Maryland eyes expansion of geothermal industry

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In an effort to reduce carbon emissions faster, Maryland lawmakers introduced a bill this year to promote the use of geothermal energy — one of the most efficient ways to heat and cool buildings — through renewable energy credits. Gov. Lawrence J. Hogan Jr. (R) is expected to sign the bill Tuesday.

House Bill 1007, sponsored by Del. Lorig Charkoudian (D-Montgomery), would require 1% of the state’s Renewable Energy Portfolio Standard (RPS) to come from geothermal energy produced in the state by 2028. In other words, it would create a “carve-out” for geothermal energy within the state’s top renewable energy tier under the RPS. There are already carve-outs for solar and wind.

Geothermal energy systems rely on the constant temperature of the earth (around 55 degrees Fahrenheit) to heat and cool buildings. It involves a loop of underground pipes circulating water and other liquids, such as antifreeze. In the winter, the fluid absorbs the heat from the warmer earth and pushes it through a pump system inside the house to produce warm air. In the summer, the pump captures the warm air in the home and releases it into the cooler ground.

Since they do not require burning a fossil fuel and instead depend on almost unlimited amounts of heat from the earth’s core, geothermal systems can significantly reduce a building’s carbon footprint. According to the U.S. Department of Energy, geothermal energy produces one-sixth of the carbon dioxide that a natural-gas power plant emits.

Around 18% of greenhouse gas emissions in Maryland come from heating and cooling in buildings, according to the state’s greenhouse gas inventory. The state has a goal to reach emission reduction by 50% from 2006 levels by 2030, which makes decarbonizing buildings key to reaching this goal.

To encourage a gradual transition to renewable energy, Maryland set up the Renewable Energy Portfolio Standard in 2004, which requires energy companies to use a specific percentage of renewable energy credits every year or pay a fee. At least some must come from solar and wind, but there was no previous carve-out for geothermal energy.

According to the Public Service Commission, all certified geothermal systems in Maryland made up only 0.0036% of retail electric sales last year.

Charkoudian’s bill would double the size of the current geothermal market in Maryland, to reach up to 25,000 homes and hundreds of buildings such as schools, hospitals and community centers across the state, said Ian Rinehart, an energy policy consultant for The Ad Hoc Group.

It could also reduce 140,000 tons of carbon emissions each year, which is equal to the greenhouse gas emissions produced by over 320,000 barrels of oil, Rinehart continued.

Geothermal energy is not new, but there is currently no incentive to invest in geothermal infrastructure in Maryland since geothermal energy is mixed with the other dozen technologies in the “tier 1” clean energy category of the RPS, said Adam Santry, the president of Maryland Geothermal Association and Allied Well Drilling, a geothermal well drilling company.

Energy companies must use some percentage of solar and wind as a part of their credits, but not geothermal. “Tier one is kind of a mixed bag,” Santry said. And geothermal renewable energy credits are so low that they cannot overcome cost hurdles. Geothermal credits are worth $10-13 while solar energy credits are worth hundreds of dollars, Santry said.

This limits geothermal energy to only those who can afford upfront costs before seeing substantial energy bill savings.

If there is a requirement for energy suppliers to use geothermal energy to meet clean energy goals, geothermal renewable energy credits will be worth more and incentivize companies to build and invest in geothermal infrastructure in Maryland, Santry said.

“The reason for the carve-out is to put [geothermal] on a level playing field and to help bring down that first cost so that we can get it in the hands of more Marylanders and democratize the process,” Santry said.

With this incentive, more financial companies will come into Maryland to subsidize upfront costs of geothermal projects in such a way that someone could could start seeing bill savings from the first day, Charkoudian said. This would make geothermal energy accessible to not only wealthy Marylanders, advocates said.

Dandelion Energy, a national geothermal heating company, said at a bill hearing that they plan to enter the Maryland market and open a warehouse in the state if HB 1007 is successful.

Not only would this geothermal carve-out help the state reach its emission reduction goals, but it also supports labor and low- to moderate-income communities.

Large-scale installers would be required to hire 10% of their workforces from apprenticeship programs, which will expand the state’s apprentice workforce. Rinehart expects hundreds of new in-state jobs for HVAC technicians, well drillers and electricians as the geothermal market grows.

Labor unions such as Baltimore Washington Laborers District Council (LiUNA), the American Federation of Labor and Congress of Industrial Organizations and UA Local 486 Plumbers and Steamfitters supported the bill.

In 2019, 82% of renewable energy credits came from out-of-state, according to a report by the Public Service Commission. This means that Maryland is mostly purchasing renewable energy produced in other states in order to reach the state’s energy goals. Charkoudian’s bill would increase the amount of in-state renewable energy sources to purchase from, since geothermal systems have to be installed in Maryland to be eligible.

The bill also requires that a quarter of the new geothermal carveout be dedicated to projects that serve low- and moderate-income populations throughout the state, which includes multi-family buildings, schools and hospitals in low-income areas.

For some, geothermal systems could also mean healthier indoor air quality.

“Especially in rural parts of the state, there are schools that are still using heating fuel at great cost to the school but also at a great cost to the health of the children in that school — they’re breathing that combustion,” Charkoudian said. Making sure that such populations also get the benefit of healthier indoor air quality is important, she continued.

Charkoudian hopes that grounding the emerging geothermal industry with good jobs and environmental justice concerns will lead to “incredible possibilities that go well beyond what’s even in this bill.”

“I hope that [HB 1007] really encourages and supports all of our clean energy policy [makers] to look at incorporating environmental justice and labor provisions from the get-go into the policy,” Charkoudian said.

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