Maryland Approves Geothermal Heaters For Renewable Credits

Geothermal heat pumps use heat from the ground to control temperatures within a structure. Temperatures 20 feet below ground level stay between 50 and 60 degrees year round, so GHPs can use absorbed solar energy or contact points with groundwater to make a home or office warmer or cooler.

Maryland has become the first state to recognize geothermal heat pumps (GHPs) as an accepted technology for renewable energy credits.

The state’s Renewable Energy Portfolio Standard—Renewable Energy Credits—Geothermal Heating and Cooling bill passed earlier this month, and includes a $3,000 tax credit incentive for residential geothermal system purchases beginning next year.

Maryland’s Renewable Energy Portfolio Standard, originally passed in 2004, mandates that all electricity suppliers must generate at least 20 percent of the power in their ratepayer systems from renewable sources by 2022.

Ted Clutter, communications director at the Geothermal Exchange Organization (GEO), told BuilderOnline that state acceptance of GHPs should push utilities to provide rebates or financing for homeowners to have geothermal systems installed. Fostering GHP use will earn utilities credits, which can be applied to the 20% mandate or sold to under-complying utilities.

GEO, a national trade association for the GHP industry, supported Maryland’s bill and is working to get geothermal systems recognized in Illinois, California, and in a Senate bill that would mandate clean energy purchases nationwide. Nearly 40 states have mandates for renewable energy credits.

Clutter claims that tax incentives make GHPs the most cost-effective method for heating and cooling homes, despite a GEO estimate that average residential geothermal systems cost $20,000 to purchase and install. "There’s a 30 percent federal tax rebate, which would reduce the cost by $6,000. Maryland has an additional $3,000 rebate, bringing the cost down to $11,000, which is how much a traditional heating and air conditioning system would cost anyway,” Clutter said. “Energy bills will [also] be cut by 40 percent to 70 pecrect, making the payback time as little as three to seven years, depending on the house."