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Thermal energy networks are the next big thing
In this episode, I revisit thermal energy networks with HEET's Zeyneb Magavi and Eversource's Eric Bosworth. What was once a novel concept — replacing gas networks with shared ground-source heat pumps — is now being piloted across the country. We explore the technology's remarkable efficiency and its potential to revolutionize heating and cooling — and give gas utilities a second life as thermal utilities.
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David Roberts
Happy New Year, everyone. This is Volts for January 1, 2025, "Thermal energy networks are the next big thing." I'm your host, David Roberts. Back in April 2022, did a podcast on what was, at the time, a somewhat obscure idea: replacing natural gas networks with networks of pipes carrying water that's heated and cooled using the Earth's shallow crust. Rather than each building having a furnace, each would have a heat pump, pulling heat from, or dumping heat into, the circulating water.
One of the most intriguing aspects of the idea is that natural gas companies themselves could manage the transition, becoming heating and cooling companies — thermal energy companies — rather than merely natural gas companies. It would give them an alternative, in a decarbonizing world, to simply going out of business.
Since then, that obscure idea has caught fire. The first operational pilot is up and running in Massachusetts and may be expanded. Dozens of other utilities are contemplating or launching pilots. Dozens of states are considering bills that would echo the one just passed in Massachusetts, which makes it legal for natural gas companies to become thermal companies.
Today, this is one of the buzziest ideas in energy, so I am psyched to revisit it.
One of my guests on that first pod, the pioneer of this idea, is back today: Zeyneb Magavi was the research director for HEET, a nonprofit working on the transition away from gas; she is now its executive director. My other guest is Eric Bosworth, who manages clean technologies at Eversource Energy, the Massachusetts gas utility that is running a thermal network pilot. We're going to get into all the details. Hop in!
Let's do this. With no further ado, Zeyneb Magavi, Eric Bosworth, welcome to Volts. Thank you for coming.
Zeyneb Magavi
Thank you.
Eric Bosworth
Great to be here.
David Roberts
So, Zeyneb, this is, you know, like I said in my intro, a hot idea these days. Very buzzy. Everybody in our little world knows about this. But in the unlikely event that there's some listener out there who doesn't know what we're talking about, maybe you could just start by describing in general terms what a thermal energy network is and how does it work? What are the pieces of it?
Zeyneb Magavi
Absolutely. It's both a hot idea and a cool idea.
David Roberts
Yes, exactly.
Zeyneb Magavi
Sorry, terrible pun. Yeah. It starts with, you know, the ground source heat pump, which a heat pump moves temperature from one place to another. It can move heat in or heat out. So then you get heating or cooling. And of course, like, you know, your refrigerator is a heat pump. This is a known technology. What we're doing with the thermal energy network is we are putting the most efficient heat pump — which is often called a geothermal heat pump or a ground source heat pump — we're putting that most efficient heat pump in the building for the customer.
And then we're having the temperature supply for that heat pump be coming from the street, from utility infrastructure. And that infrastructure is your thermal network. And in the cases we're talking about, owned and managed by a thermal utility, AKA your gas utility. And then the temperature of that network is managed and balanced by geothermal boreholes and by other thermal resources. So the minute you have that network.
David Roberts
We're going to get into that. But at least in the beginning, you're getting the heat from just a series of holes.
Zeyneb Magavi
Yeah, and it's really, really important to clarify that the word geothermal causes a bit of confusion. A lot of people think about Iceland. So, the thing we're talking about is just like you said earlier, it's the shallow, everywhere-form of geothermal. It's the stored thermal energy in the bedrock under our feet, and it's everywhere. What we're doing is basically putting a tube down into the bedrock and back up and using it like a radiator.
David Roberts
Right. So, just so people can envision it, a normal ground source heat pump is just connected to a series of pipes that run in your yard, basically. Your yard or whatever. It's just, you know, you dig down, run pipes to dump heat or pick up heat. This is like that, except the network of pipes in your yard is in fact a giant network of pipes that runs throughout your entire neighborhood. But otherwise, it's just a ground source heat pump; it's just that the heat network it's drawing from is neighborhood-wide rather than just your yard.
Zeyneb Magavi
And networking the ground source heat pumps, a little bit like networking computers; yes, it's the same thing, but you also get some new things that happen.
David Roberts
What is the line drawn — and is there a clear line — between this and district heating? Which, of course, is not a hot new idea. It's a hot, very old idea. Is there a technical distinction?
Zeyneb Magavi
Another really good question. And, of course, the Romans did district heating, right?
David Roberts
Yeah, yeah.
Zeyneb Magavi
There has been so much confusion with the terms thermal energy network, geothermal network, district heating. I recently published a taxonomy paper to try to clarify. What I will say, I believe to be the clarifying, correct language is that district energy systems have this generation nomenclature. They go first generation, second generation, third generation. There's this really interesting thing that happens in district energy naming where you go from a fourth-generation district energy to fifth-generation and you get this step change where it goes from a central source to a distributed source. When you get to that fifth generation, now we're in the zone for this technology.
In the typical definitions in the literature, fifth generation is a two-pipe system. It is dramatically different from fourth generation, which by the way, can have geothermal. You can have a fourth-generation heating district or cooling district that has geothermal, but you're still going to have a central source and central heat pump. When you go to that fifth generation, you're going to decentralize and you suddenly have both heating and cooling at the same time. Then what we did when we proposed the single pipe is take it one little step further, so it's a subset of fifth generation.
David Roberts
Oh, goodness.
Zeyneb Magavi
We took it one little step further, where it is more efficient, a little lower infrastructure cost, and it allows for a really straightforward growth model where you can add people on and off, customers on and off, and add loops to each other and kind of go utility scale. A utility growth model.
David Roberts
Right. You can build incrementally.
Zeyneb Magavi
So, for me, the thermal energy network is any of those ambient temperature heating and cooling networks. The ones that have geothermal energy on them are geothermal energy networks. We could shorten that to TENs and GENs if you wish.
David Roberts
This is a lot; there's a lot to hold in. I think maybe the best way to think about it is traditional, sort of old-school district heating, which has been around for a long time, typically uses a central heating source. Sometimes that's geothermal, sometimes it could be something else. And then that heat is carried to all the houses through the pipes. So there's a central heater and then a bunch of pipes. What you're doing with this is distributing the heat source. So instead of a single heat source, there's a bunch of boreholes. And you're distributing the heat pump too.
Instead of one central heat pump, there are heat pumps in every home. Is that a good way to think about it?
Zeyneb Magavi
It's beautifully said. I'm going to have to poach from you.
David Roberts
Thank you.
Eric Bosworth
And I think one of the really interesting distinctions here, and what separates a system like this from previous iterations, is it allows for individual customers to heat and cool on their own cadence versus all customers having to use the same type of energy. So, on previous district systems, everybody is heating at the same time. Because it's single directional, you're sending the heat out. On a system like this, I can have one customer running heating and I can have another customer running air conditioning. And so it's flexible in that everyone doesn't have to be using the same type of energy at the same time.
David Roberts
I see, I see. So, you retain this sort of individual control over your thermostat.
Eric Bosworth
And I'm sure Zeyneb would love to talk about the efficiency gains that you get for that. When you have customers doing, you know, simultaneous heating and cooling, those loads will actually cancel out in the pipe. You don't even need the ground. It makes for a very efficient system.
David Roberts
Right. So, if you're just taking heat out of water and somebody else is putting heat back into the water, you could do without even the boreholes. Right. You're just sort of like — they're balancing each other out.
Zeyneb Magavi
And in fact, between the time we last talked to now, Xcel Energy, who's the gas and electric provider for Colorado Mesa, that oldest project we know of, they published a calculation that the system COP for that is 5.7 annually.
David Roberts
This is the coefficient of performance for those who don't know what that is, which is just sort of like, how many units of heat do you get out per unit of energy put in? And of course, like, I think this is the magic of heat pumps, so I just want to stop and sort of spell this point out. So, like for a natural gas furnace, you get less heat out than you put energy in. Almost any fossil fuel is like that. You lose some in the conversion. So its COP is like 0.9 or something like that. The magic of heat pumps is that you get more heat out than you put energy in.
That's the spooky thing about heat pumps, which means their COP is over 1. And the COP here is 5.7, which means you're getting 5.7 units of heat out for every unit of energy you put into the system. Which I'm assuming Zeyneb is the highest efficiency available of any heating system in the world. Is there such a thing as a better, more efficient heating system than that?
Zeyneb Magavi
I've been looking, being very obviously quite nerdy. I have heard a report of a similar system in Switzerland achieving a 7, but I have not yet actually seen the data. I'm very excited, and I will mention that Colorado Mesa reports a winter coefficient of performance of 8.9.
David Roberts
Oh, geez. So, while this gets to my next set of questions, because a lot of people, I think, when they hear this, they think, "Well, if you're putting a ground source heat pump in every home, why not just make them individual installations? Adding all the infrastructure of this pipe network adds a lot of work, adds a lot of CapEx, adds a lot of money. Do you get so much additional efficiency out of that that it makes it worth building that elaborate network?"
Eric Bosworth
This is one of the very first questions I asked when looking at this technology. And there's a couple of interesting benefits that you get out of networking the system. The first and most basic is that you can, for lack of a better term, right-size the bore fields for the load. So just speaking in rough numbers here, let's say we had 100 customers and they needed on average 1.5 boreholes to support their buildings. Well, you're going to end up putting two boreholes at every single home. You're not going to drill half a borehole. So, you end up drilling 200 holes to support those hundred homes.
David Roberts
Right?
Eric Bosworth
When you centralize, you may only need to drill 150 because you can size the central bore field for the aggregate load versus every single individual home. You lose a little bit of capacity, for lack of a better term, when you do it that way. That's before you look at the efficiency gains and all of the other benefits from networking the homes together. That's just simply capital cost.
David Roberts
Less digging. Is digging the boreholes a big chunk of the cost?
Eric Bosworth
It's a pretty large portion. If you look at the overall budget that we spent in Framingham, a very rough breakdown of it is about 30% of our capital budget was drilling the bore fields. Another 30% plus was building conversions and retrofits, so actually putting the heat pumps in. And then the remaining third or so was everything else: pipes in the street, pump house, instrumentation, civil work, you name it.
David Roberts
I would have thought that the retrofits would be a bigger piece. I mean, that's one of the things I trip on when I think about this. It's just like there are so many different kinds of buildings. You know, like retrofitting a building is a pretty bespoke process, sort of unavoidably. I would have thought that would be a bigger portion of the cost. So, I don't know if you can put a figure on this, either of you, but like the standard approach here to electrification of heating is just to slap an air source heat pump on each of these individual homes.
That's sort of like the easiest way to do it because you don't need a lot of planning that way, right? People can just do it when they're ready to do it. Do we have any idea, like numerically, how much greater the efficiency of a networked neighborhood like this is than a neighborhood full of individual air source heat pumps? Do we have that, is that measured somewhere?
Zeyneb Magavi
So, I'll start by going a little large on that answer. And there was a fabulous piece of research published by Oak Ridge National Labs in December of last year, one year ago, that asked that question, "What happens?" And it was only asking air source to ground source, that distinction. So, our default concept is to swap out an air source heat pump. Now we say, "Okay, instead we're going to swap out a ground source heat pump. What happens?" And they did the very interesting thing of actually looking at this from an integrated planning perspective and looking at the grid impacts.
And they came out with some numbers that were jaw-dropping, including an overall net present value cost savings on the grid for a mass deployment of geothermal heat pumps of, I believe, $1.7 trillion.
David Roberts
We're going to talk about the grid effects later. But, is a big chunk of that value the effects on the grid?
Zeyneb Magavi
That particular number is the grid impacts value, including like 100 parts of that. But in terms of the other aspects outside of the grid aspects, the cost per month, the customer costs for the energy is established lower than for the air source heat pump if you put in a geothermal heat pump. So, it is currently lower than the cost of gas to operate in most research and studies.
David Roberts
How dense does housing need to be to make this work? I'm just thinking intuitively, like as you get more rural, you have more distance between buildings, that's more piping, et cetera. So, do we — I mean, we're still, you know, building early pilots, so I'm assuming there's a lot to learn here — but do we have some sense of the required density?
Zeyneb Magavi
So, I'm going to turn it over to Eric, but I will say that really nailing down that threshold is part of what our research team is seeking to do with all the data collection from the demonstration projects now.
Eric Bosworth
I absolutely agree there is going to be a threshold or a limit where you get rural enough that the economics of running pipes between the buildings may not make sense. I've done a lot of work lately, kind of looking at our service territory and screening areas to try to figure out where are the best places to deploy these. And actually found some interesting things in going through that exercise, which is that even as you get very rural, most rural areas still have a city center. They've got a town hall, they've got a school, they've got a post office, they've got a downtown, for lack of a better term.
And these networks can still work in those areas. I mean, the beauty of them is that the energy source is local. So, you're not looking around to say, "Where's the transmission pipeline that I need to tie into? Or where is my upstream supply?" It really is, you can look at a small area and say, "Yes, we're in a rural community," but the numbers are penciling for this one or two-mile loop in the downtown of this rural area. And you know, maybe the people in the outskirts have a different solution that fits better for their individual property because they're a mile away from their closest neighbor.
But you know, those are the things I'm thinking through right now to try to figure out where and how I can deploy more of these.
Zeyneb Magavi
And I just want to add, David, a kind of speculative item to throw out there. When you are in that rural area with a mile between houses, really rough calculations that we haven't followed up on show if you do have a water system, your water system has enough distance horizontally underground between buildings that it can be your heat and cool.
David Roberts
Yes, I was going to ask, I'm curious how this infrastructure relates to other infrastructure. So, first being, if I have a series of natural gas pipes already underneath my neighborhood, can I reuse those pipes? Or, if I install one of these systems, am I ripping all of that infrastructure out and adding a new, different set of pipes?
Eric Bosworth
Always a fun question and a frequent one. You know, I like to emphasize that the types of plastic that we put in for geothermal are the exact same as the type we put in for gas work. It's one of the great benefits about this technology. The challenge with reusing gas pipe, and this is somewhat unique to our region, but we have a lot of old pipe. We've got cast iron in the ground, we've got steel in the ground, we've got all sorts of things in the region. And so, finding an area where you had plastic pipe of a relatively new vintage and it was the diameters that we needed, that may be a unicorn.
It's going to be very difficult to find that, especially over a large area. Right. You may be able to find one street that has the right diameter pipe that you may be able to reuse. But for our pilot and kind of how I'm thinking about it going forward, is get the geopipes in and get them going. I mean, you can size them properly, you can get them installed, and maybe not necessarily reusing.
David Roberts
Then do you just leave the natural gas pipes down there?
Eric Bosworth
Yeah, I mean, that's what happens with traditional pipe replacement these days, anyways. If you go in and "replace" an old cast iron pipe, what you're doing is you're laying a new pipe in the ground and then you're cutting and capping the old pipe. You're not actually yanking it out of the ground.
David Roberts
So we're just accumulating pipes slowly?
Zeyneb Magavi
This is a new version of the "Keep it in the ground" phrase; it's carbon. I will just comment that there are different regulatory prescriptions for this. So, for example, the first demonstration project in Massachusetts that Eric's referring to, there's actually an expectation and requirement by the regulators that any of the customers at the end of the two-year period can be made whole and have their old system returned. So this is not a demonstration of removing the gas system at all. There is a next demonstration project where there was explicit permission, where appropriate, to remove pipe or to move off pipe, not necessarily physically removing it.
