VIEWPOINT: Scaling Urban Geothermal Requires Regional Design and New Financing Models
The following Viewpoint is written by Arjun Mehta, the vice president, project management at Ecosave who is based in Philadelphia
Today, geothermal energy supplies roughly 1% of global electricity demand. Some long-term projections suggest geothermal could contribute meaningfully—potentially in double digits—to global electricity growth by mid-century. As cities around the world pursue decarbonization while also seeking protection from long-term energy spikes, investment in geothermal is expected to accelerate, with global estimates reaching as much as $1 trillion by 2035. The question is no longer whether geothermal works, but whether we are prepared to deploy it at the scale required.
To capitalize on this coming wave of investment, engineers and developers must rethink how geothermal systems are planned, financed and owned. That means moving beyond isolated, single-building projects and toward regional strategies supported by off-balance-sheet financing models that align long-term system performance with long-term capital. Without this shift, geothermal will continue to be a niche solution rather than becoming a core component of urban energy systems.
Still, the biggest obstacle to adoption remains capital cost. Geothermal systems typically require higher upfront investment than conventional HVAC, particularly in dense urban environments where subsurface analysis, drilling logistics and permitting introduce additional complexity. These costs often overshadow geothermal’s long-term advantages, even though underground loop infrastructure is designed to operate for 50 years or more and rely on fewer mechanical components subject to wear and failure. In practice, the challenge is primarily financial rather than technical as upfront cost structures are misaligned with lifecycle value, resilience and operating performance.
This is increasingly being addressed through service-based financing models that highlight geothermal as a long-term utility rather than a one-time capital purchase. By shifting geothermal from a capital expense to a service agreement, projects can be structured to be close to cash-flow neutral—eliminating the upfront capital burden and balance-sheet risk for developers. Under “Energy as a Service” models, providers cover the full upfront cost of equipment and installation, maintain the system over a long-term contract and recover their investment through energy savings relative to conventional utility costs. As decarbonization targets tighten and access to upfront capital becomes more constrained, these models are gaining traction as they remove financial uncertainty for developers while delivering predictable, long-term energy performance.
While financing innovation is critical, how we think about scale is equally important. Single-building geothermal systems are inherently constrained by site limitations, capacity and economics, especially in dense cities where space, drilling access and subsurface conditions restrict system size. These constraints often cap heating and cooling capacity while reducing the financial efficiency of standalone installations. Even well-designed systems struggle to capture geothermal’s full value when confined to a single parcel.
However, at the district or neighborhood scale, geothermal’s advantages compound as thermal energy is shared, stored, and redistributed across a network of multiple buildings with similar load profiles. This balancing of seasonal and daily loads improves overall system efficiency, lowers per-building costs and increases resilience during peak demand or system disruptions. At this scale, geothermal moves beyond building-level mechanical upgrades and begins to function as shared thermal infrastructure—comparable to district energy systems like electric, steam, or water networks that serve neighborhoods rather than individual buildings.
New York City offers a clear example of what this future can look like. Driven largely by Local Law 97, which imposes increasingly strict emissions caps through 2030 and beyond, the city is a proving ground for urban geothermal deployment. Projects such as 1515 Surf Avenue in Coney Island demonstrate that geothermal can be successfully engineered and financed even in one of the most complex urban environments in the country. Over the life of the contract, the project is expected to reduce energy consumption by roughly 60% compared to conventional HVAC systems, generating an estimated $7.2 million in savings and avoiding nearly 24,000 metric tons of CO₂ emissions. Dense subsurface conditions, regulatory constraints and high construction costs have not prevented integration when engineering, sequencing and financing are aligned early.
Just as importantly, these projects illustrate how service-based financing can overcome upfront capital constraints while allowing developers to meet emissions targets without incurring additional balance-sheet risk. Rather than treating geothermal as a premium sustainability upgrade, it must be viewed as a long-term energy infrastructure tied to measurable performance and lifecycle value.
If geothermal is to move from 1% of today’s energy mix toward its projected role in future growth, the industry must act accordingly. Engineers, developers and policymakers must prioritize regional systems, embrace off-balance-sheet financing and evaluate projects through a long-term infrastructure lens. The opportunity is substantial, and the technology is increasingly validated in real-world urban deployments. The final step is to stop treating geothermal like a premium add-on and start building it as core urban energy infrastructure.
Arjun Mehta is the vice president, project management at Ecosave, where he leads project operations and oversees the delivery of complex energy efficiency and renewable energy projects. With more than 15 years of experience, he specializes in construction management, energy systems, and carbon mitigation strategies that balance performance with cost. Arjun has managed projects across the U.S. and internationally and holds a bachelor’s degree in mechanical engineering from the University of Technology Sydney.