Title
Resolution to Support of Geothermal Installations at City Facilities
Memorandum
In 2020, Ann Arbor City Council unanimously adopted the A2ZERO Plan and the goal of achieving community-wide carbon neutrality by 2030. One of the core tenants of the A2ZERO plan is switching from fossil gas systems to electric systems – including transiting vehicles; heating, cooling, and ventilation systems; lawn equipment; and other gas or diesel based systems.
Over the last several years, the City has made progress in installing solar systems, with over 20 city facilities now powered, in part, with solar. Work is also underway to expand electric vehicle charging and energy storage at many of these same facilities, along with sustained energy efficiency efforts. One area where investment is still needed, however, is in decarbonizing heating and cooling solutions.
With the sunsetting of the Investment Tax Credits in 2027 for geothermal systems, the City has a strategic opportunity to move intentionally and quickly with installing geothermal over the next year. Moreover, a recent determination by the Internal Revenue Services gives Ann Arbor and all of Washtenaw County an additional 10% incentive bonus when installing geothermal systems through the Direct Pay/Elective Pay program. This is on top of the 30% tax incentive already available for geothermal, plus another possible 10% incentive if domestic content is used in the installation. Together, this means that the installation of geothermal systems at City facilities in Ann Arbor between now and summer 2027 may be eligible for up to a 50% rebate of the full cost of system installation.
This unique moment combined with the City’s sustainability goals and the volatility in the fossil gas market, present an opportunity for the City to intentionally and expeditiously move forward with geothermal installations.
Budget/Fiscal Impact: The study of geothermal systems could be covered by the Office of Sustainability and Inno...
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