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August 26, 2020

Higher CT rebates draw Google’s geothermal spinout

Photo | Contributed A Dandelion Energy crew drills a geothermal well at a home in New York.
By Matt Pilon

A New York-based installer of home geothermal heating and cooling systems that was spun out of Google’s innovation lab three years ago has set its sights on the Connecticut market.

Dandelion Energy, which says it installed more home geothermal heating and cooling systems than anyone else in New York over the past two years, is expanding its service territory thanks to a recent increase in rebates that help bring down the historically steep cost of such systems, which draw warm and cool air from as deep as several hundred feet below the ground, reducing fossil fuel consumption.

The rebates, which are ultimately funded by Connecticut ratepayers, are provided by utilities through the state’s energy efficiency fund.

In an interview, CEO Michael Sachse said Dandelion expects to open a warehouse location somewhere in Connecticut next year to support its expansion.

He said Connecticut’s geothermal rebates are now on par with New York, which has been a leading Northeast state for geothermal systems. The Empire State’s incentives are a key reason Dandelion moved from California to New York after graduating from the Google parent Alphabet’s X lab in 2017.

Dandelion specializes in residential geothermal, and has developed more compact drilling rigs that allow the company to install systems on smaller properties that might not otherwise be suited for them.

While COVID-19 has slowed things a bit, Sachse sad he is hoping it’s only temporary.

Dandelion, which has installed more than 400 home geothermal systems in New York, aims to significantly increase the use of the technology in Connecticut.

"Our hope is across New York and Connecticut, we’re looking at something like 800 homes next year alone,” said Sachse, who was named CEO of the company early this year, according to Greentech Media.

Data on exactly how many residential geothermal systems are in operation today in Connecticut don’t appear to be available, but they certainly aren’t the norm.

For example, the Connecticut Green Bank’s residential energy efficiency financing program, Smart-E Loans, issued 690 loans between 2013 and 2018 for home heating pumps. Only 4% of them were for geothermal pumps.

Connecticut’s rebates for geothermal systems used to be capped at $1,500 per dwelling, but the new structure, which provides the greatest incentive for converting homes that currently use oil heat, allows for rebates as high as $7,500 for larger systems. Sachse said there are 550,000 fuel oil homes in Connecticut.

Meanwhile, a home with electric heat that converts to geothermal is eligible for up to half that amount.

Coupled with the federal Investment Tax Credit, the rebates help bring down the cost of a system to roughly $40,000, Sachse said, though the price can vary depending on size, property features and other factors.

For a homeowner who purchases a Dandelion system outright, without financing it, the payback period is between five to seven years on a system that lasts up to 25 years, he said. For those who finance, the company says their average monthly heating and cooling bill will be the same or lower than it is now.

"Our expectation is we’re not looking for consumers to buy geothermal because they want to be more sustainable,” Sachse said. “It has to make economic sense.”

He said the increase in rebates is welcome, as ratepayers here have been subsidizing the use of fossil fuels for heating, particularly natural gas.

The state is currently in the seventh year of a 10-year expansion of natural gas infrastructure to new customers.

The better incentives put the more environmentally friendly geothermal technology on more equal footing, Sachse said.

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