After years of largely overlooking geothermal, New Jersey has launched an effort proponents hope will better integrate the energy source into the state’s renewables portfolio.

The state Board of Public Utilities (BPU) on Sept. 14 began setting up a pilot project to help develop geothermal energy projects, boost consumer education and outreach about the technology and prepare a workforce ready to build such projects.

Under a board-approved Memorandum of Understanding, the BPU will work with the New Jersey Department of Environmental protection (DEP) to develop the pilot with the New Jersey Corporation for Advanced Technology (NJCAT), which helps verify technology and develop and grow energy and environmental technology-based businesses.

Proponents say the geothermal agreement could stimulate interest in the energy source, which has remained on the back burner even as the state in recent years has developed solar power aggressively and put together a program to harness wind through turbines to be located off the New Jersey shore.

In the past two decades, state help for geothermal projects has ranged from incentives of thousands of dollars that could cover most of a project cost to just a few hundred dollars that barely covered the cost of the paperwork, said Jim Thomas, owner of Thomas Geothermal Engineering of Tabernacle, N.J.

“Fifteen or 20 years ago, there was some hope that geothermal would be big,” Thomas said. But lately, “New Jersey has not had any record with geothermal,” he said, expressing optimism the latest initiative could reverse the pattern.

“It’s a huge task,” he said. “I’m glad that the state is finally reaching out for people like us to maybe help them do this. So it could turn out to be a watershed moment.”

Tapping Underground Temperatures

The renewed focus on geothermal energy comes amid a vigorous push by New Jersey to cut building emissions, the state’s second largest emissions source, mainly by shifting heat and hot water systems away from fossil fuel energy to electricity. In one initiative, the BPU in June released a $50-million-a-year, three-year plan to cut building carbon emissions by prioritizing a shift from delivered fossil fuels to electric heat pumps. (See NJ BPU Outlines $150M Building Decarbonization Plan.)

Geothermal heat pumps, also known as ground source heat pumps, harness the stable temperature of the ground soil deep below the surface — usually between 50 and 59 degrees Fahrenheit — to cool a building when the temperature of the air outside is high and warm it when the air temperature is low.

Some projects rely on a closed “loop” system, with a pipe that connects to a heat collector or system of underground pipes, tapping the ground temperature to warm or cool the fluid, depending on what’s needed. The heat or coolness is then extracted and used to heat or cool air or water, which is distributed around a building to alter its temperature. Other projects use an open-loop system, drawing water from a water source — such as ground water — and pumping it through the piping system and into the building before returning it to the source.

NJCAT suggests New Jersey focus only on closed loop rather than open-loop geothermal heat pump systems, in order to protect groundwater.

Interest in the technology is growing in other states, too, especially New York. Speakers at the packed NY-GEO Conference in May said the interest in geothermal has been helped by federal and local government promotion of the technology and the availability of tax credits in the recently enacted Inflation Reduction Act (IRA). (See Geothermal Heat Pump Industry Flush with Potential.)

The state on Sept. 21 enacted a law that would make it easier to pursue geothermal projects by loosening the regulations that govern closed-loop boreholes. (See NY Seeks to Unlock Geothermal Potential for Buildings.)

Short Term Pain, Long Term Gain

In New Jersey, despite the relatively modest recent support for geothermal projects, there are 3,400 geothermal heat pump systems in operation, 1,400 of which use a closed loop and 1,900 of which use the open loop system, according to the DEP.

The first major geothermal project in the state was at Stockton University in South Jersey, Thomas said. The now-30-year-old project heats and cools the campus with a system of 400 heat exchange wells containing plastic pipes drilled to a depth of 425 feet and connected. Water flows through pipes and the heat or cold — depending on the time of year — is extracted and piped into the buildings.

The most prominent project using geothermal techniques underway in the state is at Princeton University, which is developing a “geo-exchange” it calls a “thermal piggy bank” and describes as one of the largest in the world. The project, which consists of two systems that heat and cool campus buildings, is key to the college’s goal of reaching zero emissions by 2046 and is designed to store energy created in seasonal patterns rather than discarding it.

The project uses similar technique to a geothermal system, but rather than simply extracting heat from the ground and not returning it, as a geothermal system does, the geo-exchange stores heat energy in the ground and takes it out later.

“During summers, we take heat out of buildings and store it in the ground using geo-exchange bores to slightly warm the rock below campus,” according to a recent explanation by the college facilities department. “During winters, we use the same geo-exchange bores and warmed rock as a heat source for our buildings.”

Cost, Space Challenges

Ravi Patraju, associate executive director for NJCAT, said the organization believes geothermal heat pump systems can help the state reach its goal of cutting carbon emissions to 80% of their 2006 levels by 2050.

“We realized that with the current methods of heating and cooling residential and commercial buildings, that would not be achieved at all,” he said.

The state has in the past focused more on air-source heat pumps, which use the outdoor ambient temperature for heating and cooling, he said. Installers say a geothermal heat pump for a 2,000-square-foot home can cost between $15,000 and $38,000, double the price of a conventional HVAC system.

But air-source heat pumps are less efficient for heating and cooling, especially when the outdoor air reaches very low temperatures in the winter and very high temperatures in the summer, Patraju said. Air-source pumps use much more energy than geothermal heat pumps and so would pressure the state’s energy grid more, he added.

Geothermal heat pump systems, “if designed and installed properly, not only will it solve the space heating and cooling (problem), but also … pretty much give you the domestic hot water that you need,” he said.

The challenge, however, is getting a widespread buy-in for heating systems that are cost-efficient in the long run but require a greater upfront investment than a fossil fuel heating system, Thomas said.

“The difficulty becomes basically, you need to put pipe in the ground to exchange heat, which has meant you need to get a driller, and that’s a whole big deal,” he said. “It could easily add $15,000 to the cost of installation. … You could pick up a gas furnace for as little as $1,500.”

New Jersey in the past offered incentives of up to 80% of a project, which has been dramatically reduced, and even when projects were financially viable, the state lacked a support network of tradesmen, particularly drillers, to do the work, he said.

Another challenging issue, Thomas said, is the large amount of space needed to get drilling equipment into a house and where to put in bore holes. One solution under discussion, which would become more viable the more geothermal energy is embraced, is to have a shared loop, called a thermal energy network, he said.

“So you would not own the loop,” he said. “The loop would be owned by the utility, they would bill you monthly like they would for gas or electric, based on the amount of BTUs that you transfer.”