From individual homes to community thermal energy networks

Joe Parsons

Most people still meet geothermal one house at a time. A homeowner hears that a ground source heat pump can lower bills, cut emissions, and make the house more comfortable, then sees an installed price that looks higher than the furnace and air conditioner they are used to. The conversation quickly collapses into initial cost and simple payback.

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That narrow framing has held us back for years. It treats geothermal as a premium gadget instead of what it really is, long-lived infrastructure that can serve people, buildings, and the electric grid at the same time. Until now, the residential clean energy credit under Section 25D has softened the conversation. “You get 30 percent back” has been the bridge that made higher first cost feel manageable. With that credit scheduled to end for expenditures after December 31, 2025, under H.R. 1, that bridge is about to disappear, and a sales pitch built solely on tax credits and spreadsheets will get harder to sustain.

Meanwhile, something very different is taking shape. Across the country, utilities, cities, housing authorities, and campuses are beginning to talk about thermal energy networks, often shortened to TENs. Instead of installing a single loop for a single house, a TEN uses a shared network of water-filled pipes in the ground to move heat between many buildings and renewable sources, including the stable temperature of the earth. The network operates at ambient temperature, and each building connects with its own water-to-water or water-to-air heat pump.

Once you see geothermal that way, as shared underground infrastructure, the economics and public benefits look very different. The expensive part of a conventional residential system has always been what goes into the earth. When a bore field and distribution piping serve a block, a campus, or a neighborhood, those costs are spread across dozens or hundreds of customers and many decades of service life. A utility or network owner can recover that investment the way they recover the cost of wires and substations, and the customer sees something that feels much closer to a normal equipment purchase and a monthly service fee. That shift from stand-alone projects to thermal infrastructure changes what geothermal can do for the grid and the climate.

A typical air source electrification scenario raises winter peaks sharply on the coldest days, forcing utilities to size wires, transformers, and generation for a handful of hours each year. Geothermal systems operating on a thermal network behave very differently. Because they exchange heat with the ground and with other buildings, they keep their efficiency up when the air is most punishing, which lowers peak demand and smooths load profiles. Every building connected to a thermal energy network is also one less furnace or boiler venting combustion products into the air, which means fewer tons of CO₂, fewer leaks from aging gas infrastructure, and less exposure to indoor contaminants that contribute to respiratory problems.

Neighborhood-scale thermal networks are emerging as one of the most efficient tools we have for delivering climate-friendly heating and cooling equitably, not just to early adopters. And they come with another benefit that rarely fits on a spec sheet, they create work. A thermal energy network is not a one-day equipment swap. It is a multiyear construction and operations program that touches streets, basements, and mechanical rooms. It takes drillers, pipefitters, electricians, HVAC technicians, controls specialists, and maintenance staff. When utilities and communities commit to building these systems at scale, that work becomes steady enough to justify apprenticeships, new training programs, and meaningful career ladders.

Policy can lean into that opportunity instead of ignoring it. New York’s Utility Thermal Energy Network and Jobs Act is one example. The law promotes the development of thermal energy networks and explicitly connects them to jobs for utility workers who are at risk as gas systems wind down. It authorizes utilities to own and operate these networks and directs them to pilot projects that prove out both the technical and workforce benefits. That is a very different message than telling line workers and gas fitters that the best they can hope for is early retirement while someone else builds the clean energy future.

There is also a community development piece that deserves more attention from those of us who have been focused on equipment and incentives.

When the loop is treated as shared infrastructure instead of a private upgrade, it opens the door to serving customers who would never be able to finance a complete geothermal system on their own. Public housing authorities, main street business districts, and mixed-income neighborhoods can all tap into the same underground network, with rate design and support programs that reflect local priorities. Grants, green bonds, and utility investment can be braided together so that low-income households are not asked to front the capital for their own decarbonization. In that context, simple payback on a single home looks decreasingly relevant. It does not capture reliability when the grid is stressed, or indoor air quality and public health, or the avoided cost of replacing aging gas infrastructure. It completely ignores the creation of durable, family-wage jobs tied to building and maintaining thermal infrastructure in real communities.

As we approach the end of the 25D era, I do not think the answer is to fight a rear-guard action around one tax credit, as important as that credit has been to the residential market. The better path is to widen the frame. We can still celebrate the homeowner who chooses a ground source heat pump, but we should invite them and their neighbors to imagine something bigger, a networked approach where the value is shared and the benefits ripple out across the grid and the local economy.

The equipment in the basement or mechanical room is still part of the story. It always will be. But the future of geothermal is not a lonely box that has to justify itself on simple payback alone. The future is a set of thermal networks under our feet, tied to a cleaner grid above our heads, and to a workforce and set of communities that are better off because we chose to build them.

Sources and further reading

The federal residential clean energy credit under Section 25D, which has supported residential geothermal projects, now terminates for expenditures made after December 31, 2025, as reflected in IRS guidance and the amended statute. See the IRS FAQ on energy-credit terminations under Public Law 119-21, Residential Clean Energy Credit (25D), and related credits, and the codified language in 26 U.S.C. § 25D – Residential clean energy credit: https://www.law.cornell.edu/uscode/text/26/25D

For a clear, accessible overview of what thermal energy networks are, how shared ambient-temperature loops function, and why they reduce grid strain while delivering clean heating and cooling to entire neighborhoods, see the Building Decarbonization Coalition’s Thermal Energy Networks overview and the companion TENs resource library: https://buildingdecarb.org/initiatives/tens and https://buildingdecarb.org/resource-library/tens

New York’s Utility Thermal Energy Network and Jobs Act, adopted in 2022, shows how state policy can authorize utilities to own and operate thermal networks while explicitly tying those networks to job creation and a just transition for utility workers. See New York Senate Bill S9422 – Utility Thermal Energy Network and Jobs Act, the Sabin Center for Climate Change Law summary, and the Building Decarbonization Coalition’s overview of TENs state legislation: https://www.nysenate.gov/legislation/bills/2021/S9422, https://climate.law.columbia.edu/content/related-proceedings-and-actions, and https://buildingdecarb.org/resource-library/tens-state-leg

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