Five years ago, the entrepreneurs Daniel Cheifetz and Erik Larson saw the potential of geothermal heating and cooling and noted how infrequently the underground source had been tapped in major U.S. cities. But the two had just met, neither had ever worked in energy, and they knew next to nothing about geothermal technology.
They launched a business anyway. “We saw that there were opportunities to break into the space and learn as we went,” says Cheifetz, now the CEO of the firm he and Larson cofounded, Indie Energy, which is headquartered in the Chicago suburb of Evanston, Illinois. Now that boldness, combined with ingenuity, has made Indie Energy a key pioneer in the field of urban clean energy. Boosted by a $2.45 million grant from the U.S. Department of Energy (DOE) and projects for high-profile clients—including Walgreens, Astellas Pharma, and Chicago’s Northwestern Memorial Hospital—Indie has tripled its revenues over the past 30 months to an expected $11 million for 2011. The firm has supplied heating and cooling for more than 2.3 million square feet of commercial space in Illinois and is negotiating projects in cities from Buffalo, New York, to Reno, Nevada.
Indie relies on closed ground-source heat-pump technology, drilling beneath buildings to access underground earth temperatures of 50 to 60 degrees Fahrenheit, which is then used to heat and cool the structure above. But Indie often drills as deep as 700 feet—more than double the industry standard of 200 to 250 feet—to attain higher energy volume within a smaller footprint. In the heating mode, the deeper-bore holes may yield up to ten percent more energy than those of conventional depths, according to John Lund, the administrator emeritus of the Geo-Heat Center, at Oregon Institute of Technology.
To facilitate geothermal projects in dense urban areas, Indie also designed a drilling method that can be done in surface spaces as small as 100 square feet; it uses rigs imported from Sweden that are just 12 feet long (as opposed to the typical 40 feet) and remote-controlled for precise operation. And once the system is up and running, Indie’s unique metering and monitoring system, called Indie Energy Network, increases efficiency by tapping into a building’s energy apparatus to extract continuous heating and cooling data, which are then run through algorithms to provide real-time operations feedback. “It’s applying science to understanding the dynamic of how a building interacts with the earth,” Larson says.
Will these innovations pave the way for more widespread geothermal projects in American cities? “It’s a good idea,” said Jefferson Tester, the David Croll Chair of Sustainable Energy Systems at Cornell University, who has advised the U.S. government on the potential of geothermal energy. “It’s a good thing to drill fewer holes and drill deeper, and if you can keep costs down, it should work just fine.” Geothermal technology does come at a hefty up-front price: for a recent 420,000-square-foot office project in Glenview, Illinois, the Indie system cost nearly $2 million more than a conventional system. But Indie promises long-term energy savings: “We typically advise clients that they can expect a payback period of around two years to recoup the additional expense of installing our geothermal systems,” Larson says. He adds that this varies, depending on location, building shape, and usage, “but this is a middle-of-the-road estimate for 100,000- to 200,000-square-foot buildings.”
Calculating payback periods can be complicated, says Jay Kohler, a partner at Kohler Ronan, LLC, a consulting engineering firm in Danbury, Connecticut, that has designed geothermal systems for such clients as Yale University and Westchester Residence & Club. “Typically we see paybacks in about five to seven years,” he says. “This is highly dependent on the utility rate structure and the cost of the system. And a lot of projected payback has to do with the prices of fossil fuel. You save money by using a mix of electricity and renewable energy from a ground source instead of oil or gas.”
And the rising cost of traditional, oil-based energy means that renewable alternatives are going to become increasingly attractive. “What lifts Indie Energy’s boat is that people are now willing to spend more money because energy is getting more expensive,” says Maurice Gunderson of the venture capital firm CMEA, which invests in clean-energy start-ups. “There’s an interest that’s less economic than societal. Our environmental attitudes have changed.” Indie is banking on that societal shift. The $2.45 million that the company received from the DOE is going toward demonstrating new research and technology to the marketplace. “We’re not just drilling into the ground,” Cheifetz says. “We’re designers of smart buildings now.”