So, just to clarify that, there's a lot of regulatory questions with regards to that actual transition and whether the pipe is physically removed, which is a totally different distinction.
David Roberts
And what about other infrastructure? Like, as we were talking about the rural areas. It's true, it's more cost to go between buildings that are a mile apart, but the water system does that. There are water pipes going to all these buildings already. Can you get dual use out of sewer and water pipes?
Zeyneb Magavi
So, I've been exploring that for years. I actually first tried to convince my water department in front of my house to let me do that. And the physical answer is yes, where you have enough distance, this is technically feasible. The question is again, regulatory. And of course, our water departments want to maintain a certain temperature range. And so, having clear rules and expectations around how and where you can do it and to what load, we are not there yet, but it is a great potential ahead of us. And I would also say that our sewer systems have waste thermal, and that is a really big opportunity we're trying to move forward with a lot of different people across the country. There's some amazing projects. Like, there's one in Colorado that has an entire thermal energy network running off of waste thermal from the sewer.
David Roberts
Yeah, yeah. I mean, just to spell that out, like, you know, sewage is warm and we're otherwise wasting that heat. And, you know, this is one of the cool things I think about the development of this area is just we're starting to think about, "Where is all the heat? Where is all the waste heat around us?" And it turns out it's just like everywhere; there's heat all over the place.
Zeyneb Magavi
Can I pick up on that, David? This is a big thing that I've been thinking about and trying to figure out how to talk about more: this thermal opportunity. Yes, we're talking today about this thermal network infrastructure. But part of what it's doing is putting thermal energy on the table. And we've kind of been ignoring it. It's the missing piece of the puzzle that's going to get us to where we need to go.
David Roberts
This is why I love hot rocks.
Zeyneb Magavi
Right. There's that stored thermal that we're talking about in the bedrock that has always been there, the solar millennia. But there's also what I've started calling anthropogenic thermal. I think this is a thing that we haven't been talking about. There are two forms of that. There's that waste thermal we just mentioned, and that's not just sewer, it's our industrial waste heat, and another. And then there's this beautiful other thermal that's terribly depressing. And it's the excess thermal energy due to human-caused climate change.
David Roberts
Oh, that heat.
Zeyneb Magavi
And it's enormous, right? And I just like, I don't know how much you want to go into this, but all of humanity apparently uses about half a zettajoule. And our oceans are absorbing five zettajoules a year since 1970. Over 300 in the bedrock, in the oceans, and the rivers. And so, all this excess thermal energy, we can use it with heat pumps, with thermal networks, we can tap it.
David Roberts
Yeah, that's poetic. There's some poetic justice to that, or I don't know what the term is.
Zeyneb Magavi
There is.
David Roberts
So, Eric, this is a question for you: Intuitively, this seems like a pretty short leap for a natural gas company. You're dealing with pipes, you're circulating fluids, you're interacting with customers, you're charging customers monthly rates. Like a lot of the pieces of this look similar to pieces of what you're already doing. But of course, what do I know about running a natural gas utility? So maybe you could tell us, like, how big of a lateral leap is this?
Eric Bosworth
"Well, to be fair, we're on the same page as you because that was essentially the pitch that we made to our regulators back when we asked for permission to do this project. I mean, for a little bit of context here, the state of Massachusetts has set strong goals towards decarbonization. And, you know, we as a company are aligning with those goals. And so, we asked ourselves, "If we're transitioning over to clean and zero carbon offerings for our customers, what does that mean for the gas company, the gas industry, the gas workforce?" And to your point, this technology checks a lot of the boxes of what we do day in and day out with our traditional offerings.
And so, we really made the pitch that we'd be a good candidate for owning and operating a system like this. This is what we do every day. And we looked at the skills required to install and operate a shared network geothermal system like this, and we basically had them all in house already, save for drilling some boreholes. So, a great example of this is the mile of pipe and the service lines that we laid down in Framingham to connect all of these customers up. All of that work was actually done by one of our traditional gas contractors.
We brought them out on site, we showed them the geothermal pipe, which is the exact same plastic resin that's used with gas pipe work. And we basically, you know, had a one-day training with the pipe vendor that came out and double-checked that the guys knew what they were doing and that the fusion techniques were appropriate. And we were off to the races. We were, you know, trenching in the street just like we would every day with regular work. Laying down the geothermal pipe, pulling service lines. And in terms of work streams, that one was by far the one that was done most efficiently and most on budget.
You know, it kind of came in right where we knew it would because this is what we do every day.
David Roberts
Right. Pipes or pipes, since we're talking about it, tell us a little bit more about the pilot than the Framingham pilot. For starters, how big is it? Like, how big of an area are we connecting up with this?
Eric Bosworth
Yeah, so at a high level, we have about a 1-mile loop of pipe. It's a continuous circuit in a neighborhood of Framingham. To give you an idea on load context, we're talking about 375 tons of peak heating or cooling load. It's pretty well balanced between the two seasons.
David Roberts
Is it all residential?
Eric Bosworth
It's a mix, actually. So, what we wanted to do is, first and foremost, we wanted a nice mix and load for efficiency and balancing of the system. But we also wanted a good cross-section of our customer base. We didn't want to just do residential and then have somebody come in and say, "Yeah, but most of your service territory has commercial and multifamily and all of these other things." So, we did our best to capture all of that within this one-mile loop. And, happy to say, we, I think we hit the mark there. We've got about 22 residential homes.
We have five commercial buildings that range from large — there's a portion of a school connected to the loop — all the way down to a small business cabinet shop. And then the balance of the load is about 108 low-income Framingham Housing Authority apartments. So, we've got every customer type. We've got customers that were on gas, oil, electric resistance. We're going to get a lot of good data out of this set.
David Roberts
So, you are laying these pipes next to the existing natural gas pipes, and then you're going into all these buildings and pulling out old furnaces and old resistance heaters, replacing them with heat exchangers, with heat pumps. And then you're telling everybody involved at the end of what, two years, "If you don't like this, we'll come restore your original setup." Is that the idea?
Eric Bosworth
Yeah, that was built into the contract, actually. So, we tried our best to indemnify our customers, to basically say, "We're here to gather data, we're here, we're doing a pilot. We're confident you're going to love it and it's going to work well. But here is your 'Break in case of emergency' clause in your contract if you need it."
David Roberts
Has anyone asked for their original setup back?
Eric Bosworth
No, they have not. And I'm fairly confident customers will be happy with these systems going through the first winter and then the first summer here as well.
David Roberts
Yeah, yeah, get some AC. I'm curious, if you're a sort of efficiency-minded contractor, when you're switching out systems, are you also going to do some envelope sealing or whatever? There's usually other things involved with this. Is this purely pulling out an old furnace and adding a new one? Is there any additional work being done on these buildings?
Eric Bosworth
Oh, there's a lot of work being done depending on the building. You mentioned it earlier, but building retrofits are not easy and simple. In some cases, they actually were; I'll give the example of the schools that had rooftop units feeding a distributed air system. Basically, in that case, what we did is we came in with a crane and we pulled the old gas-fired unit off the roof. We dropped the new heat pump in and we piped the water lines to it. We reused the entire building system. But in other cases, we were upgrading main electrical panels, we were running ducting, we were insulating, we were air sealing.
We remediated a bit of knob-and-tube wiring in one case. So, there were certainly some skeletons in the closet on these.
David Roberts
But you got everybody? There were no deal breakers; like everybody in the area is on the system?
Eric Bosworth
Everybody who wanted to participate and signed a customer contract, you know, we didn't turn anyone away. I'll put it that way. There were some more challenging conversions for sure, but again, we wanted to demonstrate what it takes to wholesale convert neighborhoods.
David Roberts
The big question here is about costs and who's paying for what. So, my first question is, who paid for the pilot? Because I'm guessing the customers here are not paying to have these things done. So, who's paying for the pilot? And then, if this shifts from pilot to whatever real thing, then who pays?
