A new residential project south of Denver is serving as a proving ground for ground-source heat pumps, pairing a geothermal startup with a major homebuilder to test a model that could reshape how Americans heat and cool their homes.
Dandelion Energy and Lennar have finished nearly 100 homes near Colorado’s Front Range, each equipped with a ground-source heat pump. The systems use less electricity than even high-efficiency air-source units, potentially helping the state meet climate targets while cutting peak demand and reducing the need for new gas infrastructure, according to the companies.
Ground-source heat pumps tap stable underground temperatures to heat and cool buildings. Custom designs and deep drilling typically drive up costs, with boreholes often several hundred feet deep and drilling alone commonly topping $10,000.
Dandelion, which originated at Alphabet’s X research division, says it can deliver geothermal systems twice as fast and at roughly half the cost of standard installations.
The company is “taking a kind of mass market and maximally efficient lens to what has historically been a bespoke kind of custom, high-end product,” said Dan Yates, Dandelion Energy’s CEO and chairman.
At Lennar’s Ken Caryl Ranch development near Littleton, Dandelion’s crew used a lightweight rig designed to move rapidly from lot to lot, drilling boreholes and setting polyethylene pipe before foundations are poured.
Each house receives a single bore between 200 and 500 feet deep, where temperatures hover around 50 degrees Fahrenheit. Water circulating through the pipe exchanges heat with the earth, then a heat pump in the basement provides heating or cooling depending on the season.
The drilling team can complete boreholes for one or more homes per day. In a one-off retrofit elsewhere, transporting a rig could consume a full day, the company said.
Installing systems across dozens of similar new homes at once streamlines design, avoids custom engineering, and prevents costly HVAC retrofits.
Dandelion says the result is a highly efficient setup that outperforms air-source heat pumps and gas heat, particularly during cold snaps when energy demand spikes. Yates said ground-source heat pumps can use about a quarter of the electricity of air-source units in those conditions.
It is “the only system that actually reduces peak demand and electrifies homes at the same time,” he said.
The Ken Caryl Ranch work is part of a broader push with Lennar announced in 2025 to install geothermal systems in more than 1,500 Colorado homes over two years. Dandelion aims to scale to 10,000 homes annually nationwide in the coming years.
“Our mission at Dandelion is to mainstream geothermal, and we think that the time has finally arrived for that to happen,” Yates said.
Just over a million U.S. homes use ground-source heat pumps, with about 100,000 new installations each year, according to a 2025 U.S. Department of Energy report. The agency projects adoption could reach 7 million homes by 2035, trimming winter peak demand by more than 40 gigawatts and saving roughly $4 billion annually in grid costs.
Still, ground-source heat pumps account for a small slice of new installations. By comparison, 3.6 million air-source heat pumps were sold in the U.S. last year, surpassing gas furnace sales for the fourth straight year, said Yara van Ingen of BloombergNEF’s buildings decarbonization team.
New research in the journal iScience found ground-source heat pumps are economically viable across the continental U.S., factoring in incentives, energy prices, climate, and subsurface conditions.
“It is technically possible everywhere, and there is economic potential across all states,” said Juliet Simpson, the study’s lead author and a former research engineer at the National Laboratory of the Rockies.
Upfront cost remains a hurdle. The Energy Department estimates around $25,000 for a typical new-home system. Van Ingen noted that space limits in dense areas and varying local permits can complicate drilling.
Incentives accelerate ground-source heat pumps
Dandelion and Lennar, which has invested in the startup, are working to drive down costs, while policy support is expanding. Xcel Energy’s efficiency program in Colorado offers about $25,000 per home for new high-efficiency houses with a ground-source system, helping offset added construction and equipment expenses.
“For large neighborhoods with hundreds of homes, builders may receive seven-figure rebate amounts,” an Xcel spokesperson said in a written statement.
The utility says the rebates support its climate strategy and Colorado’s Clean Heat Standard goal to cut greenhouse gas emissions 22 percent below 2015 levels by 2030.
Colorado also provides a $2,000 tax credit for ground-source heat pumps and requires homebuilders to cover the cost of new gas service expansion lines, expenses avoided with all-electric homes.
These policies aim to lower emissions from buildings by favoring efficient electric heating and cooling over fossil fuels, said Will Toor, executive director of the Colorado Energy Office.
Other states and utilities offer incentives as well, including Maryland, where Dandelion plans to install systems in 129 new homes. Commercial projects can also qualify for federal tax credits covering 30 percent or more of installation costs.
“The economics just look better and better,” said Jessica Silber-Byrne of the Building Decarbonization Coalition. “There is a combination of both incentives and market signals that suggest that this is about to really take off.”
