10 March 2025
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Tamsin Lishman, CEO of Kensa, shares her thoughts and opinions on how the US ground source industry has advanced so quickly and what the UK might learn from their experiences.
Tasmin explained that in October 2024 she had the pleasure of attending and speaking at the NY-Geo Conference1, held in New York City, US. She said: “I was struck by the excitement and enthusiasm in the room. It truly felt like an industry on the cusp of something huge, and from my UK point of view, that my US counterparts, might now beat us at our own game. “While the UK has historically been ahead in adopting these systems, the US market is now experiencing a surge in interest and deployment, driven primarily by legislative support and a growing army of advocates. "In this article, I will explain why I believe the US industry has advanced so quickly and the lessons the UK can learn from its experience."
A supportive legislative framework
The turning point for ground source heat pumps (GSHPs) in the US was undoubtedly the 2022 Inflation Reduction Act (IRA). The IRA introduced substantial financial incentives for renewables, including a 30% tax credit for GSHP installations, this is in place until 2035. On top of the IRA, many states have their own clean energy tax credits, like the NYS Clean Heat rebates2, further boosting funding for geothermal. While the longterm trajectory of the IRA remains to be seen under the new administration, its initial impact has been transformative, and it has set a strong foundation for growth. In 2023 alone, around 80,000 GSHP units were installed using IRA tax credits, marking a significant leap from just a few years ago, when the industry was still in its infancy. This growth is particularly striking considering that most installations have been individual projects, meaning the vast potential of networked heat pump solutions is largely yet to come. The US is starting to deliver innovative large-scale projects, such as the 37-storey development in New York3, which will be the largest geothermal project in New York State, possibly even the US, when it is completed next year. These types of projects will only grow with legislation in an increasing number of states removing the regulatory barriers to geothermal networks and, in many cases, instructing utilities to develop pilot projects as the first step to decarbonising heat and, critically, transitioning workers from gas to clean heat industries. New York4 was the first to pass legislation in 2022, similar legislation is being passed in at least six other states. National Grid has multiple US projects planned5, and there are many more supported by the US Department of Energy (DoE) being delivered by other utilities across the country, such as those in Michigan, Illinois, Vermont and Oklahoma. These new projects are a sign of the growing momentum for networked heat pumps and follow in the footsteps of the Framingham Eversource project6 the first operational utility-owned geothermal network in the US. While the UK has a longer history of supporting GSHPs and other forms of lowcarbon heat, this support has been marked by frequent changes and hiatus in funding, particularly for GSHPs. This has created somewhat of a challenging environment in which to invest and scale up. The industry confidence this policy certainty has provided so far is worth noting, but it will be critical to see whether this continues under the new political landscape.
Government understanding of the importance of GSHP
What particularly stands out in the US is the clear understanding from the Government at both a state and federal level of the importance of GSHPs. At this conference, and others attended recently by colleagues, it was inspiring to see representatives from the US Department of Energy (DoE) advocate passionately for GSHP technologies – recognising its major benefits for lowcarbon heating and cooling. This point is underscored by the existence of a dedicated DoE team on GSHPs who provide extensive support to the sector, including the publication of a major study7 on the benefits to the electricity grid of decarbonising through the use of GSHPs compared to other heating and cooling technologies. Again, to contrast this position in the UK, there is little specific thought given to GSHPs which are largely treated as an extension of ASHP. Given the different use cases for GSHPs and ASHP, the different barriers they face to deployment, and critically, the different policy interventions that may unlock their mass deployment, it is important that Department for Energy Security and Net Zero (DESNZ) provides a more specific focus on GSHP. The Climate Change Committee and National Grid’s Future Energy Scenarios have both set out major roles for networked GSHPs (approximately 20% of homes being connected to them by 205), and studies exist on the major system benefits that GSHPs can provide to the UK as well.
Supply chain considerations
The US has also put in specific measures to support the deployment of US-made GSHPs (and other renewable technologies). The IRA provides a 10% tax credit for the installation of US-made heat pumps to ensure that the transition to clean heat also supports economic growth and jobs in the US. As noted above, legislation in various states aims to move utilities towards deployment of clean heat infrastructure to ensure that jobs currently tied to fossil fuels are increasingly moving to clean energy technologies. Unsurprisingly, the unions are strongly in support of these moves.
Conclusion
Tasmin said: "As I wrote in a previous article titled “The future of heating in the country is a question not just of climate policy, but of industrial strategy8” I believe it's critical for the UK to start viewing climate policy through an industrial lens. While I would not propose that the UK directly replicate the IRA's approach to supporting domestic manufacturing, it is absolutely essential for the heat transition, and decarbonisation more broadly, that the public sees the benefits. Moreover, it is crucial that the transition is not perceived as undermining well-paid jobs here. The Government’s Industrial Strategy must deliver on this, and I am confident it will. “In conclusion, the landscape for networked heat pumps is evolving rapidly in both the UK and the US. While the UK has established itself as a leader with a wealth of experience and a solid business model, the US is catching up, fuelled by legislative support, advocacy, and a growing recognition of the benefits of GSHP technology. By learning from each other’s experiences and embracing innovative strategies, both countries can accelerate the adoption of this crucial technology in the f ight against climate change.”
Source
1. www.ny-geo.org/nyc-ny-geo-2024
4. www.nysenate.gov/legislation/bills/2021/S9422
5. https://tinyurl.com/3rre8tv9
6. https://tinyurl.com/4rtmjm25
7. https://info.ornl.gov/sites/publications/Files/Pub196793.pdf
8. https://tinyurl.com/436fs5mr
