SARANAC LAKE — The village is considering a plan that would theoretically allow it to launch a geothermal heating and cooling business without paying a dollar for the massive project.
A number of circumstances make this possible – federal grants, a contract with a multinational corporation and the Adirondack Park Agency's plan to move its headquarters to downtown Saranac Lake.
The village board will discuss this again at its meeting on Tuesday evening. The board shows feelings of excitement and hesitation. Some consider this an opportunity too great to pass up. Others want more reassurance that the planned route is guaranteed to happen to avoid the village having to foot an unexpected bill.
Mayor Jimmy Williams said former village manager Erik Stender first brought the geothermal idea to the village in 2022 and then introduced it to village officials Mitch DeWein of Albany-based engineering firm CHA Consulting.
With DeWein's help, the village applied for a grant from the state Energy Research and Development Authority and received $100,000 for a geothermal feasibility study. The study recommended “rings” of development — starting in the downtown area with wells dug under village parking lots that attracted several large “anchor” customers, and then extending the benefits to residential areas.
This would make Saranac Lake the first municipal geothermal utility in the state, Williams said.
Then the village received a $500,000 engineering and design grant. However, this design required a $500,000 grant from the village.
Last year, the village signed a contract with Siemens, an international technology group, to find and finance energy efficiency projects. The village would then pay off the debt to the company with savings from those upgrades and revenue from energy customers.
Williams said Siemens would cover the village's $500,000 grant as well as implementation of the project – essentially meaning the village would not have to spend any money on the project.
Then the Adirondack Park Agency expressed interest in moving its headquarters from Ray Brook to the village-owned building at 1-3 Main St., which has a parking lot that is one of the proposed drilling sites.
If the village secures APA as an “anchor client,” Williams said it could be a “mutually beneficial” partnership.
“They would be such a large customer that the revenue from the utility would actually pay off the debt,” Williams said.
Siemens would pay for the installation, the village would owe Siemens a debt.
The APA would pay the village for geothermal services. The village would use this money to pay off the debt.
Ultimately, the geothermal energy bills paid to the village would become income for the village.
But the APA's plans were on hold for a while because it did not have sufficient resources.
Use of the geothermal subsidy was on hold for a while. NYSERDA told the village it had to use it or lose it.
With an additional $10 million for the now $40 million APA headquarters project approved in this year's state budget, the project came off the shelf, Williams said.
A state regulation has mandated that any new state building cannot be heated with fossil fuels. Williams said the APA can run on either electricity or geothermal energy, and electrification is more expensive. Geothermal energy is a more cost-effective, environmentally friendly and renewable method of heating and cooling.
The APA would pay for utilities monthly at a set price per square foot. This rate has not yet been set. Williams said they need to see if the tariff works for the APA.
The project is still years away from fruition and cannot be guaranteed at this time, but the agency has named the site at the intersection of Main Street, Lake Street and Kiwassa Road as its “preferred location.”
The building could also be connected to conventional heating, ventilation and air conditioning technology and the project does not rely on a geothermal connection.
However, there was controversy over this APA push, with various Saranac Lakers groups writing letters supporting or opposing it.
For more information about the APA Headquarters Project, visit tinyurl.com/3yz38265.
It is unclear how much the debt to Siemens would be and how long it would take to pay it off. This depends on what the total cost of the system would be. Williams said they wouldn't know until the design was 60% complete. The whole idea is just conceptual at the moment.
The next step would be to execute the $500,000 contract with NYSERDA and accept the grant. The village has asked to split that grant into two $250,000 phases — one for construction at 1-3 Main St. and another for a second design phase at a site that has not yet been selected. The village is still waiting for confirmation that it can do this.
The entire system, which includes fountains in village parking lots along Main Street, was valued at $14 million several years ago.
There are also Inflation Reduction Act tax credits for geothermal systems that cover 30 to 40% of the costs.
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Questions
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But village trustees have questions they want answered about the plan before signing it off.
Trustee Aurora White wondered what the cost of using the system would be – whether it would be too prohibitive for homeowners and business owners.
DeWein said the cost of the connection will vary. But when he spoke to downtown businesses two years ago, most told him their heating systems were nearing the end of their lifespan. Most companies have fuel delivered for heat supply. Although retrofitting to a geothermal system involves high upfront costs, he said they have expressed interest in investing in the long-term savings that geothermal energy would bring.
Williams said businesses and homeowners would also be eligible for tax credits of 30% to 40%.
White demands guarantees from Siemens and the APA that they will meet their obligations.
She also wondered what would happen if the APA didn't move there.
Williams said they should be able to sign a lease with the APA before building the wells to ensure this as a customer.
If the APA doesn't move there, Williams said they would have to work out with Siemens how much of the $250,000 in engineering grants the village would have to come up with. White doesn't want taxpayers who don't directly benefit from geothermal energy to have to pay for its installation.
Williams also said the village could find another anchor customer since it has already spent the money on well design and planning.
The Harrietstown Housing Authority's Lake Flower Apartments high-rise across the street could also potentially tap into those wells. Williams said residents there have never been provided with cooling in the building.
Future phases could extend utility service along Main Street to the Hotel Saranac. Maps from the study show it would later extend around Church Street to St. Bernard Street and down Petrova Avenue to the proposed 33 Petrova Ave. Public Safety Building. could be expanded. Eventually it could include Lake Flower Avenue and then become village-wide.
Essentially, the village would become a utility company. The nearby villages of Lake Placid and Tupper Lake operate municipal electric utilities that make electricity rates for their residents significantly lower than in Saranac Lake.
Williams said geothermal energy requires much less maintenance than utilities like electricity, so it would cost less to run the village. After almost every storm, power systems need to be repaired. Williams said geothermal wells will be installed and then located safely underground.
He called them “100-year systems.”
Proponents say geothermal energy is the future of heating and cooling and that this opportunity will come only once.
Jill Henck, climate and energy director for the Adirondack North Country Association, urged the board not to miss this “truly unique opportunity” to subsidize initial work to install geothermal wells. She said this option doesn't exist anywhere else and that other green energy incentives for things like solar panels or air pumps are being eliminated at the federal and state levels.
Williams felt the village could do this now or find the money to do it in the future. He said that under the current federal administration, there probably won't be much money flowing into geothermal energy in a few years.
Jesse Schwartzberg of Black Mountain Architecture said geothermal energy is “incredible.” If it weren't for the high upfront costs, he would do it on every project.
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How geothermal energy works
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Geothermal wells are tubes drilled deep into the ground to reach a point in the Earth's crust where there is always a stable temperature — usually around 40 degrees, Williams said. The pipes circulate water and are arranged in a circuit for supply and return. Depending on the season, the groundwater and rocks heat or cool the liquid in the pipes.
In winter, the water and rocks underground are warmer than the air. The system absorbs this heat energy and pulls it to the surface, increasing the temperature even further through compression.
In summer, the system extracts heat from the building and releases it back into the ground to cool the building.
Williams said if the system expands larger, the village could eventually install geothermal pipes under the streets, along with other utilities like water and sewer, and add utilities as the streets are resurfaced.