The Driller
  • Sign In
  • Create Account
  • Sign Out
  • My Account
  • NEWS
  • CLASSIFIEDS
  • EQUIPMENT
  • SAFETY
  • VIDEOS
  • EDUCATION
  • SOURCEBOOK
  • EVENTS
  • SUBMIT
  • ABOUT
  • SIGN UP
cart
facebook twitter linkedin youtube
  • NEWS
  • Water
  • Geothermal
  • Construction
  • Environmental
  • Mining
  • All Industry News
  • EQUIPMENT
  • Rigs & Heavy Equipment
  • Consumables
  • Pumps
  • Featured Products
  • VIDEOS
  • Newscast
  • Drill Talks
  • Ask Brock
  • Emerging Drillers
  • EDUCATION
  • Drilling Business Insights
  • Reference Desk
  • Sponsored Insights
  • EVENTS
  • Conferences & Demo Days
  • Newscast LIVE
  • SUBMIT
  • Drillers @Work
  • ABOUT
  • Contact
  • Advertise
The Driller
search
cart
facebook twitter linkedin youtube
  • Sign In
  • Create Account
  • Sign Out
  • My Account
The Driller
  • NEWS
    • Water
    • Geothermal
    • Construction
    • Environmental
    • Mining
    • All Industry News
  • CLASSIFIEDS
  • EQUIPMENT
    • Rigs & Heavy Equipment
    • Consumables
    • Pumps
    • Featured Products
  • SAFETY
  • VIDEOS
    • Newscast
    • Drill Talks
    • Ask Brock
    • Emerging Drillers
  • EDUCATION
    • Drilling Business Insights
    • Reference Desk
    • Sponsored Insights
  • SOURCEBOOK
  • EVENTS
    • Conferences & Demo Days
    • Newscast LIVE
  • SUBMIT
    • Drillers @Work
  • ABOUT
    • Contact
    • Advertise
  • SIGN UP
OpinionsIndustrial DrillingGeothermalEditor's Notes

How Can Geothermal Installers Solve the ‘First Cost’ Problem?

By Jeremy Verdusco
geothermal drilling

Expiration of a federal tax credit has brought back the “first cost” problem for geothermal contractors. Source: GEO

March 1, 2017

Government stepping in almost always distorts things. Whether that distortion bends toward your advantage or disadvantage often makes the difference in how you feel about it. In the geothermal part of National Driller’s readership, we’re seeing the fallout now of government stepping out of a market, and how professionals in that market are trying to move on.

An important tax credit, which made geothermal HVAC installations more competitive with other types of systems, like forced air, expired at the end of 2016. (Read our cover story on page 12.) There are no clear sign as to whether it will be reinstated, and the geothermal sector now has to come to grips with how to survive and thrive without it.

I’ll delve more into that idea, but first I want to talk about what it means for an industry when government gets involved. This isn’t an anti-government screed. I bring my own biases to the distortion I mentioned, just as each of my readers do. But I do want to acknowledge the change inherent in government involvement in anything. I’ll use two examples.

First, a more macro example: the oil and gas industry. Tax credits, deductions and incentives add up to billions. That’s not a good thing or a bad thing, but it’s worth acknowledging as a thing. Businesses can write off all kinds of intangible costs related to drilling new wells. They can also get depreciation on many durable assets and may get tax incentives for investing in one state versus another. Those policies — like all tax policies — are designed to encourage or discourage activity, the distortion I’m talking about. Drill here, not there. Hire workers here, not there. Buy equipment, or don’t.

Now, a more micro example: a small geothermal contractor who runs a couple drill rigs. You struggled for a while because a geothermal system, while more efficient to operate, comes with that famous “first cost” problem. Now, the federal government all of a sudden decides that geothermal heat pump systems are “energy efficient,” and eligible for tax credits. All of a sudden, your phone is ringing off the hook. People who were curious about whether geothermal might be right for them, but daunted by the price, now reconsider. The “first cost” problem has been solved. Even architects are calling, asking about systems for new commercial builds and neighborhoods.

It’s not unusual for a business in that position to see revenue jump 30 or 40 percent. Kind of makes you want to see the government butt into your business, doesn’t it? We sure could use another 30 or 40 percent in revenue here at National Driller. Heck, I’d love a revenue bump like that for my personal balance sheet. Wouldn’t you?

