Is the answer to cleaner, cheaper electric heat under our feet?
Dan Yates co-founded Opower in 2007, based on the belief that consumers want to use less energy—and that their utilities could actually help them do it. He was right. Opower took off, and Oracle bought the customer engagement platform in 2016. A year later, Dan became interested in another startup focused on residential energy: Dandelion Energy. Spun out of GoogleX, Dandelion developed a system for using geothermal energy to heat and cool buildings.
Electrifying buildings is a major tenant of decarbonizing the power sector, but air-source heat pumps can be expensive. Installation costs are even higher with geothermal heat pumps, but they offer energy efficiency advantages. Dan is a big fan. After investing in Dandelion and serving on its board, he became CEO in 2023.
This week on With Great Power, Dan talks about the potential for residential geothermal heating and cooling, why it could be the clean energy that gains instead of loses federal support in the near term, and the role he thinks utilities can play in the technology’s deployment.
With Great Power is a co-production of GridX and Latitude Studios.
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Credits: Hosted by Brad Langley. Produced by Erin Hardick and Mary Catherine O’Connor. Edited by Anne Bailey. Original music and engineering by Sean Marquand. Stephen Lacey is executive editor. Sean Marquand composed the original theme song and mixed the show. The Grid X production team includes Jenni Barber, Samantha McCabe, and Brad Langley.
Brad Langley: Back in the late nineties, Dan Yates had just finished up a degree in computer science at Harvard and was heading west to San Francisco. He was an early hire at a music streaming startup called Echo, a company that, as it turned out, was a little before its time.
Dan Yates: It was basically Spotify in 1999, which unfortunately did not come with the concomitant and necessary revenue model that Spotify was able to harness. 20 plus years later.
Brad Langley: The gig was intense and short-lived, but it was also clarifying. It showed Dan what he didn't want.
Dan Yates: For me, the opportunity cost of working my butt off like 24 hours a day was such that I needed to have more than just the promise of a big payout. I needed to be doing something that I really cared about.
Brad Langley: So in late 2000, at the age of 23, Dan and a friend co-founded an education software company called Edusoft.
Dan Yates: Both of us are mothers, are teachers, and both of us had been really influenced by our own college experiences. So we were really passionate about education and we built one of the first SaaS companies. We didn't even have that term at the time. We were bringing this platform to school districts to help teachers and administrators to make better sense of student performance.
Brad Langley: Within three years, Houghton Mifflin acquired the company. Dan stayed on for another year and then embarked on a different kind of adventure driving the entire 19,000 mile Pan-American Highway with his girlfriend.
Dan Yates: So we bought an old Toyota 4Runner with a manual transmission, shipped it up to Alaska, flew up and met. We drove all the way to the Arctic Circle to hit the starting line, and then drove south for about almost a year, taking our time with really no other mission, but to head south.
Brad Langley: The trip was epic. It was also eyeopening for Dan. One moment in particular, changed the course of his entire career.
Dan Yates: We're driving across what looked like planes and you realized, oh my God, everything I'm driving through right now was dense rainforest, but it's been chopped down for farmland and that is the status quo in all of Central America and even through the Andes as we headed south through South America. And that's what led me to decide I really wanted to focus on environmental issues
Brad Langley: Back home in San Francisco. It took Dan a minute to figure out how to turn that new focus into a career. But one day as he was trying to make sense of all the kilowatt hours on his electric bill, it came to him.
Dan Yates: I'm thinking, geez, there's a billion utility bills that go out a year. Wouldn't this be the perfect opportunity to communicate to consumers about their energy use and motivate behavior changes and help them buy new products?
Brad Langley: The result was Opower, a customer engagement platform for utilities aimed at helping customers save energy. It was a big success. Oracle went on to acquire Opower in 2016 for $532 million. The next year, Dan became an investor in a startup called Dandelion Energy, a spinoff from Google X aimed at developing geothermal heating and cooling for buildings.
Dan Yates: What really drew me was the scale of the problem that's being tackled. 20% of US emissions is attributable to buildings and 80% of building emissions is attributable to heating and cooling.
Brad Langley: Soon after he joined Dandelion’s board and then in 2023, Dan became CEO of the company.
Dan Yates: I really immediately fell in love with the business opportunity and the technology.
