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Geothermal Energy Systems

TEP is offering rebates to residential and nonresidential customers to encourage the installation of Geothermal Energy Systems. Geothermal energy is a renewable resource that uses the natural heat from the earth. By investing in geothermal energy, you can reduce long-term energy costs and increase energy independence. Qualifying geothermal energy systems include:

Geothermal Space Heating or Cooling — more information
The most common type of space heating or cooling from geothermal energy is a geothermal heat pump. The geothermal heat pump takes advantage of the relatively constant temperature of the earth’s interior, using it as a source for both heating and cooling purposes. This type of geothermal energy usually requires low to moderate temperatures ranging between 80 to 150 degrees Fahrenheit.
Geothermal Thermal (Process Heating) — more information
This method uses heat from the earth’s interior that is directly used in an application or process such as heating or cooking. An example is the use of geothermal energy to heat water. This is the oldest form of geothermal energy use and is generally practical with low to moderate temperatures of 150 degrees Fahrenheit or more.
Geothermal Electric Generation — more information
In this process, wells are drilled into the earth to tap a geothermal reservoir of natural hot water or steam. The reservoir collects below the groundwater table. Wells bring the geothermal liquid to the surface where it is converted into electricity by a generator. This type of geothermal energy usually requires a geothermal reservoir with high temperatures over 180 degrees Fahrenheit. Dry hot rock applications are also possible, given the appropriate subterranean retaining formations.

Where does geothermal energy come from?

Source: U.S. Department of Energy

Geothermal energy is derived from the natural heat of the earth. Resources of geothermal energy range from the shallow ground to hot water and hot rock found a few miles beneath the earth’s surface and down even deeper to the extreme temperatures of molten rock (magma). Geothermal energy can be contained in underground reservoirs of steam, hot water and hot dry rocks. Click here for more information.

What are the benefits of geothermal energy?

Produces no emissions and is replenished naturally
Reduces greenhouse gases
Saves the release of 2 lbs. of carbon dioxide (CO₂) for each kilowatt-hour (kWh) produced by your geothermal systems
Saves the use of one-half gallon of water for each kWh of geothermal energy produced
Saves the release of other emissions that result from the burning of fossil fuels such as nitrogen oxides, sulfur dioxide or mercury
Geothermal energy can be a low-cost source of renewable energy, costing between 4-6 cents per kilowatt-hour in areas that are geologically stable with sufficient available water to bring the earth’s heat to surface.
Provides customers with options to reduce their electric bills. For every kWh produced by your geothermal system, you will avoid about 10 cents (including taxes) on your electric bill.

Is geothermal energy right for me?

Geothermal energy is a highly reliable source of renewable energy. The fuel supply is available 24 hours a day, 7 days a week. However, the economics of installing geothermal energy is entirely dependent on finding available heat sources in geologically stable areas where the thermal conductivity of the subsurface or subterranean water is present in appropriately porous rock structures to bring heat to surface.

The decision to install a geothermal system on your property requires the answers to many questions, and your knowledge and input to the process is vitally important. Local and state codes, subterranean thermal and pore structure conditions, soil corrosivity, maintenance requirements and the cost of other alternative energy options such as solar should all be considered in your decision to install geothermal generation. In many areas of Arizona a solar generator is more cost effective than a geothermal generator. However, if your home or business is located in a geologically stable area with appropriate subterranean water supply, you could be a prime candidate for geothermal generation.

What rebates are available to TEP customers?

TEP provides customers with Performance Based Incentive (PBI) options for Geothermal Electric Generation and Geothermal Space Heating and Space Cooling Systems. Customers qualify for two incentive options: Up-Front Incentive (UFI) or Performance Based Incentive (PBI) for Geothermal Thermal (Process Heating). The amount of incentive depends on the term chosen.

2008 and 2009 Rebate Schedule

Up Front Incentive (1) Performance Based Incentives (2)

20-Year REC Agreement ($) 10-Year REC and Payment Agreement (¢/kWh) 15-Year REC and Payment Agreement (¢/kWh) 20-Year REC and Payment Agreement (¢/kWh)

GEOTHERMAL ELECTRIC GENERATION NA 0.024 0.022 0.022

GEOTHERMAL THERMAL (PROCESS HEATING) 1.00/Watt 0.048 0.045 0.043

GEOTHERMAL SPACE HEATING/COOLING NA 0.032 0.030 0.029

Customer must choose between a UFI or PBI rebate for Geothermal Thermal (Process Heating).

(1) Up-Front Incentive or a UFI provides customers a one-time payment based on their system size which is in watts per AC (alternating current). In turn the customer would a sign a credit purchase agreement assigning TEP the Renewable Energy Credits (REC) for 20 years.

(2) Performance Based Incentive or a PBI provides customers with a long-term payment stream from 10 to 20 years based upon term chosen. In turn the customer would a sign a credit purchase agreement assigning TEP the Renewable Energy Credits (REC) for the same number of years.

Who is eligible for the rebates?

You must be a Tucson Electric Power customer.
The geothermal energy system must be installed at a Tucson Electric Power service address.
You must purchase and install a qualifying geothermal energy system for this rebate.
Rebates for Geothermal Thermal over 20 kW will receive the PBI rebate and under 20 kW will receive the UFI rebate.
Check with your tax professional to see if you qualify for state or federal tax rebates.
You must provide at least 15 percent of the geothermal project cost after TEP’s incentives and rebates.

Please review Tucson Electric Power’s Technical Requirements in full detail. Click here.

How do I get started?

Get an estimate from a contractor that will install a geothermal system. Look in your phone book or on the Internet under "Geothermal Installers in Arizona."
Fill out and submit the appropriate application for your system (click on one of the links below).
A TEP representative will review your application to ensure it conforms to program requirements.
Following review of your application, TEP will notify you of the status of your reservation request.

Application

Geothermal Application

Renewable Energy Credit Purchase Agreements

Supplemental Program Information

Some helpful websites: