Going Geothermal, Part 2: Incentives, Permits and other Logistics

By Helen Triolo, last updated 3/18/13 08:55am

1 comment · 

This is how one corner of our front yard looked in early May last year, and how I imagine it will look again next year. Because the irises and a few other perennials are planted smack in the middle of where the well-digger -- coming in a few weeks to dig two 300-ft holes in our yard -- will have to park, I spent the past weekend dividing and shoveling them up and moving them to their temporary home in the back yard. Irises are ideally transplanted in the fall after they’re done blooming, but since they’ve just started their new growth for this season, I think they’ll survive the move fine and may even bloom in the backyard this year. Since they need to be divided every couple years to thrive, this was a good excuse to do that.

Along with preparing for the well-digger's arrival, a few other logistical things had to be taken care of to get ready for the geothermal installation we're having put in. My thanks to Audra Lew and Erica Shingara of the Environmental Management Division, City of Rockville Department of Public Works, for meeting with me and pointing out some of the incentives I might not have seen otherwise. I feel fortunate to live in a City which takes its commitment to environmental sustainability seriously and has staff like Audra and Erica making sure we know what opportunities are available to us.

Financing and Incentives

The first requirement for taking on this project was, of course, finding a way to finance it. We looked at all the credits and grants available, and at loans from several different sources to decide which would be most suitable for us. Current tax credits and grants available in our area include

A 30% federal tax credit, which is the main factor that enabled us to go ahead with this project. Although we still have to pay the full cost of the project up front (in 3 installments), we’ll get 30% back as a tax credit when we file 2013 taxes. As explained in this PDF, Geothermal equipment that meets Energy Star requirements at the time of installation is eligible for the tax credit. Covered expenditures include labor for onsite preparation, assembly, or original system installation and for piping or wiring to connect a system to the home."

A $3,000 grant from the Maryland Energy Administration: click that link for a page describing the program, the eligibility requirements, and links to an application form for 2013.

A Pepco participating contractor rebate of $500, as described here.

There are also some Maryland tax incentives to help defray the cost. A database of such incentives, for all states in the US and listed by state, is found at DSIRE; those relevant for our area include:

Sales Tax Incentive, which exempts geothermal and solar energy equipment from state sales tax, and

Property Tax incentive, under which geothermal systems are to be assessed at not more than the value of a conventional system for property tax purposes.

Several options exist for obtaining financing for such projects. One was a "no payment for 365 days" loan offered specifically for geothermal and solar installations by participating contractors, but we didn't like some of the reviews we found online for the bank offering it, so we crossed that off the list.

Another is the Maryland Home Energy Loan Program (MHELP), which offers a 6.99% loan with a required energy audit, or a 9.99% loan for any Energy Star improvement/replacement (max $30,000). More about that and other Maryland residential incentives here.

Because we have other energy efficient upgrades we'd like to pursue in the future, and the interest was lower than the MHELP loan, we opted for a home equity line of credit with our bank. The main downside to that is the massive number of documents that have to be rounded up and sent to the bank (which we could do via secure email, fortunately), and the massive amount of paper generating during closing. We were able at least to get our copy sent to us as a PDF file instead of carting home an encyclopedia-sized pack of papers.


In the City of Rockville, two permits are required for a geothermal installation, as described on the City Inspection Services page: a mechanical permit (PDF here) and an electrical permit (PDF here). Contracting work must be done by electricians and plumbers licensed with the City of Rockville, and typically those contractors will file the permits. Montgomery County also requires a well permit, which may be filed by the contractor or customer. I filed ours last week, in the County Department of Permitting Services at 255 Rockville Pike, after reading and filling out the forms here. It took about 10 minutes and a check for $165, and they say it will take one to two weeks to secure the permit.

Now that some of the permit process is underway, and our line of credit is in place, we look forward to the next step of finding the right electrician, moving the rest of the perennials, and seeing the well dug in a few weeks!

Filed under Tech & Science, Home & Garden, Renewable energy / energy saving, Wildlife / biodiversity / nature appreciation

1 comment

Wendy , Mar 19 2013 8:31am:

That's a very clear and well-written summary for anyone looking to have geothermal installed, even in another state. Thank you!

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