Brad Langley: It was a business opportunity he couldn't have imagined two decades ago as he was driving that old forerunner from Alaska to South America. But the environmental focus that trip inspired guides him every day at Dandelion.
Dan Yates: This is a multi-trillion dollar effort to transition the world to clean electric heat, and it's inevitable. So the question is just: Will geothermal play a big role or not? And how do we get it off to the races?
Brad Langley: This is With Great Power, a show about the people building the future grid, today. I'm Brad Langley. Some people say utilities are slow to change. They don't innovate fast enough. And while it might not seem like the most cutting-edge industry, there are lots of really smart people working really hard to make the grid cleaner, more reliable and customer centric. Today my guest is Dan Yates, CEO of Dandelion Energy. We talk about the potential for residential geothermal heating and cooling. Why it could be the clean energy that gains instead of loses federal support in the near term and the role he thinks utilities can play in the technologies deployment. But first, I asked Dan for an overview of how the technology works.
Dan Yates: The way that geothermal works that's different from what you might see in a different form of electric heat source is that we exchange heat with the ground. So we operate a heat pump, which is a brilliant form of technology that runs refrigeration in both directions. So we can heat your house and we can cool your house. And the conduit for that interaction with the earth is that we drill typically a 500-foot-deep, well, that's only six inches in diameter. Incredibly narrow, incredibly deep well, and we bury two pipes that are connected to the bottom so they form a loop and we fill that loop of pipe with an antifreeze water solution. And then we're able to pump it down in one direction and it comes up in the other. We can suck the heat out of that water and pump it back into the earth where it gets warmed up in the winter, and we can do the opposite in the summer.
Brad Langley: How do geothermal heat pumps differ from air source heat pumps, which people may be more familiar with that technology?
Dan Yates: So an air source heat pump has the same — more or less similar — components inside the house. It's a refrigeration cycle, and if we had a twice-as-long podcast, I'd talk through exactly how refrigeration works because it's a magical thing. But what we can all understand is that a refrigeration cycle enables you to move heat in the opposite direction than you would expect. So in an air conditioner, it takes heat in your house and it shoves it into an even hotter place outside your house. And when you run in the winter — as what's called a heat pump, which is the same tech as the air conditioner — it just does the opposite. It takes heat from outside your house where there isn't much and brings it into your house. So with an air source heat pump, the place where it's taking the heat from and pushing it to is the air outside, which has one huge benefit, which is it's very easy to access.
You just put a unit outside and there's the air. The big problem with an air source heat pump is that the air works against you. When you want to cool your house and you're trying to push heat into the air, the air is at its hottest. It's midsummer, it's 90 degrees outside, and it's hard to push heat into 90 degree air when you're trying to heat your house midwinter. It might be five degrees outside and you're trying to suck heat out of the air to push into your house, and there's just not a lot of heat in the air when it's five degrees outside. So the difference with geothermal is that as soon as you get about eight feet down, you have no fluctuations in earth temperature. This is not hot earth. This is not the geothermal in Iceland or Yellowstone that you use to make a power plant.
This is lukewarm geothermal as I call it. The ground's about 60 degrees. We put in this loop of pipe, we pump the water in. And 60 degrees is a heck of a lot warmer than five degrees outside in the winter, and it's a heck of a lot cooler than 90 degrees in the summer. And so our ability to suck heat out of that water and out of that earth and to shunt heat into it is just much better. And what you end up with is you end up with a system that's about twice as efficient overall and about four times as efficient on the peak days. And so that does two things. One: it radically lowers customer's bills. And two: it radically lowers in aggregate the expected transmission and distribution line build out that has to happen to electrify everything. What you've got, a number of states have done these studies that have shown that if they're going to get to a million, 2 million air source heat pumps in their states, they're going to spend billions and billions of dollars in transmission and distribution lines to support what will become a new winter peaking infrastructure.
And so what these states have recognized is that there's really, for them and for home builders who are looking at being pushed towards either air source heat pumps or geothermal, there's this fork in the road. If you go the geothermal route, you're getting a better durable solution. You're delivering your customers a great lower bill, and by the way, the ground loop outside, that pipe in the ground, lasts almost a hundred years. So it's like a really long-term valued investment for the state. It matches the lifetime of the house. So what we are seeing is states bringing forward these durable incentives because they know they're either going to pay tens of thousands of dollars to support ground source heat pump installations. Because, like, effectively the ground loop is a distributed form of infrastructure. I can either put a bunch of these ground loops in the ground or I can string up a bunch of new transmission and distribution lines.
