New York is preparing a $111.5 million test of a different way to heat and cool neighborhoods: connect buildings to shared pipes that draw on heat in the ground and wastewater, part of the initiative to develop New York thermal energy networks.
Two utility thermal-energy projects, one in Buffalo and one in Haverstraw, have been allowed to advance. Nine other proposals were not. That split decision puts the promise of cleaner heating alongside a question that matters to every utility customer: can the system deliver good value in the context of New York thermal energy networks?
The Public Service Commission made its decision Oct. 15. An Oct. 23 report by New York Focus examined the costs and disagreement behind it. These are approved pilots moving toward further planning and construction, part of the broader efforts to establish New York thermal energy networks, not networks already heating homes.
Moving heat instead of burning fuel
A thermal-energy network links several buildings through shared pipes. Heat pumps use that system to move heat where it is needed. The approach can draw on the ground’s steadier temperature and recover heat that would otherwise go unused.
The U.S. Department of Energy explains the basic ground-source principle this way: below the surface, the earth changes temperature less than the outdoor air. A system can take heat from the ground in winter and transfer unwanted heat into it in summer.
That is different from drilling for hot water deep underground to generate electricity. These projects are about supplying buildings with heating and cooling, using heat pumps and shared thermal resources.
The technology still needs electricity, equipment and maintenance. Installation costs depend on the site, the ground, available space and the buildings being served. A general claim that heat pumps are efficient does not, by itself, establish that every neighborhood network is affordable.
What the two projects would serve
National Fuel Gas Distribution’s Buffalo pilot is authorized for $61.4 million. The state says it would serve 12 affordable multifamily buildings and a municipal building in a disadvantaged community downtown.
Its four-pipe network would use thermal energy from incoming wastewater and geothermal boreholes. It would also replace hot-water boilers used in the existing Buffalo District Energy System. The state sees potential to expand the approach if the pilot succeeds.
Orange & Rockland Utilities’ West Loop project in the Village of Haverstraw is authorized for $50.1 million. It would connect municipal, commercial and residential buildings across roughly 10 acres in a disadvantaged community.
That design uses a single ambient-temperature loop, two geothermal borefields and a wastewater heat exchanger. The planned services include heating, cooling and domestic hot water.
The designs are not identical. Testing different layouts and building mixes is part of what makes the pilots useful. Results from one site will not automatically settle every question about the other.
Who pays, and why nine proposals stopped
The state has allocated $93 million from its Sustainable Futures Program to the two projects. That covers more than 80 percent of their combined authorized cost, reducing the amount that would otherwise fall on the utilities’ ratepayers.
It does not make the projects cost-free. The commission’s Oct. 15 presentation identifies about $18.5 million to be recovered from National Fuel and Orange & Rockland ratepayers through surcharges. Recovery is capped at 1 percent of annual gas revenues for National Fuel and annual electric revenues for Orange & Rockland. That is a utility-revenue cap, not a quoted bill increase for every household.
The commission’s order also notes that the pilot budgets do not include later costs after the pilot period. Continuing service, removing a system or helping customers switch back could require more money, depending on what happens after the test.
The commission declined to advance nine other proposed pilots that together sought more than $1 billion in ratepayer funding. Its order also addressed costs already incurred and called for lessons from the process to shape future proposals.
Rejection does not erase the planning bills. The state’s presentation identifies about $40.88 million in earlier costs for the projects not advancing, to be deferred for consideration in later rate proceedings. That is separate from the two approved pilots’ budgets.
One of those proposals was in Syracuse. The state’s presentation lists its final forecasted project budget at $143.65 million. Its rejection gives the decision a Central New York connection, even though neither of the projects moving forward is in the Mohawk Valley.
New York Focus reported that regulators found individual-building electrification cheaper than neighborhood networks in every pilot area reviewed, including the two approved sites. Networks, however, could place less demand on the electric grid. Supporters argued that the review did not fully capture benefits such as retaining skilled union jobs.
That is the central trade-off: a shared system may offer advantages that a building-by-building approach does not, but it also brings substantial construction and operating costs.
What the tests should help answer
In an Oct. 22 public-radio report, Department of Public Service policy analyst Laurie Kokkinides described the selected projects as the most viable, lowest-risk choices in the group, with different opportunities for learning.
The state is also developing a Thermal Energy Network Roadmap. The commission directed staff to gather feedback from utilities and other participants, including lessons about the use of waste heat and the rules future networks would need.
Before construction, the selected utilities must complete customer-protection and enrollment requirements and obtain the necessary permits and agreements. Approval to advance is an important step, but it does not remove those conditions.
For readers in Utica and the Mohawk Valley, there is no enrollment offer in this announcement. Neither approved pilot is here. Their importance is as test cases that could help the state evaluate later projects elsewhere.
The useful measures will be concrete ones: construction cost, reliable service during cold weather, customer bills, electricity demand and the work needed to maintain the network. Those are questions to follow, not results that have already been achieved.
The decision is therefore both a step forward and a limit. New York is paying to learn from two projects while declining to approve construction of all eleven. Whether shared clean heat becomes a larger part of the state’s future will depend on what those tests show.
Reporting note: Approval occurred Oct. 15, 2026; the newest analysis cited here was published Oct. 23. Authorized spending, planned service and anticipated benefits are not presented as completed construction or measured savings.
