Schumer-Manchin deal includes geothermal tax extension

Late last week, an 11th hour compromise deal between West Virginia Senator Joe Manchin and Senate President Chuck Schumer has revived hopes that the 30 percent tax credit for geothermal heat pumps can return and be extended. The news apparently surprised most of the Senate and House members and even the most connected DC insiders. Senate Minority Leader Mitch McConnell has vowed to fight the action and many Democrats have voiced their support.

It's likely that the Dems will need all 50 of their votes in the Senate to pass the reconciliation legislation, which would then be approved with the Vice President’s tie breaking vote. The Geothermal Exchange Organization and other representatives of energy-related organizations have been working on a package to bring back the 30 percent tax credit for residential geothermal, and extend it for 10 years. This package, as currently drafted, would do just that. Here is a summary from IGSHPA:

  • Section 25D residential tax credit
  • Under current law, the credit is at 26% in 2022, 22% in 2023, and expires at the end of 2023.
  • The bill extends the credit for all Section 25D technologies at the following rates:
  • 26% (2021)
  • 30% (2022-2032)
  • 26% (2033)
  • 22% (2034)
  • 0% (2035)
  • The House-passed version of the bill made the credit fully refundable, subject to extensive verification requirements on installers to guard against fraud. These refundability and verification requirements have been removed.
  • Section 48 commercial tax credit –
  • Section 48 is extended under a two-tier structure:
  • A “base rate” of 6% (or 1/5 of the bonus rate)
  • A “bonus rate” of 30%
  • In order to receive the bonus rate, projects will have to either: (1) meet prevailing wage and apprenticeship requirements; or (2) be “a project with a maximum net output of less than 1 megawatt (as measured in alternating current) of electrical or thermal energy.” 
  • Section 48 technologies will transition to a technology-neutral clean electricity production investment tax credit (i.e., the Wyden Tech Neutral bill), starting in 2025. However, geothermal heat pumps will continue to be eligible for the Section 48 credit through 3034 at the following rates:
  • 26% (2021) (base/bonus rate structure not applicable)
  • 30% bonus/6% base (2022-2032)
  • 26% bonus/5.2% (2033)
  • 22% bonus rate/4.4% (2034)
  • Direct pay/refundability is only available under Section 48 for the following entities:
  • tax-exempt organizations;
  • state or local government (or political subdivision thereof);
  • Tennessee Valley Authority;
  • Indian tribal government; and
  • Alaskan Native Corporations.
  • The bill includes a domestic content bonus credit for facilities that use domestic steel, iron, and manufactured products. The bonus credit is two-tiered: 
  • 10% (projects that either meet prevailing wage/apprenticeship requirements or are under 1MW of electrical or thermal energy)
  • 2% (projects over 1MW that don’t meet prevailing wage/apprenticeship requirements)

IGSHPA’s letter said Leader Schumer plans to bring the bill to a vote on the Senate floor as soon as next week, but it is unclear whether or not that timeline can hold. Both houses of Congress have very slim Democratic majorities and legislation support or opposition apparently is lined up on partisan basis.

Electric cooperative and former GAOI leader Bob Dickey passes away

Bob Dickey, longtime geothermal supporter and marketing leader at Eastern Illini Electric Cooperative, passed away early last Saturday at his Gibson City home. Dickey, a former board member of the Geothermal Alliance of Illinois, was one of the state’s strongest geothermal heat pump and energy efficiency advocates. Bob led one of the state’s most successful geothermal heat pump marketing programs. At the time of his retirement from the co-op a few years ago, EIEC had more than 1,200 geothermal heat pumps on the cooperative’s system, an incredible result.

Bob had been battling cancer for the past seven years. He is survived by his wife Gloria and children and grandchildren. His friends around Illinois have been amazed by his incredibly strong faith and positive attitude during his struggles with cancer. Bob’s glass was never half empty – it was ALWAYS overflowing. That is the Bob Dickey many of us knew and loved. Bob was always the consummate good and loyal friend, strong family man and 100 percent faith-filled Christian to the end.

There will be a service at 6 pm at the Gibson City Bible Church in Gibson City this Friday, August 5. An open house from 4-6 pm precedes the memorial service.

Sponsorship Opportunities

Geothermal Alliance of Illinois and Iowa Geothermal Association are collaborating on an online professional development program starting in September. The one-hour sessions will be available to all members of the two organizations, at no charge. Demonstrate your company’s leadership in the geothermal industry while promoting your brand and increasing visibility by sponsoring the first series. (September 2022 – January 2023).

Sponsorship $400

  • Recognition on Illinois and Iowa website
  • Visual recognition of all sponsors during each session. 
  •  Verbal introduction during one session in the series - (September, October, November, December, or January)

To secure your sponsorship contact, Kathy Ridley,

Remember to mark your calendar for the 2023 conference.

We will be in East Peoria at the Par-A-Dice Hotel and Conference Center on March 13 - 15, 2023