Eric Bosworth
To answer your first question, the pilot was funded through a gas rate case, actually. So, it is being recovered via our gas rates as a demonstration pilot.
David Roberts
The whole Eversource rate base is sharing the cost here?
Eric Bosworth
The whole NSTAR gas rate base. Yes.
David Roberts
Ah, got it.
Zeyneb Magavi
All of the customers are in some tiny part contributing. Yes. And then, they have a participation monthly fee, but it is ratepayer-based, and that was the very first permissioning. That was part of the discussion, was the value of the demonstration project to the gas ratepayer base.
David Roberts
Right. And so, is the idea that if you continue with this, keep doing this, that is going to be the standard, like all the costs are going to be shared across the entire rate base throughout the process?
Zeyneb Magavi
So, to me, there is some beauty in this, in that if we proceed with moving buildings off of fossil fuel heating in Massachusetts, as is our climate mandate, we will have a shrinking ratepayer base with unfortunate spiking costs which would be a really challenging equity situation and affordability situation. It's that problem of the last grandmother holding the bill for —
David Roberts
Yeah, yes. This is, of course, a problem. Anywhere you want to phase out gas is that you need to do it chunkily. Right. It can't just be individual consumer decisions.
Zeyneb Magavi
It's chunkily. But this approach allows for stabilization of that ratepayer base because as you are shrinking streets with gas, you're increasing streets with geo. And if the decision is made to leave it as a merged ratepayer base, then in the end, you know, when you have fewer gas customers and more geo customers, those geo customers are stabilizing the gas customers.
David Roberts
Are they paying as much as they were when they were gas customers? Like, presumably, this, the whole promise of this, is hyper-efficiency. Like, theoretically, they should be paying less, right?
Eric Bosworth
So, in the case of the pilot, the short answer is yes. You know, we do have a very small nominal fee that we're charging as kind of a customer service fee for the geothermal system. But to give you an idea, we're talking like $9 a month for a residential customer. The whole point of the fee was to establish a billing relationship with customers that may have been on oil previously and not received a bill from Eversource so that they get something that says, "Eversource Geothermal" on it and we establish that relationship.
From an operating standpoint, we're obviously just starting to get data on a heating season here as we get some colder months. So, we can't say for sure with hard data, but we did look at like a 2-year previous consumption average annual usage on these customers and we ballparked what we thought they would use on geothermal for electricity. And pretty much across the board, there were savings for these customers. So, you know, from an operating standpoint, it looks like the electricity that is needed to run these ground source heat pumps is cheaper than their previous electricity and gas bill combined.
David Roberts
And if you undershot, it's fairly easy to just add more boreholes, right? Just incrementally add boreholes, I'm guessing.
Zeyneb Magavi
My prediction is that, you know, as is often true with utilities generally, they were cautious and there's going to be plenty of room for the additional customers that are now asking to join.
David Roberts
Well, this gets to a big question I had for you Eric, which is what is the — I guess I don't know if customer acquisition is even really the right word in this context, but like you have to go to an area and talk everyone in the area into doing this basically, right? So what is that process like if there are holdouts who just say no, can you just build around them?
Eric Bosworth
So, in terms of the pilot, you know, customer acquisition is probably a totally accurate phrase here. And, in full transparency, we actually retrained and reutilized folks internally that were traditionally on the gas sales team. So, these were people that were going out and going door to door on gas expansion projects and were now trained to sell geothermal in the neighborhood. And what we did is we took the same approach. We went out into the community, we generated marketing materials, informational materials, we had fact sheets and all kinds of information. And then we approached the customers and said, "Hey, we're doing this pilot, here's what we're doing and why. Do you have any questions about geothermal in general? Do you have any questions about what we're doing?"
And we took the time to sit down and speak with them. And honestly, the results were overwhelmingly positive. In the neighborhood, you know, on the loop route, I think we had about an 80% positive rate on customer acquisition. And of those that we didn't get to sign up, the vast majority were because we weren't able to talk to them. We just never managed to connect with the customer. We had one customer who had just redone their HVAC system that year and basically said, "I'm not going through that again. I, you know, I just tore up my house. I can't." But by and large, they were all very positive.
David Roberts
Well, the reason I ask is that obviously, the goal here, the larger goal, is to shut off gas. Right? The larger goal is to shut off the gas system. And if you have a single customer using gas, you have to have your whole gas system running. So, there is kind of a, like, you ultimately are going to have to have some ability to pressure people, right?
Zeyneb Magavi
I'll jump in and speak to that because that's not what the demonstration project in Framingham is testing. And it is, of course, a really interesting question as we face a kind of utility evolution. And of course, there's a lot of conversation around customer choice. And customers do have a choice, but they don't have a choice among multiple different energies from one utility. They have a choice with one utility of whether to hook up or to not hook up. Right. Your electric utility doesn't say, "Well, here's all the forms of energy we have. Radiance, we have..." And so that question of how we have regulation and laws around it is beginning to be talked about across the country.
And the question of how the obligation to serve, and however it's expressed either in statute or in regulation in each state, whether that can be expanded to include this thermal service so the obligation to serve a customer is met by providing this more modern thermal. So, one state made a first go at that. And then, Massachusetts has just also, in its most recent climate bill signed by the governor last week, has explicitly turned over some clarification of that obligation to serve to the Department of Public Utilities. I think this is a conversation that is very live and hot.
How are we going to both ensure that the equity aspects of, of course, serving every customer on the infrastructure be met also with this evolution of the kind of aggregated good of a single infrastructure?
David Roberts
But, like, I guess I just come back to, like, if Eversource shows up at my door and says, "We're not a gas utility anymore, we're now a hot water utility, we'll hook you up with hot water or you're on your own." Is that the idea?
Zeyneb Magavi
That is not resolved yet. All I can tell you — so that is a conversation that needs to happen over time with every stakeholder involved. And I will tell you that I have a vision in my head of something happening a little bit like what we see today with new gas pipe where, you know, the door hangers come out and a year ahead of time they let you know, "Well, you know, we're going to be, you've got a leaky pipe and we're going to be upgrading your infrastructure in X month of X year. And here are the things we need to do. We need to get into your basement. We need to, you know..."
And I think some version of that, with a time delay, with time for the customers to make decisions to engage, to be supported with provision of all necessary elements, will happen with this upgrade where you'll get a notification that the street is switching to modern thermal to meet state mandates and deliver a safer, more affordable energy. Here are the steps and here's what's going to happen. And we're going to support you. And you can choose not to. You can get off of our utility. That's always your choice.
David Roberts
But then there will be no gas utility that you can then resort to, right, gas will not be among your choices?
Zeyneb Magavi
You can choose at that point to get a propane tank or other tank.
David Roberts
Right. You can buy your own gas.
Zeyneb Magavi
So again, this is me speculating, not a regulator or a state or a utility.
David Roberts
Eric, I mean, you're in the utility. You obviously have to be sensitive about this. But like, what is the utility thinking about this issue?
Eric Bosworth
Absolutely. And one thing I'd like to point out, Zeyneb did just mention propane or other delivered fuels. One interesting thing that I've been thinking about is, you kind of, not avoid, but you can spend some time solving this problem here if you're deploying these systems in areas that don't have any existing US utility service. Right. We still have something on the order of — and Zeyneb, correct me if I'm wrong — I think it's about 40% of the customers here in Massachusetts are still on delivered fuels. They're on heating oil and propane.
David Roberts
Oh, wow.
Eric Bosworth
And this is entire communities in some cases. This isn't just one-off customers.
David Roberts
That's unusual, though. That's mostly the Northeast. Right. Where that is still...
Zeyneb Magavi
I don't think it's that unusual.
David Roberts
Huh.
Zeyneb Magavi
71 towns, I believe, in Massachusetts don't have gas.
Eric Bosworth
Connecticut's similar.
