Enertech and Palmetto Launch $0-Down Geothermal Lease Enabled by New Tax Law

By Maria Taylor, Senior Managing Editor, The ACHR NEWS November 11, 2026

Enertech Global LLC and clean-energy financing company Palmetto have launched a 10-year residential geothermal lease with no upfront cost, fixed monthly payments, and full maintenance and warranty coverage. The program is enabled by the One Big Beautiful Bill Act of 2025, which opened residential geothermal to commercial leasing under IRS Section 48.

How the tax-law change works

The One Big Beautiful Bill Act, passed in July 2025, eliminated the residential tax credit for geothermal but retained the commercial credit and added a provision allowing the leasing of geothermal systems — previously disallowed under an IRS principle called the limited-use doctrine. Rob Derksen, director of business development at Enertech, explained that the lease transaction in a residential structure now falls under Section 48 of the IRS code, making federal tax credits and domestic content credits available to the leasing company. In practical terms, commercial tax credits can now be applied to residential geothermal when the system is owned by a commercial entity.

Program terms

The lease runs for 10 years with no money down. Monthly payments cover all required maintenance and 100% warranty coverage for the full term. Homeowners can buy out the lease after five years without penalty, transfer it to a new homeowner, or extend it up to five years beyond the 10-year term at a discounted monthly rate. Enertech estimates that geothermal energy savings will commonly offset one-third to one-half of the monthly lease payment.

Separately, Enertech is partnering with Figure to offer a home equity line of credit for geothermal installations.

What changes for contractors

The installation process remains standard. The homeowner agrees to the contractor's installation price and applies for lease approval through Palmetto. Once approved, Palmetto pays the contractor at two milestones: after ground-loop installation and at final equipment commissioning. The homeowner's lease payments begin only after the project is completed.

Maintenance and repair work stays with the installing contractor. Palmetto pays the contractor a set fee for maintenance. For warranty repairs, the equipment manufacturer provides a parts-and-labor allowance, with Palmetto supplementing the manufacturer's labor reimbursement. Enertech said the arrangement eliminates the risk of customer nonpayment and creates a longer-term relationship between contractor and customer, since the lease provider determines who maintains the system. The ground loop remains in place after the lease ends, setting up future equipment replacements.

Solar parallels — and differences

The third-party ownership model is not new to renewables. After the federal solar investment tax credit took effect in 2006, companies such as Sunrun and SolarCity offered residential solar through leases and power purchase agreements, helping fuel rapid industry growth in the early 2010s. By 2014, 72% of U.S. residential solar installations were third-party owned, according to GTM Research.

Joe Parsons, vice president of thermal energy networks at Transformative Technologies, cautioned that the solar model does not translate cleanly to geothermal. Solar is modular and largely plug-and-play, he noted, while geothermal is permanent infrastructure requiring site-specific engineering. He also pointed out that the rooftop solar boom was driven by aggressive, commission-based direct-sales companies, a model that contrasts with established HVAC contractors who build reputations on equipment reliability, craftsmanship, and local trust.

Parsons identified the likely customer as someone already planning an equipment replacement who wants ground-source efficiency but cannot or will not write a $30,000 to $50,000 check upfront. He noted that emergency replacements remain out of reach, since a homeowner with a broken system in extreme weather will still want immediate restoration. More likely buyers, he said, are the planned-replacement customer or the "trade-off buyer" willing to exchange equipment ownership for a predictable monthly payment, provided immediate utility savings offset a meaningful portion of that fee.

On the contractor side, Parsons questioned whether the program would generate sufficient interest. He acknowledged that on paper the lease attacks the obvious barrier — eliminating the upfront capital cost of the ground heat exchanger (GHEX) — but noted that a $0-down, multi-year commitment fundamentally changes what an HVAC contractor is selling. Seasoned geothermal contractors have historically been reluctant to push long-term financing or lease structures because it turns an equipment recommendation into a multi-decade commitment. Whether the program meaningfully moves the needle, he said, depends on how many reputable contractors are willing to stake their reputation on it.

Outlook

Derksen said Enertech is "very optimistic" about the leasing program's ability to reach new buyers, but the company does not expect leasing to replace conventional cash sales. He noted that the current buyer demographic will likely continue to transact with cash, while leasing opens the door to a new set of buyers with a greater need for efficiency.

The program is currently available for existing-home retrofits. Palmetto has not provided a timeline for a new-construction option, although Derksen expressed hope that it could be rolled out in early 2027.

Source: www.achrnews.com.