U.S. DEPARTMENT OF ENERGY RELEASES NEW REPORTS HIGHLIGHTING BENEFITS OF CONSUMER-CENTRIC SOLUTIONS FOR HOUSEHOLDS, BUSINESSES, AND UTILITIES

WASHINGTON, D.C. — The U.S. Department of Energy (DOE) today released two reports in its Pathway to Commercial Liftoff series, one on geothermal heating and cooling and the second providing an update on virtual power plants (VPPs). These reports represent the thirteenth and fourteenth installments in DOE’s Liftoff series. Together, these two reports confirm that consumer-controlled energy assets can support a resilient electricity system while saving money for homeowners and businesses.

“With the revitalization of industry in the U.S. and growing demand from businesses and consumers on our energy infrastructure, it’s imperative that we continue tapping into America’s clean energy assets and supporting innovative technologies to meet this moment.” said DOE Chief Commercialization Officer and Director of the Office of Technology Transitions Dr. Vanessa Z. Chan. “These latest reports in DOE’s Commercial Liftoff series illustrate the potential for families and businesses to reduce energy costs right at home, while helping alleviate infrastructure challenges for everyone.”

Geothermal Heating and Cooling 

“Pathways to Commercial Liftoff: Geothermal Heating and Cooling” marks the second report in DOE’s Liftoff series featuring geothermal. Geothermal heating and cooling technologies are important and underutilized solutions for supporting a more resilient and efficient national energy system, as well as reducing emissions from buildings. This report paves the way to dramatically expand the domestic geothermal industry while helping Americans have better access to local, affordable heating and cooling technologies.

The release of this Liftoff Report follows the 2024 release of the Pathways to Commercial Liftoff: Next-Generation Geothermal Power report and DOE’s 2023 release of an analysis highlighting impacts of mass deployment of geothermal heat pumps (GHPs), including the potential to reduce electricity demand by up to 13% by 2050 relative to decarbonizing without GHPs and avoiding as much as 43,500 miles of new transmission lines.

Key findings from the Geothermal Heating and Cooling Liftoff report include:

• Geothermal heating and cooling technologies can reduce peak electricity demand, increase resilience, and reduce ratepayer energy bills. Widespread deployment of GHPs and integration with smart, grid-connected technologies reduce energy demand and support flexibility, helping to avoid upgrades to the electricity system and providing savings to both utilities and ratepayers. GHPs, when deployed with air-source heat pumps and other energy efficiency measures, also help meet national energy efficiency goals as set forth in the DOE's National Blueprint for the Buildings Sector.
• The pathway to commercial scale for geothermal heating and cooling relies first on scaling GHP installations in new construction through 2035 and thereafter increasing the deployment rate in building retrofits. New builds present lower barriers for installations but represent a smaller market segment than existing buildings.
• Near-term investment opportunities for GHP installations are between $100-150 billion of capital deployed by 2035 serving the equivalent of 7 million homes (a tripling of current U.S. GHP capacity). Achieving and maintaining an annual ~10% growth trajectory could lead to broad market penetration in 2050, reflecting GHPs installed in the equivalent of 36 million homes.  Expanding the use of GHPs will require robust GHP workforce growth and more efficient installations, as well as simplified permitting, certification, and utility rate and incentive programs. Expanding demonstrations of thermal energy networks, where multiple buildings connect to a single system, will help networked geothermal systems meet cost parity with single-building GHP systems.
• Federal tax incentives, energy savings, and utility incentives can help recover the upfront cost of single-building GHPs, which can be high relative to some other heating and cooling solutions. Tax incentives, including a 30% or greater federal tax credit, as well as utility bill savings and lower operating costs of GHPs relative to other systems are important to help customers offset the initial cost of a GHP system. Utility rate structures and programs that align with energy efficiency goals will also help compensate consumers and businesses who adopt GHP systems.

On Thursday, January 16, DOE will host a webinar featuring senior DOE leadership to explore the Pathways to Commercial Liftoff: Geothermal Heating and Cooling report. Registration is required. Learn more about geothermal energy, including GHPs, through DOE’s Geothermal Technologies Office. 

Virtual Power Plants Update

The Pathways to Commercial Liftoff: Virtual Power Plants Update marks the second installment of the Virtual Power Plant (VPP) Liftoff Report. Since the publication of the 2023 Liftoff Report, the near-term pressures on the U.S. electric grid have only intensified – rapid growth in peak electricity demand, upward pressure on customer costs from growing transmission and distribution upgrades to accommodate expected load growth, and outages due to extreme weather events and aging infrastructure are placing disproportionate pressure on grid reliability, affordability, and resilience. 

Against the backdrop of these challenges, Virtual Power Plants (VPPs) are solutions that can be deployed at scale in a short timeframe to maximize the use and value of existing grid infrastructure, minimize costs to ratepayers, and ensure a resilient, reliable, and secure grid for all.

Over the last year, VPP scale has grown to 33 GW across North America. Rising interest in VPPs and growing recognition of their potential is demonstrated by new VPP deployments, new insights and analyses into benefits, and new tools and resources from within and outside of the DOE. However, the pace of deployment still needs to accelerate. Deploying 80-160 GW of VPPs (enough to serve 10-20% of peak load) by 2030 could support rapid load growth while reducing overall grid costs. Stakeholders can adopt and adapt demonstrated best practices from across the country to accelerate deployment. 

Key findings from the Virtual Power Plant Update include:

• Multiple utilities have launched basic VPP programs in less than 6 months with limited upfront investment cost (<$1M) to achieve 100+ MW of peak shaving benefits over time, reducing costs for customers while meeting resource adequacy needs for the grid. With distributed energy resource (DER) capacity forecasted to grow in every state across the U.S., VPPs can leverage DERs that are already on the grid or expected to be deployed to serve as the foundation for fast-launching, large-scale VPP programs.
• VPP deployment has been highest in areas where state regulators and policymakers have implemented VPP-supportive actions; examples include establishing improved grid planning practices to better integrate VPPs as a solution, expediting DER interconnection processes, and instituting comprehensive valuation models to compensate DERs and VPPs for the full range of grid benefits delivered.
• CAISO and ISO-NE have fully complied with the requirements of FERC Order 2222, theoretically unlocking wholesale market participation from a much wider range of DERs in those regions, though implementation remains slow nationally. Although challenges remain, market operators domestically and internationally are pursuing solutions to more holistically integrate VPPs into wholesale markets.
• Finally, over 20 new resources and publications have been released to enable VPP adoption since the 2023 Liftoff Report, supported by over 50 DOE programs. 

On Wednesday, January 15, DOE will host a webinar featuring senior DOE leadership to explore the Pathways to Liftoff: Virtual Power Plants Update. Registration is required. 

DOE develops its Pathways to Commercial Liftoff reports with extensive stakeholder engagement and a combination of system-level modeling and project-level financial modeling. Find out more information about the reports here. DOE continues to encourage public input and stakeholder engagement for its liftoff reports through industry forums and via email to [email protected].

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