David Roberts
I mean, unusual on a national level. Like, it's the Northeast of the country where that is mostly still the case, as I understand it. But I could be wrong about that.
Zeyneb Magavi
I'm not sure. I'd have to look up the numbers, but I think it's really the denser, more urban areas that have gas infrastructure.
David Roberts
And so, is the idea, Eric, that you always, like, you don't want to show up at a customer's door and say, "Hey, we're switching from gas to hot water now. You have to personally purchase a heat pump." So, is the idea that the cost of putting heat pumps in, you know, say you're going to expand this to a new neighborhood, you're going and knocking on doors, you tell them that it's going to happen, is the idea that the entire rate base will share the cost of all these new heat pumps? It's not the individual customers who will have to pay for this, right?
Like, because otherwise, you're just going to get a bunch of customers saying no, right, if they have to pay for it.
Eric Bosworth
Yeah, and I think it's a question that we're trying to answer with the data from Framingham, honestly. You know, the way we framed the pilot initially was we're going to pay for absolutely everything because we want to make it as easy as possible for customers to say yes and get the data. Going forward, whether, you know, we're doing some program like an expansion on Mass Save, which is our energy efficiency program here in Massachusetts, to focus on the building side, or there's some other financial structure, for lack of a better term, that's what we're trying to work out with, you know, with the state, with our regulators, with our stakeholders, because I don't think we have the data right now to be able to clearly answer that.
Zeyneb Magavi
I will just add to that, that it's my opinion that the building transition will not happen if the entire cost burden of the building transition is borne up front by building owners. And if it does —
David Roberts
Yes, I think that's fair to say.
Zeyneb Magavi
If it does, it will be massively inequitable.
David Roberts
Yeah.
Zeyneb Magavi
And so, really understanding how to appropriately finance that building transition, having the utility in the mix in this case, I think that's a really interesting open question. We're trying a lot of different models across the country.
David Roberts
Well, has anyone pitched that this ought to be part of state taxes, that it ought to be broadened beyond the rate base to taxpayers? That should pick up because, you know, theoretically, they're all — all taxpayers are benefiting.
Zeyneb Magavi
I think that conversation has certainly been had. I don't think it's been directly filed. But one very wonky idea is a question of using securitization to drop the cost of this infrastructure and use these cost "savings" to cover low-income building transitions.
David Roberts
Interesting. Yeah, it seems like there's a lot of room for financial innovation.
Zeyneb Magavi
Yeah.
David Roberts
A lot of unanswered questions.
Zeyneb Magavi
And I think one of the pieces that I think is coming to light as we begin to do actual decarbonization is that it's not just the heat pump and the weatherization, which we kind of understand what we need to do and understand how we're going to the options for financing. It's also, particularly in our lovely Northeast, it is the hundred years of delayed maintenance that we hit in a number of the buildings.
David Roberts
Yeah.
Zeyneb Magavi
And it's that mold, asbestos, and code violations.
David Roberts
The utility can say, "We'll pay for the heat pump." But then, where does the utility's obligation end? Like, do they also do the envelope? Do they also... You know what I mean? Each of these old buildings is a potential sinkhole of money.
Eric Bosworth
And just to clarify here, this isn't a problem unique to geothermal. Regardless of whether the utility is involved or not, if you want to mass deploy air source heat pumps, you still have to tackle the building envelope.
David Roberts
True.
Eric Bosworth
I mean, it's a problem no matter what technology platform you choose.
David Roberts
Yeah, yeah. This is a question, and no offense to you, Eric, but is there any particular reason — like cities also know how to lay pipes and distribute water. So, there's no reason that this has to be done by natural gas utilities. Right? I mean, I'm even wondering if there's any particular reason other than the sort of political economy reasons of like it's going to reduce their opposition obviously if they have something to do. But, like on the merits, is there a reason that we want natural gas companies to be in charge of this or should we be more agnostic?
Zeyneb Magavi
Well, I will say that I started out quite agnostic and approached a lot of municipalities in addition to the gas utilities and others. I mean, the technology will work no matter who installs it. I think the pieces that are critical to that question, it's not just the political economy of transforming a gas utility into a driver of decarbonization, a deliverer of decarbonization, but also it's that really critical conversation about workforce and skill sets.
David Roberts
Yes, I meant to ask that earlier.
Zeyneb Magavi
Yeah, so there's that workforce piece which we can open up. There's also a kind of skill set in the energy system question. There's just a huge amount of policy experts on the electric grid and quite significantly fewer on the gas grid. And yet, some of the load management, seasonal storage, and other aspects that the gas system provides our overall energy system actually really match and mirror this thermal system.
And I see more synergy than even just the workforce in the transformation of gas to geo, but in a kind of practical, hard reality way. I will say that our municipalities, though many are interested and we are engaged with a number, are often resource-strapped with a lot of other challenges in our world. And the sheer incentive of an existing thermal utility with existing relationships from regulators and so on is another advantage.
David Roberts
Eric, and you have the workforce for this? Like, I'm trying to figure out if there are any novel kinds of workers required here. Like, you have pipe people and I don't know, is there something about heat pumps that require some new training? What is the workforce situation?
Eric Bosworth
So, you're absolutely correct from a pipe perspective. Just to give you an idea, we put something like 100 miles of plastic pipe down a year right now. But that being said, drilling is definitely a novel skill set that the utility does not undertake day to day.
David Roberts
Right.
Eric Bosworth
I had the fortunate privilege of, you know, my first career was actually in upstream oil and gas. So, I came into this with quite a bit of experience. And I kind of like to say I'm that transition story, moving from traditional fossil fuel work to clean energy now.
David Roberts
Yeah. Step by step.
Eric Bosworth
It's not something that exists generally within the utility. And so, drilling workforce is one and then even the building work, not to harp too much on it, but we're generally not in customers' homes as a matter of day-to-day work. We have a clear demarcation point with our meter or our valves or whatever it is. And we say anything downstream is the customer's responsibility. And so, that was a bit of a unique one as well: dealing with HVAC contractors and electricians and being in customers' homes.
David Roberts
Well, the people who are involved in that feel a lot of sympathy for you right now. I have a feeling that's a whole briar patch, as they say. Are you, I mean, and this is also, it's probably too early to know this either, Zeyneb, maybe you could chip in here. But I'm wondering if there are economies of scale here. Like, is this going to get cheaper as we do it more?
Zeyneb Magavi
Yes.
David Roberts
Or is it in some sense bespoke to individual buildings and communities? You know, there's a certain, like, in a sense, every building and community is unique. So, how sort of modular and replicable is this? Are we going to get cost declines over time?
Zeyneb Magavi
I'm so excited you asked that. And I think we can point to Colorado Mesa for some initial data. I always like to go to the data. And they showed that there was an incredible drop in cost per ton between the first loop and the second loop attached.
David Roberts
And that's just learning by doing, that's just figuring out how?
Zeyneb Magavi
There's a learning curve, yes. But there's also something inherent to the infrastructure where the first one has the larger pump station, and then the second one is actually, in part, thermally stabilized by the first. And that efficiency of the aggregated load calculation increases as you increase the number of buildings.
David Roberts
So, the next increment is going to be cheaper.
Eric Bosworth
We've ballparked it.
Zeyneb Magavi
We were lucky enough to design a second loop through a Department of Energy grant for the City of Framingham's loop.
Eric Bosworth
Yeah.
David Roberts
When you say a second loop, you mean not going to the same buildings, a bunch, a new block of buildings?
Eric Bosworth
Yeah, and just at a very high level, you know, rough orders of magnitude, we're going to presumably about double the size and capacity of our system. So, we will double the load on it at about half the cost of the original.
David Roberts
Interesting.
