Are US geothermal heat pumps a better renewable energy solution than China’s solar panels?

With the onset of the demolition derby of climate regulation, the Trump junta is now taking on another ideological fight which flies in the way of business common sense. Maureen Dowd reflected on these developments in the New York Times recently: Donald, This I Will Tell You. The point is that instead of decisions that might live up to the claims of business sense, the US is now increasingly embarking on a course of ideological, doctrinaire, extreme right-wing policies, limited only by the independence of the judiciary.

In the political sense however, there is a limitation by the states: they can choose to do their own thing. This is why there is talk of secession in California. This issue is evident in the actions regarding the “sanctuary cities,” where the states have a direct interest at stake since the actions of ICE agents directly undermine effective law enforcement. Another area is the collaboration of some northwestern states with Canada on climate matters. Climate policy may actually be advanced by the breakdown on the federal level. Some states, including California and New York are well ahead with realizing that the future of their economies depends on energy competitiveness, and that renewable energy is the answer.

An interesting breakthrough is shaping up in New York State. Governor Cuomo recently announced a new initiative in the area of geothermal heat pumps which goes a long way to counteracting an imbalance that resulted from the fact that at the federal level the Investment Tax Credit was discontinued for everything but solar panels. It was questionable how that made any sense anyway, for the solar panels largely come from China, and the heat pumps largely come from the US, plus the heat pumps are many times more efficient, dollar for dollar. Now New York has a new $15 million facility that subsidizes geothermal heat pumps by upto $6,000 per unit, at the rate of $1,500/ton for residential and $1,200/ton for commercial. To all intents and purposes this levels the playing field between heat pumps and solar, and keeps the geothermal contractors in business.

On the whole, it should be noted that NYSERDA has begun to pay more attention to geothermal and other heat pump technologies, which is encouraging, for this technology is an obvious winner, and has suffered from a lot of official neglect. The only explanation I have for that is that solar is more visible, in the most literal sense. With a geothermal heat pump, you have nothing to point to, and that does not suit the politicians. With rooftop solar, they can point out the car window, or down from the airplane, and point out how much they have contributed to fighting climate change, but geothermal heat pumps are largely underground, and not particularly good looking.

For property owners it all comes down to keeping the economics straight, and more than ever to keep their Brealy-Myers close at hand for the proper way to evaluate capital decisions and not be taken in ever by the financial falsification of investment decisions that sales people love most: you can afford the payments. The only thing that should guide investors is maximizing their property value, and by that measure, geothermal heat pumps should be big winners. As to the financing, the old saw applies: incentives and advantageous financing cannot make a bad project good. They can only make a good project better, so first get the economics straight, that is what matters to the value of your property, and then figure out the most advantageous way to finance it.

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DISCLAIMER: This article expresses my own ideas and opinions. Any information I have shared are from sources that I believe to be reliable and accurate. I did not receive any financial compensation in writing this post, nor do I own any shares in any company I’ve mentioned. I encourage any reader to do their own diligent research first before making any investment decisions.