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Geothermal heating and cooling is a "huge winner" of the One Big, Beautiful Bill Act, Dan Yates, CEO of geothermal startup Dandelion Energy tells Axios Pro.

The big picture: While curbed tax credits are slowing home solar panels and efficiency retrofits, the new tax law could provide a boost for geothermal heat pumps.

Zoom in: The OBBB did sunset tax credits for home geothermal systems, but it preserved and extended the credit for commercial systems. It also made leased home geothermal systems eligible for the commercial tax credit if owned by a commercial entity.

"It's going to be a net positive," Yates says.

Dandelion, which spun out of Alphabet's X in 2017, can now offer leased systems with a 30%-50% commercial tax credit along with state, local and utility incentives, says Yates.

Catch up quick: Today, 70% of Dandelion's business is B2B and 30% direct to consumer, he says.

Dandelion last year closed a $40 million Series C led by GV (Google Ventures) and joined by Collaborative Fund, Breakthrough Energy Ventures, NGP and LenX, the corporate venture arm of homebuilding giant Lennar.

The intrigue: Yates predicts that new leasing models could help unlock the market for geothermal heating and cooling systems. 

Leases were crucial for the solar industry, enabling solar customers to pay a monthly bill for the electricity instead of the high upfront fee for the system.

"No one's launched a lease product yet, but it's imminent," says Yates, explaining that companies are popping up to be lessors to help facilitate the transactions. 

Solar lease providers would be the obvious candidates to join the market, says Yates. 

Yes, but: New home construction has slowed this year due to high mortgage rates and affordability issues, which provides a challenge for geothermal systems built for new homes.

What's next: We'll be watching for geothermal leasing products to hit the market. 

Startup sees leases unlocking geothermal heat pumps

The emerging energy tech is a surprising winner of the OBBB.

Two workers unloading a large boxed item from a bright yellow Dandelion Geothermal van parked near a house with blue shutters and green trees in the background.

Dandelion Energy installs geothermal heating and cooling systems in homes, mostly on the East Coast. Photo: Courtesy of Dandelion Energy

Geothermal heating and cooling is a &quot;huge winner&quot; of the One Big, Beautiful Bill Act, Dan Yates, CEO of geothermal startup Dandelion Energy tells Axios Pro.The big picture: While curbed tax credits are slowing home solar panels and efficiency retrofits, the new tax law could provide a boost for geothermal heat pumps.

Startup sees leases unlocking geothermal heat pumps

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