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New York Startup Gives Homeowners a Way to Access Geothermal

Dandelion Energy

(Bloomberg) —

Elaine Weir’s home doesn’t sit on a volcano. Nor is it surrounded by natural geysers. But that hasn’t stopped the 69-year-old retiree in Scarsdale, New York from heating her house with geothermal energy.

Every day, plastic pipes buried in Weir’s backyard draw heat from some 300 feet underground, where the earth’s temperature stays 55F (13C) year-round. Two heat pumps installed in her basement then capture the heat by circulating thermally conductive fluid in the pipes, releasing the heat to her home. In summer, that same geothermal system also cools the house.

“It’s the most efficient way you can heat and cool your house,” said Weir, who replaced her gas boiler with the geothermal heat pumps in 2020. While her motivation was to switch to cleaner energy, Weir soon discovered there are other benefits, too. Her utility bills haven’t increased since the installation despite soaring energy prices in recent years. Without air conditioners whirring all day long, she also finds her summertime more enjoyable. And butterfly bushes now flourish in the space the AC units used to occupy. 

Dandelion Energy, a startup based in Mount Kisco, New York, helped Weir make the switch. It’s setting up ordinary homeowners with access to geothermal energy from right beneath their feet.

Since its spinoff from Alphabet Inc., the five-year-old company has already won the backing of investors such as Bill Gates’s Breakthrough Energy Ventures and Alphabet’s venture arm. This week, Dandelion raised another $70 million from venture capitalists including NGP ETP, LenX and Collaborative Fund.

Dandelion provides a one-stop solution for anyone who wants to buy and install geothermal heat pumps. It even offers to help homeowners remove existing furnaces.

“As long as your home is located on the ground, which pretty much all of them are, you theoretically have access to thermal energy resources,” said Kathy Hannun, cofounder of Dandelion.

The startup has so far installed heat pumps in more than 1,000 homes. It aims to double its installations next year by replicating a so-called “pay as you go” business model that has accelerated the use of rooftop solar energy.

Tapping geothermal energy for heating and cooling “fits certain situations pretty well, particularly in areas that have individual buildings or small clusters of buildings,” said Jefferson Tester, a professor specializing in sustainable energy at Cornell University.

But “it is wishful thinking that if we’ll just install heat pumps everywhere, we will declare victory,” Tester said, citing concerns over the technology’s requirement for vast underground space, and the source of electricity used to power heat pumps. If a heat pump runs on electricity from fossil fuels, it still cannot zero out emissions, he said.

Buildings are vital to tackling climate change. Greenhouse gas emissions from office towers, shopping malls and residential homes accounted for nearly 15% of the US emissions in 2020, a big chunk of which was generated from burning fossil fuels for space heating and cooling. While emissions cuts vary with different climates, heat pump efficiency and sources of electricity used to run the heat pump, Dandelion estimates its geothermal system could reduce carbon emissions of a home in New York state by 75% if the home switched from oil.

The startup is also modernizing traditional geothermal drilling practices with the help of a 21st-century “treasure-hunting map.” Unlike geothermal operators who usually rely on experience to guide their work, which often results in drilling larger and deeper wells than necessary, Dandelion uses geological data acquired from a company Hannun declined to disclose to pin down the precise depth of each drilling. “That’s been a driver of cost savings for our homeowners,” she said.

Purchasing and installing a Dandelion heat pump costs at least $18,000 even after subsidies. By contrast, the price of a conventional air conditioning unit ranges from $3,800 to $7,500, while a gas furnace costs $2,000 to $6,000. And the cost isn’t the only obstacle: Few people in the US have ever heard of tapping the earth as a heat source and a heat sink for their home, making geothermal heat pumps a tough sell to homeowners.

Dandelion currently operates in New York, Connecticut and Massachusetts, and it is considering entering Maryland and Colorado. That time-consuming expansion has left Hannun no choice but to shop for a non-Dandelion geothermal system this year for her home in California, which is beyond her company’s service range.

But Michael Sachse, chief executive of Dandelion, said the business is beginning to take off. The company installed about 500 heat pumps in 2022, the equivalent of its total installations over the first four years.

Much of that growth was spurred by rising public awareness of geothermal heat pump technology and deepening concerns over energy security amid Russia’s invasion of Ukraine, according to Sachse. The Inflation Reduction Act, which was passed in August and increases federal tax credits for geothermal energy, will soon become another driving force.

“The IRA will allow us to bring forward a lease model,” said Sachse, who aims to borrow a page from the playbook of US solar energy developers, whose residential installations have rocketed from practically nonexistent in 2014 to 3.9 gigawatts last year.

As the fresh incentives spark an investment frenzy, Dandelion is in talks with banks, infrastructure funds and other potential financial partners to roll out a scheme that will free homeowners from making financial commitments upfront. Instead, they can pay for a geothermal heat pump while using it.

“Financing is critical,” Sachse said.  “If you look at how residential solar has grown in the US, the lease model was a big part of that. Now, that opportunity is available to us.”

–With assistance from Mark Bergen.

To contact the author of this story:
Coco Liu in New York at yliu1640@bloomberg.net

© 2022 Bloomberg L.P.

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