Background

With ongoing concerns about fossil fuel emissions, focus continues to intensify on forms of renewable energy, most notably solar and wind, with proposed new solar and wind energy farms on the rise. Another form of renewable energy that is receiving more attention is geothermal energy.

Geothermal heating, which uses water from hot springs, has been used for bathing since Paleolithic times and for space heating since Roman times. Simply stated, geothermal energy is heat from within the earth. Below the earth's crust is magma, a layer of hot and molten rock. Heat is continually produced in this layer, mostly from the decay of naturally radioactive materials such as uranium and potassium, making geothermal energy renewable. Unlike wind and solar energy, geothermal can produce power at a constant rate, without regard to weather conditions.

Geothermal Plants and Geothermal Heat Pumps

Geothermal energy can be viewed from at least two perspectives:

• Geothermal energy plants that produce geothermal energy on a large-scale basis, and
• (2) Geothermal systems that use ground source or geothermal heat pumps (“GHP”) to heat and cool commercial and residential buildings individually or in a geothermal heating and cooling “district,” i.e., multiple buildings within a specific area such as college campus, a military base, or a cluster of residential buildings (a “H&C District”).

Geothermal power plants have existed for more than 100 years. Today’s geothermal plants have multiple design options, but the main technique is to extract steam and hot water from the ground, use it to drive turbines, and then return it to the ground as warm water. The high costs of geothermal energy, plus the limited locations where plants can be installed, deterred the construction of geothermal energy plants, particularly in the eastern U.S.

For example, no known conventional geothermal resources suitable for power production exist in Pennsylvania. But even though the western U.S. is more conducive to the construction of geothermal power plants, issues such as earthquake risk, impacts on water quality and consumption, air contamination, and land subsidence present challenges. Nevertheless, geothermal energy use is increasing worldwide as an alternative to fossil fuel use.

How GHPs Work

While some eastern U.S. states lack the resource capacity for large scale geothermal systems, GHPs present a viable alternative to fossil fuels in eastern U.S. states such as Pennsylvania, New Jersey, and New York. The Earth’s temperature in these states remains constant, which is conducive to the use of GHPs. GHP systems were first developed in the late 1940s. Using a heat exchanger, a geothermal heat pump can move heat from one space to another. In summer, the geothermal heat pump extracts heat from a building and transfers it to the ground for cooling. In a ground loop system, U-shaped pipes called ground loops are buried either vertically or horizontally in the ground and circulate a mix of water and antifreeze from the heat pump through the soil, and then back to the heat pump. This thermally conductive mix releases heat into or absorbs heat from the ground as it moves through the underground loop, facilitating the heat transfer that the ground-source heat pump needs to lower indoor temperatures in the summer or raise them in the winter. Once the geothermal heat pump conditions the air, the distribution system delivers it throughout the building.

Visuals from Department of Energy (energy.gov) "Geothermal Heat Pumps"

An open loop geothermal system uses groundwater as a heat exchange fluid. The system pumps groundwater from a well or a body of water. The groundwater passes through a heat exchanger, transferring heat to or from the building. The water is then discharged back into the ground or a surface water source like a pond.

A closed loop geothermal system circulates a mixture of water and antifreeze through a closed network of pipes buried in the ground. The three main types of closed loop systems are horizontal loop, where pipes are laid out horizontally in trenches, where pipes are installed in vertical boreholes, and pond/lake loop where pipes are submerged in a nearby body of water. This is possible only if there is a suitable water source.

Notably, GHP systems offer renewable, efficient temperature control solutions for H&C Districts, can reduce energy consumption by more than 70% compared to standard air-conditioning equipment, and can significantly reduce carbon emissions. Further, geothermal systems can be used in new construction and in retrofitted existing buildings.

Current Initiatives

Given the potential benefits of geothermal energy systems, the federal government, Pennsylvania, New Jersey, and New York have undertaken efforts to promote geothermal energy to varying degrees:

Federal

• The Inflation Reduction Act of 2022 provides investment tax credits on capital expenditures (30%) and for certain “energy communities,” e.g., brownfield sites or closed coal mines (10%).

Pennsylvania

• The Renewable Energy Program provides financial assistance in the form of grant and loan funds that will be used by eligible applicants to promote the use of alternative energy including geothermal energy.
• Hundreds of thousands of oil and gas wells have been drilled in the state, many before modern regulations, and lost over time in fields, forests, and neighborhoods. Evaluation is underway to determine whether the infrastructure can be repurposed for the recovery of low-grade geothermal energy.
• There are between 10,000 and 15,000 abandoned underground coal mines and numerous abandoned underground metal and non-metal mines in Pennsylvania. Many of these sites are flooded. The use of geothermal energy systems capable of exchanging heat with underground mine pools existing beneath sites such as a college campus offers significant potential. One such example is Marywood University in Dunmore, PA.
• Pennsylvania’s 2004 Alternative Energy Portfolio Standards Act defines geothermal energy as a Tier I energy source.

