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Geothermal for All: How Property Owners Can Tap into Sustainable Heating & Cooling | EP260 · Clean Power Hour

• 0:50
  Joselyn Lai: That's one of the beauties of geothermal heating cooling. You actually don't need all of this challenging, oftentimes, federal, right, permitting for really big infrastructure projects, if you're trying to, you know, add transmission lines to hook up to a really large solar farm, right? Like that takes a good amount of soft costs, so to speak, right getting all the paperwork and pushing through potentially multi year long permitting slogs in terms of geothermal heating and cooling, there's basically two types of permits you need.
• 1:23
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• 1:33
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• 1:50
  Tim Montague: today on the Clean Power Hour, unlocking geothermal for any real estate in any location. I'm Tim Montague, your host. Check out all of our content at Clean Power hour.com Please give us a rating and a review on Apple or Spotify.
• 2:04
  Tim Montague: Subscribe to our YouTube channel and reach out to me on LinkedIn.
• 2:07
  Tim Montague: I love hearing from my listeners today on the Clean Power Hour, my guest is Jocelyn lie. She is the co founder and CEO of a geothermal company called bedrock energy. Welcome to the show, Jocelyn,
• 2:19
  Joselyn Lai: thanks so much for having me. Tim, it's
• 2:22
  Tim Montague: great to see you again, and I am kind of on a streak thanks to titanium ventures of doing a series on geothermal. And as you know, my listeners know geothermal is super abundant. It's in the Earth's crust, and it's just a question of finding new and better ways of getting to that heat and bringing it to the surface for either heating or cooling, depending on where you are and when you are, but Jocelyn, tell us a little bit about yourself and how you got into geothermal. Sure,
• 2:59
  Joselyn Lai: my background has been in startups for many years.
• 3:02
  Joselyn Lai: So about a decade I've been doing startup investing, launching, operating, usually in impactful, mission oriented categories, and very often in sustainability. And about three years ago, I met up with Sylvia levescue, who is then a professor at UT Austin, teaching their very first geothermal course after a long career in oil and gas, and Joel wiskovsky, a venture partner at overture.
• 3:28
  Joselyn Lai: And we together discussed how geothermal heating and cooling had so little innovation in terms of the design and construction to make it just so much cheaper, so much more scalable, even though geothermal heat pumps have been so well validated for decades, and that was just such an aha moment that the technology for getting free energy from the ground for real estate has been long established, but just needs some technology innovation to make it cheaper and more scalable. That really gave us the spark for what is now bedrock energy, which is technology development for enabling real estate owners anywhere in the world to affordably tap into that renewable heat from the ground.
• 4:19
  Tim Montague: Yeah. And so explain for our listeners what technologies bedrock is rolling out, and if there are pieces of the geothermal system that you're not rolling out. Who's you know, whose technology are you leveraging? But give us the basics of what bedrock does, and, and, and then say something about the the early adopters to your technology.
• 4:46
  Joselyn Lai: Sure. So a geothermal system, let me set the stage on that is a geothermal heat pump, which is basically a water source heat pump that sits inside the building as an HVAC mechanical system. There's nothing particularly new about that.
• 5:03
  Joselyn Lai: It's very, very well validated.
• 5:09
  Joselyn Lai: But then connected to that HVAC system are pipes in the ground that move heat in and out of the ground, which is how you're harvesting free, clean heat in the winter and depositing heat in the summer. And what we do at bedrock is we install those pipes in the ground, and we do that with our technology staff that's able to drill over 1000 feet quickly, confidently, with low risk and with increasing amounts of automation, so that we can reduce the cost and the difficulty of installing those systems underground. So what the cost? Customer gets is no different than the geothermal heating and cooling systems that have been deployed for many, many decades, but our technology is what gets that into the ground, drilling, constructing and completing those systems in a way that is much faster, much cheaper and more space efficient than has ever been done over the past few decades.
