Geothermal could be in your new home. Here’s what it is and what it means

Geothermal heating and cooling may soon be coming to a new home building site near you as a leading alternative energy company expands its unique build-and-lease program nationwide.

Geothermal, which means “heat from the earth,” is considered the most efficient and durable home heating and cooling system, saving those who have it hundreds of dollars annually on their energy bills.

Last fall, Dandelion Energy announced the first-of-its-kind leasing program that allows builders to install underground geothermal systems for less than the average HVAC system would cost. Since then, it has expanded to 14 states. And now the Arlington, Virginia-based company is widening its footprint to all 50 states with a way for builders to offer a less expensive, cleaner energy source.

To bolster the expected growth, the company is partnering with Canada’s Diverso Energy to expand its financing offerings to builders. The deal allows Dandelion to design and install geothermal systems while Dandelion and Diverso finance, own and lease the fully finished turnkey product to the eventual homeowners.

Dandelion’s “zero-upfront-cost” model allows builders to offer geothermal at or below the cost of standard HVAC systems while their buyers save anywhere from $500 to $1,000 a year on their utility bills. The systems, Dandelion says, are quiet, low maintenance and last far longer than conventional HVAC systems.

Buyers are cash flow positive on the day they move in. “In cold climates,” the company says, “these systems use roughly 60% less electricity on peak cold days than air-source heat pumps, making it the most affordable electrification” system on the market.

Geothermal has been in use for ages, so it has been tested to be tried and true. According to Uncle Sam, some 1.27 million homes and 27,300 commercial buildings have geothermal heat pumps, with Florida, Tennessee and North Carolina being where the most homes have adopted these systems.

Residential geothermal systems work much like conventional air-source heat pumps except that they use the ground deep under the surface as the energy source. As a renewable source of energy, the ground is always available, regardless of the weather outside. It is a constant 40 to 70 degrees, no lower and no higher.

Geothermal systems harvest heat from the ground. In the summer, warm air from the house is drawn into the geothermal heat pump’s water. Heat is extracted and pumped into a closed-loop pipe system under the house, where it is cooled by the earth. Then, the cooled water is pumped back as cool air into and throughout the house.

In the winter, the process is reversed. Water circulates through the underground loop, where it is warmed by the earth. The water then flows back to the heat pump, which concentrates the heat and distributes it throughout the house. The water is then sent back into the loop, where the process is repeated over and over again.

Geothermal is four times more efficient than a boiler or furnace and twice as efficient as an air-source heat pump. And since the pump is located inside the house, there is no outdoor equipment to see, hear or maintain.

But geothermal has drawbacks. For one thing, systems come with high upfront costs. Enter Dandelion, which removes that barrier with its leasing program. The program all but eliminates the capital expenditure barrier that has historically held back geothermal systems.

“Geothermal is no longer a niche or premium-only option,” says CEO Dan Yates. “It’s now accessible to any builder, anywhere in the country.”

With geothermal, there’s no need for outdoor AC condensers and traditional heating components. Dandelion bores 5- to 6-inch holes straight down into the ground to a depth of 200 to 500 feet before the house is built, and because the mechanical components are inside the house, they are not subject to the weather outside.

Nothing lasts forever, not even geothermal systems. But Yates says his system will last as long as the house. “It’s the most reliable system a homeowner can ever have,” he says, noting that its system is guaranteed for 50 years.

Yates claims Dandelion’s proprietary technology produces more heat with less air flow, making its heat pumps “the quietest of the quiet.”

As a third-party ownership program, Dandelion’s partnership with Diverso also qualifies for tax credits, some of which may be passed on to homeowners.

The company’s biggest deal to date has been with Lennar. One of the country’s largest builders, Lennar will integrate the Dandelion system into 1,500 or so houses in Colorado, where state tax incentives and other inducements drive the upfront costs of geothermal heat pumps even lower.

Yates calls the Lennar partnership “one of the most significant residential geothermal developments in history,” and expects it to set a framework for making geothermal heating and cooling the standard for new home construction.

Dandelion is in talks now with more than a dozen other builders, including high-end builders Toll Brothers and Discovery Land, as well as with a number of smaller, regional outfits. The company expects to be drilling holes for 10,000 houses annually by the end of the year.

Lew Sichelman has been covering real estate for more than 50 years. He is a regular contributor to numerous shelter magazines and housing and housing-finance industry publications. Readers can contact him at lsichelman@aol.com