Axios Pro Exclusive Content

Geothermal developments gain steam with PE

Jul 7, 2022
Illustration of a geothermal heat pump with a dollar overlay.

Illustration: Gabriella Turrisi/Axios

A new housing development in Orlando, Florida, is testing private equity's appetite for geothermal developments.

Why it matters: Private equity investors are among the largest commercial and residential real estate investors and have the weight to push for long-term cost savings with upfront energy-efficiency investments.

Driving the news: Taurus affiliate EcoSmart Solution is working with TPG's real estate division on the development of a 276-unit multifamily development near Orlando.

  • EcoSmart has built two geothermal heat exchange loops to cool and heat the building seasonally by accessing the Florida aquifer.
  • The development will also include 260kW of solar energy and 34 EV chargers. The market-rate building is scheduled to open to tenants in 2024.

How it works: Eric Bradley, manager of new energy development at Taurus, tells Axios that the heat exchange combined with heat pump installation in the building is the most cost effective way for investors to lower long-term energy costs even after considering the upfront investments made during construction.

  • The underground water sits between 72° and 76° F seasonally. It requires little energy to course through the exchange loops where it takes on or adds heat, and any excess heat is integrated into the building's water heater.
  • "With traditional real estate development, the industry gets comfortable with what's tried and true and what they know works," Bradley says of the industry's slow adoption of energy efficiency measures in new builds.

Between the lines: Many renters are unable to install permanent efficiency measures and do not have access to essential infrastructure like EV chargers the same way homeowners do.

  • If landlords, in this case PE, adopt energy-efficiency measures as long-term investments, renters' relationship with renewable energy could take a complete 180°.

The intrigue: Bradley says Taurus is evaluating other rapidly growing metros for future projects, including Austin, Nashville and Phoenix.

  • It also operates a development called Whisper Valley in Manor, Texas, that remained online during the statewide energy outage during Winter Storm Uri in February 2021.
Go deeper