New Jersey

• According to the guide for New Jersey’s Clean Energy Program™ initiative, NJ’s “SmartStart Buildings® is a statewide energy efficiency program available to qualified commercial, industrial, institutional, government, or agricultural customers planning to construct, expand, renovate, or remodel a facility, or to replace electric or gas equipment. Incentives are available for prescriptive measures or for custom measures that are selected and incorporated into the project to help offset the added cost to purchase qualifying energy-efficient equipment.” These prescriptive measures include geothermal energy.

New York

• In July 2022, Senate Bill S9422 was signed into law, establishing “the Utility Thermal Energy Network and Jobs Act to promote the development of ‘thermal energy networks’ throughout the state and to provide jobs to transitioning utility workers who have lost or are at risk of losing their employment.” Thermal Energy Networks, similar in concept to H&C Districts, are utility-scale infrastructure projects that connect multiple buildings into a shared network with sources of thermal energy like geothermal boreholes, surface water, and wastewater. Rather than each building needing its own borehole, multiple buildings in a network can share the same thermal sources. Buildings are linked via underground pipes, and each building is equipped with a heat pump that provides heating or cooling by exchanging thermal energy with pipes containing circulating water. The water in the pipes maintains a temperature within the needed range by exchanging heat with geothermal boreholes or other thermal resources.
• New York in particular offers some excellent examples of geothermal energy projects:
• A new 463-unit residential complex near Coney Island, completed in 2024, is heated and cooled by New York City’s largest geothermal heating and cooling system. However, in 2025, Greenpoint’s 1 Java Street development, comprising 830 rental units in five buildings, will be the largest all-electric multi-family geothermal project in the state.
• Autumn Gardens, a 72-unit apartment complex in Lakeport (western New York state) is heated and cooled using nine separate closed-loop geothermal heat pump systems.
• A new development comprising 108 rental apartments plus ground-floor commercial and community space is underway in Ossining. The development will be heated and cooled by a closed loop geothermal system using boreholes deeper than 500 feet because of the legislation discussed below.
• In late December 2024, the New York State Energy Research and Development Authority (NYSERDA) announced that more than $29 million has been awarded to 15 innovative projects that will reduce statewide carbon emissions. Included in the awards is a project involving the design and development of the largest geothermal heating and cooling system in the Northeast for Fordham University’s Rose Hill Campus in the Bronx.

Legal Concerns

As with wind and solar, geothermal energy production involves numerous legal issues that must be addressed, particularly at the state and local level. Notably, Pennsylvania does not have state laws relating specifically to heat pumps, and the process of enacting legislation and related regulations could be a multi-year process. Further, ownership of surface rights and subsurface rights in Pennsylvania are often severed, and ownership of geothermal resources would likely have to be clarified by statute.

Well Drilling

• Title 7 of the New Jersey Administrative Code sets forth the permitting requirements and the construction requirements and contains specific requirements to all Category 5 vertical closed loop geothermal wells. Boreholes must be drilled by a licensed driller.
• Article 23 of New York’s Environmental Conservation Law provides that owners of open loop or standing column geothermal wells deeper than 500 feet are subject to the same well permitting and reporting requirements as owners of other wells. Due to September 2023 and February 2024 legislation changes, closed loop geothermal wells deeper than 500 feet are not currently subject to the same requirements..
• As noted below, municipalities in Pennsylvania have enacted ordinances governing GHP geothermal energy systems.

Discharges

• The EPA National Pollutant Discharge Elimination System (NPDES) regulations apply to the surface water discharge of GHP wastewater that may occur from an open loop geothermal system. The requirement to obtain a permit may also apply GHP wastewater discharges to a stormwater system that discharges to a jurisdictional surface water body regardless of whether or not a NPDES Permit has been issued for the stormwater discharge.

Land Use

• As with other projects, local land development and zoning ordinances may impact the installation of geothermal energy systems. Pennsylvania’s Municipalities Planning Code, on which local zoning ordinances are based, includes “geothermal energy” in the definition of “renewable energy source.” Various municipalities in Pennsylvania have amended their zoning ordinances to address the location, installation, and other aspects of geothermal energy systems, with a particular focus on preventing groundwater contamination.
• The amount of land on which a project involving the use of a geothermal energy system will affect the design and cost of the system, e.g., vertical loop vs. horizontal loop, as well as setback and other zoning-related requirements.

Conclusion

In the eastern U.S., GHP energy systems offer the potential to heat and cool buildings, particularly in a district, at potentially significant cost savings and carbon emissions reduction. The savings realized over the life cycle of the HP system would exceed any higher initial construction costs compared to conventional systems.