Eric Bosworth
So, yeah, we're looking at pretty significant cost reductions. And to Zeyneb's point, a lot of it is around the fixed infrastructure that we've already got. So, we have a pump house, we have instrumentation, we have controls. All of that is already in place. But also, we're going to have to do less drilling for those customers because we've presumably got a little bit of spare capacity on the main loop. And we have that thermal stabilization that Zeyneb mentioned where, you know, we're going to swing through the peaks a little bit easier with more mass in the system and more customers connected to it.
David Roberts
Right. It's that point you made about 1.5 boreholes. Right. Just expanded to large numbers. Like you're going to. You need fewer boreholes as you have more customers.
Zeyneb Magavi
It's actually even more than that, to get a wee bit nerdy for a second — it's kind of cool. So, it's not just the boreholes. Remember, we have three parts: We have the thermal infrastructure loop in the street. Then we have the thermal resources, which in this case are boreholes. And what we're seeing and understanding is that the thermal loop itself is like a moving thermal energy storage mechanism.
David Roberts
Yeah, sure.
Zeyneb Magavi
And so, you've got this thermal inertia on that loop. As you grow the system and you get the increased number of customers, you're actually also increasing your thermal storage on the system that's increasingly stabilizing and moving the time boundary of the load out.
David Roberts
So, you need less incremental new heat source for each new customer. Is there a horizon point there where you no longer need to do any boreholes at all? Like, I don't know, how many?
Zeyneb Magavi
I doubt that.
David Roberts
You know, I don't know how big these things could get.
Eric Bosworth
I doubt there's a horizon point, but there is, you know, interestingly, we can add marginal customers without drilling for the most part. And what that allows us to do is we can actually decouple the drilling and the capacity addition with the load addition. What I mean is, I may drill 20 or 30 boreholes in a summer to add capacity to the system. But I can be adding customers all through the year and I don't have to wait for those boreholes to be drilled. I can do them asynchronously.
David Roberts
This is interesting. So, Zeyneb, we're running a little bit short on time here, but I wanted you or you and Eric to talk about just where this is popping up outside of Massachusetts. Like last time we talked in 2022, I think the Framingham Pilot was mostly a gleam in your eyes. And that was it, that was all that was going on. Now there's all kinds of things going on. So give us a little bit of an overview of — there's a bunch more utilities investigating this. There's a bunch more states. Let's start there.
What is a state law? What do you want from a state legislation?
Zeyneb Magavi
Well, that essential permissioning allows a gas utility and/or other utilities to build this infrastructure and sell thermal energy.
David Roberts
And that requires legislation everywhere?
Zeyneb Magavi
Not necessarily. We do everything on a state-by-state basis in this country, as you know.
David Roberts
Yes. So, fun in energy.
Zeyneb Magavi
There are projects; there are projects that are in states where it's not as much of a concern. But at the moment, we have eight states that have passed this gas-to-geo law permission.
David Roberts
Interesting.
Zeyneb Magavi
With some of them having other elements, of course. And those are, let's see, Massachusetts, New York, Vermont, Colorado, Minnesota, Washington State, California, Maryland. I hope I didn't miss any.
David Roberts
And this is all just, this is all just saying, "You, natural gas utility, if you so desire, can become a thermal utility legally." That's just what the law says.
Zeyneb Magavi
To be clear, each law is its own.
David Roberts
Or is this, "You have to become a thermal utility"?
Zeyneb Magavi
For example, some of them mandate demonstration projects, some of them do not. Every state is a petri dish, right? There are five more filing this year that I know of, and there's a whole advocacy network we do together with allies. And there's so many great organizations and people across the country now involved in driving this forward where they are. And I just can't even say enough about that. There are 20.
David Roberts
There's no geography where this couldn't work. Right? I mean, this is more or less universal. Right? I mean, any, with enough density.
Zeyneb Magavi
So, it can absolutely work anywhere. And what I would say is the question is the payback period. And so, where you have very small heating and cooling loads, your payback period is longer. And it may not be the wisest economic choice, but it will work. Sure.
David Roberts
You might be better off with an air source heat pump in a very mild climate.
Zeyneb Magavi
Yeah, and it's not that it won't work. Yes, this will work anywhere. It's the everywhere geothermal. But it doesn't necessarily make a wise infrastructure investment everywhere.
David Roberts
Right. Is it safe to say that the financials will look better in colder climates, in more extreme climates? Is that fair to say?
Zeyneb Magavi
In hotter climates, more extreme and or very balanced, are going to generally look better. I think we're going to get a lot more data coming out with potential studies soon. But, I just want to add that there are 20 pilots filed with commissions for utilities to build many more that are outside of that. And, there are 29 gas utilities meeting regularly in an amazing coalition to consider a geothermal future.
David Roberts
And this is geographically spread all over the place or is this mostly Northeast?
Zeyneb Magavi
No, no, no, no. It's really important to realize that the geothermal heat pump, one of the center points of that world, is Oklahoma. And actually, they've got an amazing pilot moving forward. So, it is all over the country. In Framingham, the spray paint on the street for this infrastructure is purple. And I think that's awfully symbolic because this technology is all over the country. A huge portion of the industry, including a lot of the geothermal heat pump manufacturers, are in the Midwest and the West. And it is really a nonpartisan technology.
We apparently can agree on this.
David Roberts
My eyebrow goes up. Let me ask this. If I was in a state and a utility that did not care about climate change at all.
Zeyneb Magavi
Yeah.
David Roberts
And did not care particularly about pollution.
Zeyneb Magavi
Yep.
David Roberts
Only cared about money. Cheapest possible system. Would I be interested in a system like this if I lived in a place like that?
Zeyneb Magavi
Absolutely. That's the beauty of it. We talk to groups, people, and utilities all the time that have a mindset that isn't focused on climate, that are putting first things like, you know, profitability, affordability, safety, resilience, reliability, energy security. Energy security is huge.
David Roberts
Maybe we should have said this. It's almost too obvious to point out, but it's worth saying. If your heat source is the shallow earth, it's always there. It's always the same temperature. There's no supply chain that can be cut off. There's no other country that can cut off your supply. You're not exporting money from your community to get it. So, it is the most predictable and steady source of energy you can find.
Zeyneb Magavi
And this is why Eric and I hosted a lovely tour for a delegation from Ukraine.
David Roberts
Huh?
Zeyneb Magavi
Yes.
David Roberts
Yeah, I guess those same advantages are true anywhere, really. Anybody who's stuck exporting money for fuel, for heat, you know, it's a big cherry.
Eric Bosworth
And there are some places in the world where they are heavily reliant on energy imports, specifically. And so, the value proposition of having localized energy and security — we may not think about it as much here in the States because we've got local energy production — but it can be massively important for other places in the world.
Zeyneb Magavi
We're seeing a lot of interest from around the world, and the IFC. There's a video that actually played at COP 29 that the Financial Times made. I think one of the statements was, "We've awakened a sleeping giant," and they had a video of the Framingham project. But really, looking at the kind of sustainable development goals aspects of this decarbonization pathway.
David Roberts
Right. And this is also something that's maybe too obvious to point out, but I'm going to point it out anyway. If you proceed on a consumer choice basis, as you noted earlier, you're going to start with the wealthiest people and work backwards, and you're going to be stranding the poorest people with the system costs of the system that's left over. So, doing this on a neighborhood-by-neighborhood, community-by-community way is the only way you can get your arms around the equity aspects of this. That's the only way you can control the equity aspects of this.
Zeyneb Magavi
Yeah, very well said. And that's been central to HEET's effort from the beginning. We actually want to see it deployed first in the most vulnerable communities so that they get the safest, most affordable, best energy earliest. And I think that's where that question of who owns it, the gas utility doing that, adds that stabilization of the ratepayer base.
David Roberts
Yeah, and the stabilization of rates themselves. Just like, you know, this is something also that poor people have to think about more than probably most of the people listening to this pod, which is just fluctuations in energy costs because the price of natural gas is always changing.
Zeyneb Magavi
Yeah.
