Lessons Learned from Selling Community Scale Geothermal in New England

I’ve heard a lot of pitches to about community geothermal, using a single loop field for many different households. The main benefit is simple, a reduction in drilling costs due to economies of scale. The roadblack, as always, is actually turning the idea into a real project. Selling.

A few months ago, I finally heard of a company who has done it.

So, I had to speak with this company and learn more about they learned selling a community scale geothermal project.

I spoke with Ed Malloy, President of New England Renewable Energy Systems.

If you’re looking on strategies to sell geothermal and figure out what your strategy is, whatever your area of the country, this will be a useful discussion for you to watch

HIGHLIGHTS

• Ed said that a project at this scale is driven by folks that have a vision and pioneers in the development community
• We talked about what they are seeing as the perfect clients in the geothermal market. On the commercial side, there are institutions that have a long term outlook. He’s found the best clients are public institutions, and private institutions that have large energy spends, but are in a low margin business.
• Ed said that the client side has switched from “what is geothermal?” to “I know what geothermal is and technology, show me the cost.” However, investigating the costs costs money itself.
• We talked about if and how geothermal would fit into an ESCOs business model for commercial clients

HERES WHAT WE SPOKE ABOUT – See below for some job photos.

1) Ed’s lessons learned from selling geothermal in New England

2) With the community geothermal project, I’ve heard the idea many times, but I’ve never heard anyone who has done it. Could you share the story of the project? What makes it special? How did it come to fruition?

3) You said a project of “this scale”, what is the scale of this project?

• 9 homes on a single geothermal loop. they’re served by a sing pump run and the loop is large enough to provide enough energy for these 9 homes.

4) You alluded to the sales proces a little bit. You said that the key was having folks with a vision. Do you think this is always going to be the case? Will you always need a client with a vision, or would it be possible for a firm, like yours, to sell more community scale geothermal and convince a client about community geothermal?

5) Keeping with the sales process, were there any huge roadblocks that almost killed the project that your team had to overcome? Whether those were client facing, design, installation, or pricing?

6) Switching gears from community scale geothermal, could you share your thoughts and learning on selling geothermal around New England? What are the keys to selling geothermal? You haven’t always been selling renewable energy, and you’ve moved into the new industry.

• Answer: The customers that are seeing the value are the ones that have LONG TERM objectives, like institutions and public buildings. If you look at the adoption rate in the northeast, customers with a long term outlock are the most willing to adopt the new technology. They still need to see the costs, the likelihood of success (past examples are key), and they’d also like to see a track record of savings. When they see this, they’re likely to buy.

7) It sounds like the profile of your best client is “we have a long term view on investments”. Is this true?

• Answer: Yes, clients that are well managed and ALSO clients that have large energy budgets, low operating margins and a current lack of predictability in costs like geothermal. When you have clients in this category, these are perfect clients

8) To me, it sounds like on the public side, institutions and municipal buildings are great, and on the private side supermarkets would be perfect clients. They have super low margins, have a large energy spend and tend to stick around. Do you notice any challenges with tenants issues? When you start getting into the commercial side business, does the type of lease seems to have a huge impact? What kills projects in terms of the tenant/lease agreement?

9) I wanted to get your thoughts on is the adoption strategy. A lot of people talk about education of the design community, people think if they could just educate the best architects and engineering firms that the technology will just be adopted, but I’ve never heard of this strategy working. It makes me start thinking, why not just start creating demand and convincing people who are going to be paying for the equipment? Its harder for the design/build community to be proactive, but its easy for them to be reactive.

10) In terms of educating the design community vs creating demand, which parts of each strategy have you tried? What have you had success with? What could be tried, that you haven’t, that might help?

11) Have you noticed a switch in client mentality lately? Has there been a shift from a client that comes to you and says, “I’d like to reduce my energy spend, what are my options?”  versus a clients that says,  “I’m doing geothermal, can you help me?”

12) Lastly, what are your thoughts on geothermal financing? I’ve had 4 conversations in the past 3 months with people trying to crack this nut. None are manufacturers. Do you think this will happen in the next 5 years, or will people really need to get bored in the solar PV industry for people to start looking at geothermal?

13) Speaking of financing, it seems that geothermal fits in perfect with ESCOs business model. Have you had any conversation with ESCOs? Do they see this as an opportunity?

If you’re a developer, engineer, property owner who’s interested in talking with Ed about community scale geothermal at New England Renewable Energy Systems.  

 Here are some photos they shared with me of the installation.