One of the most interesting discussions at last Septembers’ Geothermal Heating & Cooling Days in Dublin had little to do with geology or technology.
It went straight to the money — which is where most energy conversations eventually end up.
Geothermal systems can require higher upfront investment than conventional heating and cooling technologies. For many organisations, this creates a barrier even where the long-term operational and energy benefits are attractive.
But perhaps the problem is not simply the cost of the technology. It is how we think about the asset.
Not all parts of the system are the same
A ground source heat pump is mechanical equipment. Like other mechanical plant, it will eventually need to be replaced.The geothermal collector is different.
Once installed, this underground infrastructure can remain in place for generations, serving successive heat pumps and supporting heating and cooling throughout the life of a building. This raises an important question:
If geothermal is long-term energy infrastructure, should the building owner always have to fund it upfront?
A different model is emerging – Heat-as-a-Service and Energy-as-a-Service models offer another approach.
Rather than the customer funding the full infrastructure cost, long-term capital can finance and own the energy asset. The customer then pays for the heating and cooling service it provides over an agreed period.
This changes the conversation from upfront CAPEX towards long-term cost, performance and risk.
It can also better align the financing period with the life of the underlying infrastructure.
From individual projects to infrastructure portfolios
Another important theme from Dublin was scale. A single geothermal project may be relatively small from an infrastructure investor’s perspective. But multiple projects, each with long-term customers and predictable energy demand, can potentially be aggregated into a larger portfolio.
That creates an opportunity to think differently about how geothermal is financed, owned and delivered.
The technology to provide efficient, low-carbon heating and cooling already exists. Increasingly, the challenge is creating commercial models that allow more organisations to access it. Perhaps the next major innovation in geothermal will therefore not happen underground.
It will happen in how we finance what we put there. If we want geothermal to scale as infrastructure, we need to start financing it like infrastructure.