Geothermal and Thermal Energy Networks for Mountain Towns

Project Overview

Heating and cooling buildings is one of the hardest parts of community decarbonization, especially in cold mountain climates and in states where local governments have limited control over energy codes or gas hookups. The panel’s core message was that geothermal is a key tool for community decarbonization, and that the most practical form for many towns is not a deep well tapping the earth’s heat but a thermal energy network (also called an ambient temperature loop): a system of water lines that moves heat between buildings and thermal sources so that one site’s excess heat meets another site’s heating need.

These networks can draw on many sources: ground-source geo exchange, wastewater and sewer lines, mine water, data center waste heat, rivers, lakes, and even snowmaking systems. Ground-source heat pumps connected to them stay efficient in cold weather because they rely on a stable heat source, unlike air-source heat pumps, which lose efficiency as temperatures drop. Panelists noted that the larger a shared network grows, the more efficient it becomes.

Park City, Utah is an early example. Its new water treatment plant is fully heated from water coming out of a mine shaft, drawing less than a tenth of a degree from the flow. The city is also looking at recovering heat from a sewer lift station and sharing heat across municipal buildings and hotel redevelopment planned ahead of the 2034 Olympics. Park City completed a phase one feasibility study and was issuing an RFP for a phase two study on financial and operational questions. Luke Cartin noted that, unlike a renewable electricity pathway that runs through utility commission hearings and an investor-owned utility, a municipal thermal system is something the city can largely control itself.

Federal and state incentives make these projects much more financeable. According to D.A. Davidson, the federal investment tax credit for geothermal was not cut back in recent federal legislation and remains available through 2032. Public entities such as governments, utility and special districts, and nonprofits can use tax-exempt bonds and receive a direct cash payment from the federal government (30 to 50 percent of project cost) once a project is placed in service. Private owners such as ski companies can use the credit against their own taxes or sell it, at roughly 90 to 95 cents on the dollar. Fixed-rate bonds over 20 to 30 years can finance up to 100 percent of a project for some public borrowers, depending on credit quality and how offtake is structured.

In Colorado, the Colorado Energy Office’s geothermal program launched with $12 million and has awarded more than 60 projects, including feasibility studies and buildouts in places like Eagle County and Colorado Mesa University. The state also offers a $35 million merit-based geothermal energy tax credit and an estimated several hundred million dollars in heat pump incentives (including ground-source heat pumps) over the next decade, designed to complement federal incentives. Bryce Carter explained that projects in federally designated energy communities that also win the state’s merit-based credit can raise the 30 percent investment tax credit to as much as 50 percent. Study results and commissioning reports from state-funded projects are made publicly available.

A phased path from idea to operating system

Matt Garlick of GreyEdge Group described the step-by-step process his firm uses to reduce risk, since a geothermal system, once drilled, cannot easily be undone. A phase one study maps both sides of the equation: which buildings could connect and which thermal resources are available. A phase two study refines the numbers, estimating heating and cooling loads and how much energy each resource (for example a wastewater line or a snowmaking system) could realistically supply.

Next comes reducing building loads through commissioning or efficiency work, then pre-design, which GreyEdge recently completed in Vail. Pre-design is where the work shifts from technical to interpersonal: building the coalition and governance structure that will carry the project. Design and construction follow, ideally with certified geothermal designers and certified geothermal inspectors on the team, and a team should stay involved after construction to refine and expand the system over time.

Lessons Learned

Start with shared low-temperature heat, not deep wells

For most mountain towns the near-term opportunity is a thermal energy network that shares heat among buildings and taps local sources like sewer lines, mine water, or the shallow ground. Luke Cartin of Park City described it as a basic thermal utility using fairly straightforward technology. Deep, high-temperature geothermal for electricity is a separate and longer-term opportunity.

Mitigate risk with phased studies and qualified people

Because drilling commits a community, GreyEdge Group recommends moving through feasibility, refined load studies, pre-design, and design in order. Hiring certified geothermal designers and inspectors helps ensure the system performs as designed and delivers the expected carbon reductions.

Stack federal and state incentives

The federal geothermal investment tax credit remains available through 2032, and public entities can receive it as a direct cash payment once a project is in service. In Colorado, state merit-based tax credits and heat pump incentives are designed to sit on top of federal incentives, potentially raising the credit from 30 percent to 50 percent for qualifying projects.

Long-term bond financing can cover upfront costs

D.A. Davidson noted that governments, special districts, and nonprofits may be able to finance up to 100 percent of a project with fixed-rate tax-exempt bonds over 20 to 30 years, depending on credit and offtake structure. Private owners need to bring some equity but can monetize their tax credits.

Frame it for every audience

Panelists described geothermal as a nonpartisan solution that serves both environmental and financial goals, including protection from volatile natural gas prices. Utah, for example, passed a thermal energy network tax credit even while restricting local gas policy. Matching the pitch to an organization’s priorities, whether decarbonization, resilience, or a sound 30 to 50 year investment, helps build support.

Build coalitions and share what you learn

The market is new, and Bryce Carter noted that it moves at the speed of trust. The Colorado Energy Office is convening a Colorado geothermal council and working groups (including utilities) to answer common questions, and it publishes study and commissioning results so other communities can learn from funded projects.

Program Contacts

Michelle Stewart, Executive Director (moderator), Yampa Valley Sustainability Council
Luke Cartin, Lands and Sustainability, Park City Municipal
Alexandra Iseman, Managing Director, Fixed Income Capital Markets, D.A. Davidson
Matt Garlick, CEO, GreyEdge Group
Bryce Carter, Geothermal Program Manager, Colorado Energy Office