But it was all distortion at work. Not a good thing, not a bad thing, but a thing nonetheless. I’m sure we can all think of tax incentives we might have been for or against. You may think giving a tax break to build a local stadium is a bad idea. I’m skeptical of the job promises such deals come with. You may love your home mortgage interest deduction. I know I do.

All of these change the way things actually behave under the “invisible hand” of the market. Those changes have a big impact. Ask someone in geothermal.

It’s not that I don’t have sympathy for all the drilling contractors who just had a tax credit yanked out from under them. I do. And it’s not like all of a sudden geothermal systems are no longer efficient and cheaper to run over the long term. They are. It’s just that the first cost problem is back. The question is, how are you going to solve it without government help?

What do you think? Do you have advice for geothermal contractors going forward? Send your ideas to verduscoj@bnpmedia.com.

Stay safe out there, drillers.

KEYWORDS: geothermal drilling geothermal HVAC geothermal tax credit

Share This Story

Looking for a reprint of this article?
From high-res PDFs to custom plaques, order your copy today!

Jeremy verdusco 200px

Jeremy Verdusco worked as Editorial Director for The Driller from late 2012 through early 2024. He’s worked in publishing since 1997, including stints as a reporter, copy editor, page designer and technical writer.

Recommended Content

JOIN TODAY
to unlock your recommendations.

Already have an account? Sign In

  • geotechnical drilling rig

    6 Onsite Phrases Environmental Drillers Hate

    Here are six phrases that highlight common frustrations...
    Markets
    By: Jeff Garby
  • Wayne Nash

    Pipe Stuck? Common Causes and Solutions for Drillers

    If you have drilled for any length of time, sooner or...
    Water Wells
    By: Wayne Nash
  • submersible pumps, water well pumps

    Selecting and Sizing Submersible Pump Cable

    This article helps pump installers and servicers decide...
    Opinions
    By: Bob Pelikan
You must login or register in order to post a comment.

Report Abusive Comment

Subscribe For Free!
  • eNewsletters
  • Online Registration
  • Subscription Customer Service
  • Manage My Preferences

The Driller Newscast: 21st Century Drillers | Part 1 DEMAND

The Driller Newscast: 21st Century Drillers | Part 1 DEMAND

The Driller Newscast: Coiled Tubing Drilling and the Future of Geothermal

The Driller Newscast: Coiled Tubing Drilling and the Future of Geothermal

The Driller Newscast, Episode 147: Global Geothermal Collaboration at NY-GEO 2025

The Driller Newscast, Episode 147: Global Geothermal Collaboration at NY-GEO 2025

The Driller Newscast: New York Geo Talks 2025 Conference with Hands-on Driller Education

The Driller Newscast: New York Geo Talks 2025 Conference with Hands-on Driller Education

More Videos

Sponsored Content

Sponsored Content is a special paid section where industry companies provide high quality, objective, non-commercial content around topics of interest to the The Driller audience. All Sponsored Content is supplied by the advertising company and any opinions expressed in this article are those of the author and not necessarily reflect the views of The Driller or its parent company, BNP Media. Interested in participating in our Sponsored Content section? Contact your local rep!

close
  • demo of a DM450 drilling rig during a customer factory visit
    Sponsored byGeoprobe

    Built for You: Smarter Drill Rigs, Stronger Support, Bigger Opportunities

Popular Stories

MainPhotoTwoBrothers.jpg

Two Brothers' Journey Through the Drilling Industry

Tariffs

Tariffs Shake Up the Drilling Industry

AI and Drought Concerns

AI’s Growing Thirst for Water and Power

The Driller Classifieds

COMPRESSORS

EAST WEST MACHINERY & DRILLING IS BUYING AND SELLING AIR COMPRESSORS, AIR BOOSTERS, AIR ENDS & PARTS
Company: East West Machinery

DRILL RIGS

LOOKING FOR LATE MODEL TOPHEADS & DRILLTECH D25'S
Company: Spikes’s Rig Sales

DRILL RIG PARTS

MEETING DRILLERS NEEDS AROUND THE WORLD
Company: East West Machinery

ELEVATORS

SEMCO INC. PIPE ELEVATORS
Company: Semco Inc.