Brad Langley: Just thinking about the ideal scenario for a geothermal heat pump, is it by region across the country? Are there some regions where it's more applicable? Do you have to have a yard? Maybe talk through what makes a location an ideal scenario for geothermal?
Dan Yates: Yeah, great question. So often people start, and I know you're not starting there, Brad, but people will often start like, do you have to live near a fault line or a geyser? And as I was saying earlier, I wouldn't know what to do with a geyser or a fault line. We need regular old dirt, which is in essentially a hundred percent of where people are living. That said, there are a few exception corner cases where geothermal is not a great match. Arizona is one of them. It turns out because it's really only hot there, not cold. So you don't have a seasonal variation and it's sand and sand's not very thermally conductive. Does geothermal work in Arizona? It does. It's just not very economic. Another place that's unfortunate is mountain towns. There is a lot of geothermal in mountain towns because there's very wealthy people who will put it in regardless of the cost. But it's not economic there. It's again, not thermally conductive soil and it's, it's just very cold. But from everywhere from Florida to Minnesota to Long Island to Seattle to Denver, Colorado, it's a slam dunk.
Brad Langley: And so let's talk about some of that market penetration. So the DOE put out a recent report saying only about 1% of U.S. homes have geothermal heat pumps. That's 1.3 million homes altogether. But the potential over the next 10 years is about 7 million homes. How does that square with your forecast for residential systems?
Dan Yates: I mean, I'm looking to deliver all 7 million of those homes myself, so we'll mark that at the low end of the growth trajectory. But in all seriousness, I think the DOE is onto something here, which is we're in the first innings of this transition to electric heat. Our primary target market are the million homes that are being built a year in the U.S. Most of those homes could be geothermal homes. So we're starting in the states that have the best policies for geothermal. I'll give you some numbers to make it concrete. When we retrofit a home, it's typically, call it $45,000 to do a single heat pump home retrofit. And that's before the customer gets incentives. So in the states that we perform, typically the out-of-pocket for the customer — after the federal tax credit and state incentives — can come down to as low as $20,000 - $25,000.
And that's a pretty great deal for a lot of homeowners. And that's why we've sold thousands and thousands of heat pumps and we've drilled over a million linear feet installing these systems for homeowners. And they often see a payback in five to eight years because the bill cost comes down so much. In a new construction environment, the pre-incentive costs can be on average something closer to like $19,000 because there's so many scale advantages to doing a new home. And then after incentives, we have now signed some large deals that I'm eager to announce in the next few months where our builder partners are actually spending less money putting in geothermal than they would've putting in either natural gas or air source. And that's what's going to unlock the kind of growth that the DOE is talking about. And the reason why it's all adding up finally is one, we've done great work to get our costs way down. Two, we're going to market with home builders where just fundamentally the approach is much lower cost. And then three, the states are seeing this fork in the road and they're choosing to fund geothermal because it's just so much simpler to support geothermal installations than to fight over transmission lines and imminent domain and distribution and more power lines down the road that people don't want blocking their view. It just makes more sense.
Brad Langley: So is this driving the shift of Dandelion to focus more on home builders rather than your traditional direct to consumer model? Where are you guys putting most of your attention?
Dan Yates: Yeah, so we're still doing both, but unambiguously our primary focus for growth now is with home builders and it’s going gangbusters.
Brad Langley: That's great. Not to delve into politics, but it bears asking: The new administration has shifted federal funding and priorities when it comes to energy. What policies do you think will benefit Dandelion and are there any you're concerned about that might stunt that rapid growth you guys are experiencing?
Dan Yates: Yeah, so I'd say first specifically for Dandelion, we are not concerned because our business working with home builders is really completely not reliant on federal incentive programs. And that's a very safe and happy place for us to be. I would say a positive and a negative. What we're seeing out of the Republican Congress and the Trump administration, there's actually a lot specifically of enthusiasm around geothermal and it's primarily focused around the other kind of geothermal, which is power plant, baseload energy generation. With this, like I've been jokingly calling the Iceland Yellowstone fault line geothermal, but it extends to the ground source heat pump technology. And a lot of our manufacturing partners are in Republican strongholds and there's a lot of real American jobs supported by geothermal of both kinds. And so I think the enthusiasm around geothermal amongst this administration is real, and I think it's going to help us. I'd say the only thing that is a negative is that the federal incentives for geothermal right now are part of the same tax code, tax policy that the big incentives for wind and solar are. And so there is a baby out with the bathwater risk. So we're working on that and helping to educate folks to make sure that that mistake doesn't happen, but we don't see there's no one out there hating on geothermal.