• 6:11
  Tim Montague: And talk about the temperature in the Earth's crust, because I'm familiar with shallow geothermal where you just dig a trench maybe 10 feet deep, and that temperature is, I think, in the 50s degrees Fahrenheit. But as you go deeper, does that temperature change?
• 6:30
  Joselyn Lai: It does. It does so the first, I would say, 20 feet changes a bit relative to the weather, because it's pretty close to the surface. And so the sun is really shining, or if it's snowing, that first 1020 feet does get impacted. And so it does vary seasonally.
• 6:45
  Joselyn Lai: However, once you get past that first 20 feet, then the first 1000 couple 1000 feet are a temperature gradient that does vary where based on where you are in the world, but more or less is somewhere between that 50 to 75 degree range. And because of that fairly consistent range, somewhere between 5575 maybe up to 80 in that first 1000 or 2000 feet, you can use that really effectively for both clean heat for our typical heating and cooling needs in buildings and and and normal kind of urban use. Or you can use it for for cooling as well.
• 7:31
  Tim Montague: Yeah, and, and so there's the the the new thing that bedrock is bringing to the market is a faster and cheaper way of drilling those wells Exactly,
• 7:45
  Joselyn Lai: exactly. So the heat pumps inside the building are not very different from heat pumps that folks have already been using for a while. However, you're adding to those heat pumps, this geothermal heat exchange field. We call it a geo field that sits in the ground, either under your building, under your parking lot, under your green space, and that system is this energy asset that has historically been quite expensive to the tune of payback periods. That might be 1520, 20 or 25 years in payback by bringing the cost down of that geothermal asset, it's kind of like how the cost of solar panels have come down a lot over the past 20 years. Bringing that down means that the capex up front is much lower, and your payback periods can come towards that five year threshold that is so important to real estate owners. In doing so, we're making it a really financially profitable choice for real estate owners to go geothermal.
• 8:43
  Joselyn Lai: Have this all electric HVAC system. Have it be really resilient. Save a lot of money.
• 8:50
  Joselyn Lai: Get all this free thermal energy from the ground. Instead of paying for, you know, fossil fuels, paying for gas, you're getting it free right under your property, and then basically making a really strong investment return by choosing the clean HVAC choice.
• 9:08
  Tim Montague: And tell us a little more about the drilling technology then, and I guess overall tech stack. How are you making this more affordable?
• 9:17
  Tim Montague: Yeah,
• 9:20
  Joselyn Lai: it's a great question. Tim, drilling is something that you know, obviously, we've done for decades in in, you know, modern society, but the ground varies a lot, and typically, especially if you're using Water Well Drilling rigs, there's a lot of uncertainty about what you'll encounter underground. And this means that if you encounter really high groundwater production or really, really hard rock or voids and caverns underground, or gas pockets or other types of subsurface challenges, the cost can get pretty high because you're basically blindly pushing a drill bit and a drill string into the ground. So to your question about, what is our technology? We utilize a drilling rig that has a two way communication wire that goes down the entire drill string might be 1000 2000 feet going underground, and at the very end we have our proprietary sensor package that pairs with the drill bit. This means that while we're drilling, we're reading the ground as we go. We're seeing what's happening down there, we're computationally analyzing the qualities of the subsurface and doing drilling controls in accordance to what we see. This means that we can drill usually about three times faster, but as much as eight times faster in difficult subsurface. Conditions that is really key to being able to go deeper, being able to go faster, reducing the human effort of manually doing the drilling controls, and overall, bringing down the cost of installing these geothermal systems, so that at the end of the day, the financial return is so much stronger for installing Geo.
• 11:14
  Tim Montague: And in the opening, you said that historically, geothermal might be a 15 or 20 year payback. Now you're getting the payback period down to what and is that very geographic? Are you only working in certain geographies?