GROUTERS

GROUTING EQUIPMENT - GROUT PUMPS & GROUT HOSE REELS
Company: Geo-Loop Inc.

PUMP HOISTS

SEMCO INC. - BASIC PUMP HOISTS
Company: Semco Inc.

WELL PACKERS

LANSAS PRODUCTS - INFLATABLE WELL PACKERS
Company: Vanderlans Lansas Products

WELL SCREENS

WELL SCREENS & SLOTTED PIPE
Company: Alloy Screen Works

Products

Water Quality Engineering: Physical / Chemical Treatment Processes

Water Quality Engineering: Physical / Chemical Treatment Processes

By carefully explaining both the underlying theory and the underlying mathematics, this text enables readers to fully grasp the fundamentals of physical and chemical treatment processes for water and wastewater.

See More Products

Subscribe to The Driller Newscast

Related Articles

  • Jeremy Verdusco

    How Can Drillers be Better Problem-Solvers?

    See More
  • masks

    How Can Drillers Keep Vigilant on the Jobsite amid the Pandemic?

    See More
  • Jeremy Verdusco

    How Can Drilling Businesses Get Referrals?

    See More

Related Products

See More Products
  • nat-engineered-solutions-dr.gif

    Natural and Engineered Solutions for Drinking Water Supplies

See More Products

Events

View AllSubmit An Event
  • May 15, 2017

    Geothermal Summit

    We are excited to invite you to the first Clemson University Geothermal Summit.
View AllSubmit An Event

Related Directories

  • CETCO

    CETCO sets the pace for product research and development. We are committed to bringing you innovative, cost-effective products that go beyond merely meeting your needs. CETCO offers a complete line of high-quality drilling fluids, grouts, sealants, polymers, and additives that will help you maximize your efficiency in the field.
  • Geo-Loop Inc.

    We are an employee-owned company in NW Iowa. We have been in the water well and geothermal fields for over 28 years and build a full line of grout pumps, hose reels, loop reels, and other related equipment as well as custom units. Let us help you build your next machine!
  • GeoPro Inc.

    Bentonite based thermal grouts and graphite based thermal enhancement compounds engineered specifically for the geothermal heating and cooling industry.
×

Dig deeper into the drilling and water supply industry!

Build your knowledge with The Driller, covering the people, equipment and technologies across drilling markets.

SIGN UP NOW
  • RESOURCES
    • Advertise
    • Contact Us
    • Directories
    • Store
    • Want More
    • Classifieds
  • SIGN UP TODAY
    • Create Account
    • eNewsletters
    • Customer Service
    • Manage Preferences
  • SERVICES
    • Marketing Services
    • Reprints
    • Market Research
    • List Rental
    • Survey/Respondent Access
  • STAY CONNECTED
    • LinkedIn
    • Facebook
    • YouTube
    • X (Twitter)
  • PRIVACY
    • PRIVACY POLICY
    • TERMS & CONDITIONS
    • DO NOT SELL MY PERSONAL INFORMATION
    • PRIVACY REQUEST
    • ACCESSIBILITY

Copyright ©2025. All Rights Reserved BNP Media.

Design, CMS, Hosting & Web Development :: ePublishing

The Driller
search
cart
facebook twitter linkedin youtube
  • Sign In
  • Create Account
  • Sign Out
  • My Account
The Driller
  • NEWS
    • Water
    • Geothermal
    • Construction
    • Environmental
    • Mining
    • All Industry News
  • CLASSIFIEDS
  • EQUIPMENT
    • Rigs & Heavy Equipment
    • Consumables
    • Pumps
    • Featured Products
  • SAFETY
  • VIDEOS
    • Newscast
    • Drill Talks
    • Ask Brock
    • Emerging Drillers
  • EDUCATION
    • Drilling Business Insights
    • Reference Desk
    • Sponsored Insights
  • SOURCEBOOK
  • EVENTS
    • Conferences & Demo Days
    • Newscast LIVE
  • SUBMIT
    • Drillers @Work
  • ABOUT
    • Contact
    • Advertise
  • SIGN UP