Brad Langley: Let's talk a little bit about your relationship with utilities. What role could geothermal heat pumps play in managing load and increasing clean generation?
Dan Yates: As you know, Brad, my past life running Opower, we sold exclusively to utilities. So I have a lot of network and friends and history working with utility partners all across the country. These incentive programs that I described are primarily run through utility partners in most states. And so we have great relationships with our utility partners in Colorado and Maryland and New York, Massachusetts, Connecticut now New Jersey, as we continue to grow and expand the business. So I think the benefits to them are very aligned with the benefits to the state and to consumers, especially dual fuel utilities, utilities that have gas and electric provision. They see the writing on the wall that the future for natural gas distribution is waning and they don't want to put more money into that natural gas infrastructure because they don't want it to end up with stranded assets over the next 10 to 20 years as demand drops.
And for them to see the potential to support a transition to an all electric solution that doesn't overtax the grid and enables them at the same time to generate more electric revenue is a slam dunk. And utilities are in this really amazing moment right now. It is a great time to be selling electricity in the U.S. There is an insatiable demand coming from these AI data centers and electrification of everything, whether it's cars or heat, it's all moving to the electric grid. So if they can participate in accelerating the electric heat transition without leading to brownouts, that's a big win for them. We don't actually think it makes sense in the long-term for homeowners to own these loops. They last a hundred years. No homeowner values the years 22 to 100 — if they even value 10 to 22. And it's a classic example of low maintenance infrastructure that is sort of purpose-built for utility ownership or state green bank ownership, et cetera. And so one of the things that we've been exploring with some of our utility partners is how do we help facilitate that transition because they can make a rate of return on owning and maintaining those loops while the customer just has to put in the heat pumps.
Brad Langley: So how would that work? So the utility would own the infrastructure, so they would kind of reap the cost savings from geothermal rather than the end customer. What does that look like?
Dan Yates: I mean, there's a lot to figure out, but I think at its simplest, the utility would own the ground loop. They would include that in the distribution. They own a lot of things that don't themselves that are not themselves energy. They own distribution, they own transformers, they own power poles, they own distribution pipes, and this would become another piece of that that just goes into the distribution charges would be a simple answer. And then the customer benefits while the distribution charge has gone up, the customer benefits with a radically lower bill, and so they're also still winning. But the cost of capital to the utility, the allowable rate of return, it's just all lower than what a homeowner pays to finance or a builder has to essentially stomach in the upfront assimilation of the cost.
Brad Langley: Last question for you, kind of a fun one. We call this show With Great Power, which is a nod to the energy industry. It's also a famous Spider-Man quote. With great power comes great responsibility. So Dan, what superpower do you bring to the energy transition?
Dan Yates: I would say the superpower I bring is single-mindedness and I'm a terrible loser. I really think geothermal really deserves to be a big part of the solution, and I'm just doggedly going to go after making sure that that happens and that's going to be my contribution.
Brad Langley: Love it. Well, Dan, thanks so much for coming on the show. I really enjoyed our conversation.
Dan Yates: Likewise. Thanks so much for having me. It was a lot of fun.
Brad Langley: Dan Yates is the CEO of Dandelion Energy with Great Power is produced by GridX in partnership with Latitude Studios, delivering on our clean energy future is complex. GridX exists to simplify the journey, GridX is the enterprise rate platform that modern utilities rely on to usher in our clean energy future. We design and implement emerging race structures and we increase consumer investment in clean energy all while managing the complex billing needs of a distributed grid.
Our production team includes Erin Hardick and Mary Catherine O'Connor. Anne Bailey is our senior editor. Steven Lacey is our executive editor. Sean Marquand composed the original theme song and mixed the show. The GridX production team includes Jenni Barber, Samantha McCabe, and me, Brad Langley.
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