David Roberts
These are unpredictable and can be quite devastating to household budgets. And this is like, you know how much your heat and cooling is going to cost this year, next year, 10 years from now, it's going to be the same forever. That's like just that stability, never mind the level, just the stability itself is a huge advantage.
Zeyneb Magavi
And that's the kind of conversation that I hear over and over again. There are these amazing leaders in this industry who built the geothermal heat pump industry. They're all over the country. Like I mentioned, quite a few are in Oklahoma and, you know, one friend from Utah. These are the conversations I hear over and over that have been spreading the kind of pleasure and joy of this technology. It's about those elements. And it's only really recently in these conversations in the Northeast that it's become additionally connected to the effort to decarbonize in a different way. I think it's a multi-solving technology that's kind of practical.
And that's why I said, really, it is something everyone can get behind. Maybe not all for the same reasons, but that's kind of what I hope for, for the country. Right.
David Roberts
Two final questions. I always lie when I say that, but I mean it this time. Two final questions. One is, just say a few things. The pilot here, the heat source is geothermal boreholes, which are what, like a thousand feet? Something like that.
Eric Bosworth
600 to 700 depending on the hole. We, you know, not to go down the rabbit hole. Sorry for the pun. Some of them are deviated, which means we drilled them at an angle. Those are about 700ft total depth. A traditional vertical borehole on our system is 600.
David Roberts
Interesting. So that's the source of heat here and in most cases. But there are, as you mentioned in passing, Zeyneb, you could have the same distribution system hooked up to a different heat source. So maybe just say a little bit about the variety. Like, what kinds of things are people using as heat sources for these systems and could people theoretically use?
Zeyneb Magavi
Oh my goodness. There's a couple of wonderful products out there for capturing waste thermal, like we've talked about with sewage. But there's also a lot of wonderful opportunities to capture thermal energy from our bodies of water, aquifers, lakes, rivers, the sea. There's some titanium seawater heat pumps out there that have me really excited. I think we can maybe make the lobsters happier in Boston Harbor while heating part of Boston.
David Roberts
Oh, taking some of the heat out of the harbor?
Zeyneb Magavi
Yeah, it's a restoration effort.
David Roberts
And putting it into the houses, that's quite clever.
Zeyneb Magavi
Yeah, and there's also really interesting, clever things once you begin to play with thermal energy and see thermal energy. Like Colorado Mesa, for example, creates cooling capacity in the summer by dumping heat at night into their irrigation system. It's the most cost-effective cooling I've ever seen. There are places where there's snow melt as a way to do the same thing. Like, there's a lot of fun opportunities.
David Roberts
You shift heat from one place to another. What about, like, just industrial? Has anybody hooked one of these systems up to, like, a data center or a factory of some sort?
Zeyneb Magavi
Big conversation. There are some projects in Europe. I think one of them I was most recently hearing about was looking at a milk pasteurization plant. We've looked at a brewery in Colorado as a fabulous thermal source. There's tons of opportunity for industrial waste heat capture. And I would say data centers is an obvious and exciting one. I know there are some geothermal greenhouses in a bunch of different ways all over the world, but having greenhouses off a data center is another one.
David Roberts
So, theoretically, any building you hook up to a network like this is going to receive the benefits. But also, some of them can be contributors. Right. They can be net contributors of heat because of processes in the building.
Zeyneb Magavi
Yeah, so the buildings themselves are prosumers. They're both users and producers of thermal energy. This is why you need a thermal utility. In essence, by building this infrastructure, you've built a thermal market.
David Roberts
Yeah, I really think that, like you said, we've spent so long not thinking much about heat just because fossil fuels are cheap. This is an area where, once you start looking, you just find it all over the place. You find heat or cooling, spare heat or cooling all over the place, and it's just a matter of grabbing it. I think once you set up this network, people are going to start thinking, "Oh, what else can we attach to this?" Anything that produces or uses heat.
Eric Bosworth
And to be clear, it wasn't within the scope of our pilot, but I'm actively thinking about it a few years down the line when we're out of the pilot period. You know, what resources do I have nearby that I can tie into this network and potentially, you know, not drill more boreholes, but add load and expand it?
David Roberts
Right. Just balance it out.
Eric Bosworth
Yep.
David Roberts
Well, I meant to ask, are you greenlighted to do this beyond the pilot phase, or is that decision TBD?
Eric Bosworth
I will say that we do have the legislative authority to do it as a utility now, as Zeyneb pointed out. We are still a regulated utility. So, in order to spend money, we have to have that review by our regulators to go in front of them and get approval to do it, but, you know, no real legal hurdles to additional projects.
David Roberts
So, all you need is permission from your Public Utility Commission in Massachusetts.
Zeyneb Magavi
Yeah, and I'm going to comment that we had a regulatory ruling on our Future of Gas docket that came out with a bit of a name change to a Beyond Gas framework here in Massachusetts. One of the two top paths forward that the commission flagged as of interest was geothermal networks. There's a lot of interest and excitement in the state. So, not only do they have legislative permission, and absolutely need regulatory permission, but there's a lot of excitement and obvious enthusiasm for this. Our commission issued the first ever geothermal network pipeline safety regulations.
David Roberts
Yeah, I didn't really ask much about safety because, like, what do you get? A hot water leak? Like, it seems like the risks here are somewhat limited.
Eric Bosworth
Not even hot water. To give you an idea.
David Roberts
Warm water leak.
Eric Bosworth
My expected temperature range is between about 40 degrees and 70 degrees. So, we're at relatively reasonable temperatures. I mean, we have about 20 to 30 psi on the system. It's not even high pressure. I mean, really, this is about service quality for the most part. You know, making sure the system is on and running efficiently and that it doesn't go down.
David Roberts
But you're pretty certain it's not going to explode and take out an entire city block like the natural gas system did to Seattle a few years ago.
Eric Bosworth
The worst-case scenario for me is my pumps shut off and my fluid stops moving, and we get out there and figure out how and why to put it back on.
David Roberts
Right. Okay, final question, which is one I've been meaning to get to, which is: let's talk a little bit about the grid impacts of this. So, one worry when you're talking about electrifying is in northern latitudes, in cold places, right now, winter heating, which is a huge amount of energy, is being done mostly with oil and natural gas. If you do that with electricity instead, then you risk creating this massive, massive spike of electricity use during the winter, which would be entirely new to those areas, and then you're having to update your grid, etc. So, I think the part of the appeal here is that a networked set of ground source heat pumps is going to consume much less electricity than the commensurate number of air source heat pumps.
And thus, you are to some extent forestalling that grid crisis. Is that a decent summary?
Zeyneb Magavi
I think so, absolutely. I think that the numbers that we're seeing in research are just really quite jaw-dropping.
David Roberts
Yeah, what is the savings when you move from a bunch of air source heat pumps to a bunch of ground source heat pumps that are linked up? Like, what is the scale of the savings?
Zeyneb Magavi
So, we don't actually have that number, but Eric can speak for the one project.
Eric Bosworth
Yeah. In terms of energy savings, we're expecting peak and annual load to be about half of what it would be on air source heat pumps with the same customers.
David Roberts
Interesting. So, that's just like half less grid infrastructure you're going to have to build to electrify Massachusetts.
Zeyneb Magavi
So, that's that project, and I just want to be really careful about what we say in claims. So, the numbers I do have are for individual ground source heat pumps which are, as we've discussed, these networked are even more efficient. This is a low-ball estimate, but for the country, it would be a 38% reduction in transmission lines, close to $1.7 trillion of savings. A 12% reduction in wholesale electricity cost, a 13% reduction in generation in Massachusetts, a 34% reduction in load in 2050.
David Roberts
Good grief.
Zeyneb Magavi
Yeah.
David Roberts
So, this just makes electrification easier, among the other things it does. It is a way of electrifying heating with low electricity.