• 11:30
  Joselyn Lai: We are bringing the payback period at this time closer to that, I would say, five to seven year payback period. And then we are continuing to roll out new technology so that it can really be quite regularly in that three to five year payback period, which really would make geo financial a financial just obvious choice for so many financially motivated real estate investors. There is some variation in the sense that places that have higher energy consumption for heating and cooling, whether that be very cold climates, the Northeast, the Upper Midwest, sometimes the lower Midwest, the mountain region. These are places where you're consuming so much energy for heating and for heating, and so you save more money by going to geothermal. The other places where the economic payback is is stronger is places where there's really high grid constraints. So for electric heating, and then, of course, any electric cooling, they might be paying a lot in demand charges, or just really high variable rates when everybody is air conditioning or everybody's electric heating at the same time in those places, saving on those higher rates, saving on demand charges can also make the payback particularly strong.
• 12:56
  Tim Montague: So let's say I'm a building owner. It's a high rise apartment building. It has an HVAC system. It's grid connected. It's probably getting some energy from electricity, some from natural gas. Here in the Midwest, certainly we get a bedrock geothermal system. How does the system change? And are you a soup to nuts solution in terms of actually delivering a project, or then do you have to work with partners for the installation?
• 13:35
  Joselyn Lai: We do work collaboratively with the owners, potentially other partners in a development. So, for example, if you recall, there's an HVAC system inside that would be heat pumps in geothermal cases, so water source heat pumps, so those might be designed by the developers, existing, trusted MEP engineering partner, right?
• 14:00
  Joselyn Lai: The folks who do the HVAC engineering, mechanical, electrical, plumbing. So we would work with that engineering partner. And it's also possible that the developer already has their preferred choice as a general contractor, and so that general contractor is overseeing everything right, the site preparation, the foundation, the building, the structural and we would work with them to make sure that the design, and then also the construction timing and planning of the geothermal field that goes outside the building, you know, underneath the foundation or underneath the parking lot, that that system is designed and drilled and installed in alignment with all the other work that is happening in the building. And so we would consider ourselves soup to nuts on that geothermal field, but because it interacts with HVAC, there's definitely a lot of collaboration,
• 14:57
  Tim Montague: sure, and where are you getting traction?
• 15:02
  Joselyn Lai: Yeah, we have been doing our early projects in Texas and the mountain region, so Utah, Colorado, and that is in part because our home base, from a technology, you know, headquarters standpoint, is Austin, Texas, and so we've tried to stay somewhat closer to home, so to speak. And you know, with our team just hailing so much from oil and gas, not only on oil and gas technology innovation, but oil and gas, you know, field deployment, we definitely have wanted to do our early demonstrations in in our in our home base. However, we are also seeing an increasing amount of interest in what we're doing in places that have done geothermal a lot in the past few decades, which are states like New York, Massachusetts and the rest. Of the Northeast. The reason is that these states have a lot of state level and utility level till winds for electrification and decarbonization of heat, and geothermal is so good for enabling the electrification of heat and the reduction of power demand that those states have a lot of existing knowledge and interest in geothermal. They see how bedrock technology makes the geothermal take less time, less space, less cost. And so we've been having an increasing number of conversations on how our technology can support geo installations in that region.
• 16:28
  Joselyn Lai: The
• 16:31
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• 17:31
  Tim Montague: What is your your high level analysis, both you know from your experience and based on reports like this, of what is the the economic and, I guess, decarbonization opportunity, those two things for geothermal in the built environment in the United States. Yeah,
• 17:57
  Joselyn Lai: it's this, this report that you cite is you came out from the Department of Energy Oak Ridge and NREL about a year ago, and it describes how at scale, geothermal heating and cooling adoption across residential, multi residential, commercial, industrial across the US can have hundreds of millions of dollars, somewhere between, you know, 300 $600 million In economic value and the reduction of of necessary grid expansions because of geothermal benefit in reducing demand. So all of society right now is pushing towards more heat pumps, electric vehicles.
