
there were 86 universities in the U.S. with geothermal energy systems completed or under construction. As of
1999, nearly 500 public grade schools had geothermal heat pump systems installed. Recent numbers for public
schools are not readily available, but recent press releases from AZ, IL, OH, NE, and TX show that uptake is not
slowing.
Barriers to Increased Adoption
Manufacturers cite several key barriers to growth: high upfront costs of technology and installation, lack of
consumer understanding of system life cycle costs, and logistical challenges.
In a 2009 report submitted to the U.S. Department of Energy, Navigant Research noted several technological,
market, and regulatory issues that are preventing widespread application of ground-source heat pumps: the
significant complexity, cost, and risk of the ground loop, poor payback period when compared to air-source heat
pumps, space limitations that make ground loops less feasible in urban areas, environmental regulations
prohibiting reinjection of groundwater, low market awareness among consumers, and limited numbers of
qualified and trained installers.
At a recent energy expo in Washington, D.C., the Geothermal Exchange Organization cited several concerns for
continued growth, the biggest being the potential expiration of federal tax credits on GHPs in 2016. State laws
and regulations concerning groundwater resources are also problematic: boreholes for GHP systems are unfairly
treated like wells, which puts them under the purview of water well codes. Lack of widespread consumer
education about GHP technologies, efficiencies, and financial savings is a continuing problem. The dearth of
recent, accessible heat pump market information since the cessation of the EIA survey make the group’s work
harder, especially because large GHP manufacturers like Trane, Bosch, and Carrier have elected not to join the
organization, and therefore do not divulge their shipment information. One of the largest tasks the organization
is currently engaged with is fighting for the inclusion of GHPs in state renewable portfolio standards (RPS).
Figure 34 shows the RPS requirements and goals currently enacted in the United States. Additionally, many
states choose to support higher-cost renewable technologies by using credit multipliers or “carve-outs”. In this
way, certain types of renewable energy will be ‘worth’ more when counting toward an RPS goal. States electing
to utilize carve-outs largely incentivize solar technologies. So far, there are 23 states (and the District of
Columbia) that have adopted an RPS with solar or distributed generation provisions.
Only three states (NH, MD, and MA) include GHP technology in their RPS policies. This is primarily a terminology
problem; most RPS documents have definitions of renewable that state “energy generated” but do not include
the phrase “thermal load avoided”. There are no states that have GHP carve-outs in their RPS.

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