Zeyneb Magavi
Yeah, exactly.
Eric Bosworth
And could actually, you know, kind of maybe looping back a little bit to the "Why the utility?" question could be used strategically in areas where we are constrained. Right. We're looking at this actively as a potential for "Maybe we don't have the grid capacity to roll out air source heat pumps in this town. What if we did geo and then didn't have to make any improvements?"
David Roberts
So you could target these things as kind of grid congestion easing tools?
Eric Bosworth
Yep.
Zeyneb Magavi
A tactical thermal transition.
Eric Bosworth
And not to totally nerd out, but they can be used for demand response as well — for lack of a better term. You can precondition the loop prior to a peak and ease it even further.
Zeyneb Magavi
Yep.
David Roberts
Yeah.
Eric Bosworth
Lots of rabbit holes to go down.
David Roberts
Just processing that. So, you can, like, if the grid says, "We're going to be especially congested at 4pm," you just dump a little additional heat into the network prior to then. So then, your heat pumps are just doing a little bit less work at that hour?
Zeyneb Magavi
And then, you can use the thermal inertia of the system to coast. At Colorado Mesa, there used to be a benefit to load shedding, and they had a demand shed button right on their control system where they would just hit it, coast for a few hours, and then come back online. No customer ever experienced a difference.
David Roberts
Right. So, you don't need steady, always-on heat application here. You can cut the heat on and off based on grid needs.
Eric Bosworth
You can speed your pumps up and slow them down. So, we'll actually on our loop have the ability to speed our pumps up, precondition the loop, and then slow them way down to go through a peak and respond to that load, for lack of a better term.
David Roberts
Oh, interesting. So, it's lower electricity requirements and it's more controllable electricity.
Zeyneb Magavi
And also, as soon as you get to a certain scale with a thermal network, as you've grown to a utility scale, it becomes cost-effective to do larger scale thermal storage systems, not unlike the gas utilities currently have a whole network of seasonal gas storage. More intermittent thermal storage can begin to address our load peak in the winter in a kind of resilient way, in a cost-effective way.
David Roberts
So, spell that out a little bit. So, that would mean like a network like this would be connected to, I don't know, a big lake and it would just store a bunch of heat in the lake that it could use in the winter.
Zeyneb Magavi
That's one way. You know, in Europe, there's quite a few; they're calling them ATES and BTES, aquifer thermal energy storage, borehole thermal energy storage. There are phase change thermal energy storage tanks like a molten salt battery, for example. There's a whole bunch of possible technologies that can potentially store thermal energy for different ranges of time. Possibly, we have some unused wind energy on the grid at night. We dump it into a large thermal storage system and then we use it seasonally to cover our peaks on the thermal grid.
David Roberts
And it's cheap too, to store heat relative to storing electricity. You can use it with such fancy materials as water or bricks. So, to summarize here, since we've gone over, this is cheaper for customers. I'm guessing, you know, if you believe in heat pumps, it's more comfortable for customers than the sort of on or off blast of a natural gas or oil furnace. It's net cheaper for the utility, it's good for the grid, it's good for avoiding winter peaks. It seems like a win-win. So, just to wrap up, what do you see as the big impediment?
Zeyneb Magavi
I want to be a little picky on one of those so it can be cheaper for customers. So, that monthly energy bill is expected to be cheaper. And it is in a regulated utility, of course, that is determined by the rate making and how, what duration of time we spread out the upfront cost of the infrastructure and how we approach that. So, there are a lot of projections, but it does depend on the regulator's decision making and I just want to qualify that.
David Roberts
Right. So, this is a classic clean energy case of high CapEx upfront.
Zeyneb Magavi
Yes.
David Roberts
Savings over time.
Zeyneb Magavi
Yes.
David Roberts
And so, you're in the same discussion you are with so many other contexts, which is, who provides that upfront money, how expensive is the credit, how patient is the capital? So, I guess this is kind of another reason to do it with a utility is that they have some patient capital.
Eric Bosworth
And maybe to be a little bit optimistic here, but I'm hopeful that we'll see something similar as we have with other clean energy technologies where unit costs come down as it matures. Right. As we scale, as we do more of this, as the workforce develops, if we can continue to drive unit costs down and expand the size of these networks, you know, you get to that unicorn zone where you can pay back the infrastructure and not increase the energy burden on your customers and they're getting clean, carbon-free heating and cooling. That's the perfect world that you know, you want to get to.
David Roberts
I'm guessing a lot of these customers are going to get cooling for the first time. Is that true?
Eric Bosworth
We didn't get a chance to get into that, but that was a huge selling point as well. You know, we go to the customer's home and say, "It's going to be geothermal heating, it's going to be super efficient. Oh, and it provides cooling. So you'll have central air essentially." And they say, "Sign me up!"
Zeyneb Magavi
That's a critical health aspect. And when we talk about what humans actually want and not what energy nerds want, the cooling, the affordability, the quality of heating and cooling, the reliability of the cost of the bill, these are things that matter to everyone.
David Roberts
You know, this is like a win-win. It's got a lot of things going for it. What is your big concern? What keeps you up at night? What do you think is the biggest challenge in spreading this?
Eric Bosworth
For me, it's driving initial costs down, it's figuring out how to do this equitably and responsibly for our customers, and really develop a business line that they're happy to sign up for. I mean, if I can get my costs down and I can get those geothermal rates established with our regulators that make sense, I'll be happy. But for now, I think that that's the big challenge.
Zeyneb Magavi
I think my number one would be knowledge. It's new, and there's a lot of terminology confusion. There's a lot of confusion, even at the engineering level, that can result in unexpected outcomes. And I worry; it keeps me up at night. Most modelers aren't yet taking into account thermal inertia, right? And so, we're in that risk zone, the Wild West, where there's so much excitement, there's so many projects moving forward, and we don't yet have guidelines, books, articles showing an optimized best path.
David Roberts
Right. It does sound, though, like HEET is really going overboard to just study the living crap out of this thing.
Zeyneb Magavi
We are trying so hard, and we're enjoying it, I'll admit. But yes, we have a working model, a techno-economic model, a reduced order model. We're using the data from the first projects to make that model as real as possible. And we're making it open source for everyone. We've launched a data bank; we've launched a cost survey. We're trying as hard as we can to go as fast as we can on that.
David Roberts
So, that materials — so, to make it more that another utility, the next utility, can just take something off the shelf and follow a plan that's coming. You're working on that?
Zeyneb Magavi
We're all working on it. There's just so many people trying to make this operational in a reliable way.
Eric Bosworth
And for my part, the beauty of a utility is, I can go and share with all of the other utilities and really try to take the lessons we've learned from our first one and pass them along. I mean, utilities are not competing with each other over customers here.
David Roberts
That's true.
Eric Bosworth
Anything I can do to share knowledge, lessons learned, here are issues we had, avoid this, try and do this this way. I'm taking those calls because frankly, I want everybody to be successful.
Zeyneb Magavi
Yeah.
David Roberts
Awesome. Well, thanks, you guys. This is so cool. This fits right in with my thermal obsession, my grid balancing obsessions, all my obsessions. And so much stuff is happening. So maybe we'll talk again in a couple of years. We'll have some non-pilots, maybe some actual take the word pilot off and just have it be a normal thing somewhere. I bet we'll see that in two years.
Zeyneb Magavi
Sounds good.
David Roberts
All right, thank you guys. Thanks for coming on.
Zeyneb Magavi
Absolutely.
Eric Bosworth
Thank you.
David Roberts
Thank you for listening to Volts. It takes a village to make this podcast work. Shout out, especially, to my super producer, Kyle McDonald, who makes me and my guests sound smart every week. And it is all supported entirely by listeners like you. So, if you value conversations like this, please consider joining our community of paid subscribers at volts.wtf. Or, leaving a nice review, or telling a friend about Volts. Or all three. Thanks so much, and I'll see you next time.