• 18:43
  Joselyn Lai: There's all these things where electric demand is actually just going up, not to mention, you know, AI data centers that just require so much power consumption. So as all of these buildings, facilities and infrastructure need more and more electricity, the challenge is that a lot of electricity demand is going to happen all at the same time, in the summer and in the winter, because everybody will be electrically heating air conditioning and cooling their data centers all at once. And so instead, if geothermal is adopted in at least the building segment and in some industrial segments to reduce that power demand in the winter when everybody is electrically heating and in the summer when everybody is cooling, then you can reduce the amount of generation, transmission and distribution that we need to add to the grid, and that can be in the tune of hundreds of gigawatts, and in fact, many terawatt miles of transmission and distribution that we would otherwise be spending billions of dollars on as a Country, and because all of that grid expansion requires a lot of permitting reform and a lot of changes at the you know these like big federal levels, geothermal heating, cooling is considered a much lower barrier way to go out and reduce demand and reduce the need for all this infrastructure build
• 21:02
  Tim Montague: out in the solar industry, we often gripe about how expensive it is to get our projects permitted and interconnected to the grid operator. Is this a problem in the geothermal industry? No,
• 21:19
  Joselyn Lai: it's a great question, and that's one of the beauties of geothermal heating, cooling. You actually don't need all of this challenging, oftentimes federal right, permitting for really big infrastructure projects, if you're trying to, you know, add transmission lines to hook up to a really large solar farm, right? Like that takes a good amount of soft costs. So to.
• 21:40
  Joselyn Lai: Speak right, getting all the paperwork and pushing through potentially multi year long permitting slogs in terms of geothermal heating, cooling, there's basically two types of permits you need. One is a drilling permit, and usually this is not different than a water well permit. In fact, in many states, it's easier than a water well permit. And that means that it can just be a matter of days and maybe a few weeks to get that permit for drilling, this closed loop geothermal heat exchanger that is just so simple, so narrow in, you know, in its drilling impact, and so safe. The second permit that is typically needed is an HVAC permit. You're usually when you're doing a geothermal system, you're basically putting in heat pumps, and so oftentimes the building, either as new construction or as a retrofit, needs an HVAC mechanical permit to to do that installation. Well, that's something that is done 1000s of times over in every in every state, as people just do normal building development. And because of that, the the issues with permitting are really, really minimal, in fact, negligible, compared to some of the challenges at the kind of grid scale or in the kind of solar world.
• 23:00
  Tim Montague: And so how are you attacking the market? Because it seems like it's your technology is applicable to a very wide swath geographically, and we obviously have big buildings in every geography across the US.
• 23:16
  Tim Montague: Are you simply targeting traditional HVAC contractors or what is your go to market strategy? Yeah,
• 23:28
  Joselyn Lai: at bedrock, we really focus on talking with the real estate asset owner developers that care and know a lot about some of their energy and sustainability challenges.
• 23:44
  Joselyn Lai: So we don't really go to the contractors as a subcontractor just bidding into projects, because we are here to really try to make more geothermal happen by telling the end decision maker, the real estate owner, Hey, did you know you could make money on this system?
• 24:00
  Joselyn Lai: Did you know that it doesn't take as much time or cost as maybe historically, people have assumed being able to have that conversation at the point of the real estate decision maker?
• 24:11
  Joselyn Lai: Sometimes it's the CFO.
• 24:14
  Joselyn Lai: Sometimes for a smaller development shop, it's the CEO, sometimes it's their facilities or engineering director. We have that conversation to educate them on how geothermal, which they've already known for years, is the most efficient type of HVAC. We tell them this extraordinary type of HVAC is now more accessible and affordable to you, then they usually link us up with their MEP engineering firm, and so that we can have that conversation about upcoming projects in their pipeline that could potentially get geothermal and benefit from all that energy savings and emissions reductions.
