CEC Report Details Barriers to Geothermal in California

Aug. 7, 2014
A new report by the California Energy Commission (CEC) describes the main impediments to the development of geothermal heat pump (GHP) technology in California.

A new report by the California Energy Commission (CEC) describes the main impediments to the development of geothermal heat pump (GHP) technology in California.

"Geothermal Heat Pump and Ground Loop Technologies" provides a brief overview of the technology, and details the barriers faced by the geothermal heat pump industry. It also provides proposed solutions suggested by industry and CEC staff responses.

The report was drafted in response to Assembly Bill 2339, which required the CEC to evaluate policies to overcome barriers to the use of GHP and geothermal ground loop technologies in California, and to include these evaluations and recommendations in the 2013 Integrated Energy Policy Report (IEPR). The statute required the CEC to consider:

  • The Quantitative benefits and costs to ratepayers in reference to safety, reliability, cost and efficiency.
  • Existing statutory and permit requirements as they affect GHPs.
  • Effect of the use of GHP and ground loop technologies on achieving the state’s greenhouse gas reduction goals.

The CEC convened a workshop on March 21, 2013, then developed a working group comprised of state agencies, cities, counties, and “interested parties” to begin evaluation of current policies. The Staff Paper outlines the input received during the working group process and provides additional detail on the high‐level discussion included in the 2013 IEPR.

The CEC Staff Paper covers topics including California Building Energy Efficiency Standards modeling compliance, local permitting and fee schedules, installation practices, borehole standards, well log data, tiered electricity rates, and utility‐based loop lease programs. The paper also addresses the GHP industry’s request for consideration of geothermal heat pumps as a renewable resource, and estimating avoided greenhouse gas emissions.

Barriers to the use of GHPs in California noted by industry participants include:

  • local permitting and regulatory issues (especially for drilling and boreholes)
  • upfront cost issues
  • how best to capture the benefits of GHP technologies in state energy policy.

The CEC Staff Paper describes industry participant views on how to address those barriers and CEC staff recommendations. Primary considerations include:

1. Efficiency of GHPs is not adequately represented in T24 compliance modeling practices under California building standards. This leads to disqualification for utility rebates. The industry wants the state to develop an alternative calculation method to estimate GHP energy consumption for better comparison to standard heating and cooling systems. The CEC disagrees, saying that developing standards is an industry responsibility under internal regulations.

2. Department of Water Resources (DWR) regulations regarding boreholes for geothermal ground loop heat exchangers are not reasonable due to a continued misperception of them as “wells,” prompting overly stringent and costly regulations under old proposed rules (1999) that create local permitting inconsistencies and sometimes exorbitant fees. The industry wants updated DWR regulations that recognize the difference between wells and geothermal boreholes; consistent fee schedules for permitting; and a comprehensive approach to permitting and fees. The CEC recognizes the definitional problem outlined by the industry.

3. California’s tiered electricity rate structure, which penalizes owners of GHP systems, which are all electric. Adding new load to a building exponentially raises power cost, even while the system is reducing fossil fuel use. The industry proposed a special tiered rate for GHPs.

4. Industry’s call for recognition of GHPs as a renewable resource, to make them eligible for Renewable Portfolio Standard (RPS) credits and a more attractive compliance option for utilities. CEC staff disagrees, saying that GHPs do not generate electricity so are not eligible. Staff does acknowledge that GHPs can reduce power consumption, and that could reduce the amount of renewable generation required for a utility to reach its RPS target.

5. Concern that the greenhouse gas (GHG) reduction benefits of GHPs are not adequately captured in the California Air Resources Board (CARB) cap-and-trade program. CARB says GHPS already receive adequate incentives within the program.

Financially supported in part by the Geothermal Exchange Organization (GEO), CaliforniaGeo drafted language that mandated the Staff Report and championed passage of AB 2339. According to CaliforniaGeo President Phil Henry, “The California Energy Commission Staff Report is an important consensus product that validates the industry’s views on barriers to increased GHP deployment in the state.”
In addition, he says, the report identifies problem areas that need to be addressed for the future of the industry. “The CEC has opened the door to the GHP industry to facilitate additional discussion among all stakeholders, and bring back to them solutions to problems addressed in the Staff Report. They recognize the important role GHPs can play in helping the state achieve its GHG reduction and Zero Net Energy goals.”

“The CEC Staff Report is significant progress for GHPs in California," says GEO President and CEO Doug Dougherty. "It is an excellent first step toward solution of a number of problems faced by the industry, and an opportunity to craft a regulatory environment more conducive to increased installation of GHPs statewide.”

Access the 31-page document here: CEC Staff Report on Geothermal Heat Pumps