LUNCH n LEARN

Valuing GHP Technologies as Grid Assets

Presented By:
Kevin Kitz, P.E. | KitzWorks LLC

Geothermal heat pumps (GHPs) and other geo-exchange technologies have traditionally been viewed by utilities and regulators as primarily a building energy cost-reduction asset.  And while “grid value” is acknowledged, it is rarely a significant factor in the decision to install geo-exchange technology.  However, the value that GHPs deliver to electric ratepayer customers is far larger than the energy cost reduction to building owners/residents.  This misalignment between the beneficiaries (ratepayers) and the investors (building owners) is the largest barrier to greater geo-exchange technology adoption.  Interestingly this misalignment is exactly reversed for air-source heat pumps (ASHPs) in which the cost to ratepayers as a whole is far greater than the cost to the building owners/residents.

How can GHPs be one way (ratepayers benefit) and ASHPs the other, when they are both heat pumps?  The answer to that question lies in the impact of the two technologies on both winter AND summer peak demand.

The presentation will cover the peak demand impact of GHPs and other geo-exchange technologies, and how it is different from ASHPs.  The presentation will explore different methodologies to quantify that benefit and calculate the magnitude of the benefit that all ratepayers derive when large numbers (thousands) of GHPs are installed within a utility service territory.  The value to ratepayers of the peaking value alone can be as much as $20,000 per single family home that is converted to GHP for a summer peaking utility with a 4-ton air conditioning load, and even more if the utility is or will be a winter peaking utility.

Some ideas are presented on options for implementing possible incentives and for the QA/QC that ensures that ratepayers get the grid benefits that they would be paying for.  Differences between electric customers in ISOs versus vertically integrated utilities will be covered, as well as differences between Investor Owned Utilities (IOUs) and Public Utilities (Muni’s, Co-Ops, etc).

Key Grid Benefits & Value as an Asset

• Utility System Savings: Lower peak loads generate value for electric utilities across generation, transmission, and distribution levels.
• Decarbonization & Load Growth: By reducing overall energy consumption during both heating and cooling seasons, GHPs decrease power generation emissions, supporting grid decarbonization while enabling the integration of large, year-round data center loads.
• Enhanced Grid Asset: Beyond providing significant building-level efficiency and energy cost savings, these combined factors make GHPs exceptionally useful and valuable grid assets. However, measuring the exact scale of these grid benefits has historically posed a challenge.

Presentation Scope & Methodology

• Quantification Frameworks: This presentation outlines three methodologies to quantify the grid value of GHPs and establish appropriate GHP incentive levels.
• Market Structures & QA/QC: It examines how different electricity market models—such as vertically integrated utilities (investor-owned or public) versus Independent System Operator (ISO) delivery regions—affect incentive frameworks and QA/QC processes designed to ensure value delivery.
• Universal Customer Benefits: The session demonstrates how GHP incentives yield long-term rate decreases for all electric customers, including those without a GHP.
• Case Studies: Analysis will include three sample sites spanning diverse climate zones and utility structures.