• 24:56
  Tim Montague: And what are the ballpark economic benefits from a facility owner's perspective, sure,
• 25:04
  Joselyn Lai: a system that might have a maybe, let's call it really simplistically, a million dollar installation cost might be saving as much as $100,000 a year in energy bills, often because you're saving on electricity, obviously on natural gas for heating, and then very often, you're saving on the demand charges. And then on top of that, you might have another few 10s of 1000s of dollars a year in savings on maintenance costs, because very often rooftop HVAC or cooling towers and boilers can be pretty high maintenance, right? You're burning fossil fuels, you're evaporating water. Those are pretty high maintenance pieces of equipment. So by saving this money, and then also by potentially increasing rentable square footage, or increasing your rental price, because this building is now LEED Platinum.
• 26:02
  Joselyn Lai: Typically, that's how we really get to these payback periods that are around that five years.
• 26:11
  Joselyn Lai: And then, of course, owners are often capturing the really strong federal tax incentives and sometimes state level incentives. And altogether, this ends up being really a financially positive value prop.
• 26:23
  Tim Montague: So the investment tax credit applies to your technology. Is that right?
• 26:28
  Joselyn Lai: That's right.
• 26:28
  Joselyn Lai: That's right. The investment tax credit for clean energy installations does apply to geothermal heat pumps. And what that means is that the geothermal field and the HVAC system. Them overall, get somewhere between a 30 and 60% tax credit. This tax credit can be captured by the owner themselves, or it can be transferred on these tax credit marketplaces. And that means that in many cases, when folks are really looking to do a heat pump system. You actually can get more tax incentive back by making that a geothermal heat pump system than a normal air source heat pump system
• 27:12
  Tim Montague: cool so let's step back for a second. You know, we're on this journey to decarbonize the economy and clean the grid. And that's about, you know, net sharing the economy is about 50 gigatons of CO two pollution globally. When we talk about cleaning the grid, we're talking about a future that is perhaps 50% solar, 40% wind, 10% other. What are some of these broad strokes for geothermal? What is the trajectory that you see for geothermal? Yeah, I
• 27:54
  Joselyn Lai: mean, in a in an ideal world where we're really doing the cleanest, most resilient and most efficient option for buildings is that the over five gigatons a year that is for heating and cooling of buildings could be obviously electrified through heat pumps of all kinds, and Then in places with higher energy loads and colder climates and more intensive, you know, intensive heating and cooling needs that those places would be where geothermal heat pumps really shine. And so that really means that kind of, globally, you're talking about two or three gigatons of carbon emissions that can be really impacted through geothermal heat pumps as the optimal, most cost efficient and like profit generating choice for decarbonizing that heating and cooling. So if you think about, you know, let's call it three gigatons a year that can be really directly benefited from geothermal.
• 29:01
  Joselyn Lai: You're talking about a few things. One is that every single new construction planned community for single family homes would have a district geothermal grid. Every single multi family building which has apartments or condos or town homes would have geothermal as the heating and cooling option, and commercial, retail, industrial could also all be geothermal whenever it is new construction. Now that's the first lowest hanging fruit, and that could probably get you many megatons just because of just high growth areas, especially in the American West and the American South, separately, the next big thing to tackle is retrofits, and this is where as we start to look at older cities and existing buildings, existing campuses that are moving to heat pumps and moving to electrified heating and cooling systems in So many of those at the if, if the city and the state and the utility level are pushing forward thermal energy networks that are geothermally heated and cooled, then you can get wide swaths of older residential buildings, commercial buildings, retail buildings and so forth, switch to geothermal heating and cooling. That's a little bit of a more difficult challenge as why it's so important for public policy makers to be aware of, you know, their role in decarbonizing kind of existing older communities.
• 30:35
  Tim Montague: So the the impact that you see geothermal having on, you know, decarbonizing the economy, so to speak. Does that?
• 30:50
  Tim Montague: Does that boil down to a percent? Is it 10% 20% as you know, as you see it,
• 30:58
  Joselyn Lai: uh, I would say in terms of the percentage of HVAC adoption, I think that we'd be really pushing for geothermal HVAC to be around 30 to 40% of new construction in the next 15 years. And that's not crazy.
• 31:13
  Joselyn Lai: That's actually not far from where we are in places like Sweden and other parts of the of the world where heating and cooling, you know, consumption is really high, and there is good public policy pressure for decarbonizing heat. So knowing that, you know, 25 30% is within reach. That is, that is something that we think is very a. Reasonable for all new construction, as we kind of like expand geothermal affordability and accessibility in the next few years. To get to that those kinds of numbers in the 2030s in terms of existing building retrofits, that's obviously trickier, just because changing all the HVAC inside of a building does take time and cost and so in terms of how, what kind of, you know, percentage adoption we think we can get to, I think 10% is a really good goal, especially as there are more and more incentives and grants and fines, even that are starting to push existing buildings to do some kind of retrofit.
• 32:23
  Tim Montague: It would seem to me that some of the states you're looking closely at, and maybe you've already said this, but you know, when I think about forward thinking states around energy policy, I think of New York, Massachusetts, Illinois, California, am I? Am I right is, are those some of the short list states where you focusing attention Absolutely. And
• 32:46
  Joselyn Lai: then I would also add the mountain region. It's led by Colorado, which has recently spearheaded a big Western Governors Association, you know, push for geothermal of all kinds, both heating and cooling and power production, to have higher adoption in the region. And, you know, it's a cold climate region, and building new energy infrastructure in mountainous regions is really expensive and takes a lot of time. If you can accelerate those timelines of expanding energy infrastructure by actually building it on the site of your of your customer, on the side of a community or commercial building or industrial building, you can avoid a lot of that expensive infrastructure expansion through big, mountainous terrain. So we'd say absolutely. New York, Massachusetts, surrounding northeastern states, Illinois, probably Michigan, Minnesota, that upper midwest, and then Colorado, Utah and that region as well. California is definitely very ahead of the curve and kind of pushing, obviously clean energy policy.
• 33:46
  Joselyn Lai: It is a slightly, slightly lower priority state for geothermal, just because California has, you know, not as cold weather and a lot more temperate zones,
• 34:01
  Tim Montague: right? Yep, I get it well in our last few minutes.
• 34:05
  Tim Montague: Jocelyn, what else should our listeners know about bedrock energy and how they can potentially help you sure
• 34:14
  Joselyn Lai: we are hiring and so the first thing that I must say is, if you know, or you yourself, are a great, you know, mid career mechanical, mechanical engineer, electrical engineer or software engineer, we would love to talk to you.
• 34:30
  Joselyn Lai: And so our website is bedrock energy.com Come check out our job postings. And then, of course, if you're in one of those states mentioned, especially in the Northeast or or, you know, Colorado, Utah, the mountain region. We would love to talk if you are doing work in high performance buildings or in real estate development, because the numbers are really getting there.
• 34:52
  Joselyn Lai: Geothermal can be just a profitable investment with a less than five year payback period. And we love to talk more.
• 35:03
  Tim Montague: Great. Well, check out all of our content at Clean Power hour.com Please give us a rating and a review on Apple or Spotify. Subscribe to our channel on YouTube, reach out to me on LinkedIn. I love connecting with my listeners. Or you can reach me on Clean Power hour.com website and again.
• 35:21
  Tim Montague: Jocelyn, how or what is the best way people can connect with you.
• 35:27
  Joselyn Lai: We are so you know, our website has a contact form on bedrock energy.com and you can also reach out to us at info at bedrock energy.com and we will make sure to engage with your listeners.
• 35:43
  Tim Montague: Wonderful. Well, I'm Tim Montague, let's grow solar and storage. Take care.
• 35:45
  Tim Montague: Bye.