HB 520
Department of Legislative Services
Maryland General Assembly
2021 Session
FISCAL AND POLICY NOTE
First Reader
House Bill 520 (Delegate Barve)
Appropriations
State Buildings – Geothermal Energy Systems – Requirement
This bill requires that a geothermal energy system be installed in each newly constructed
State building if the payback period for the system is less than or equal to 20 years. The
requirement applies only to (1) a building constructed by or for the State for occupancy by
a State agency or department or (2) any building constructed for which more than 50% of
the construction cost is paid using State funds.
Fiscal Summary
State Effect: No effect on total funding in the capital budget, but construction costs
increase for some State projects, as discussed below. As a result, fewer projects may
receive funding in some years. State utility costs may decrease over time, but any such
effect cannot be reliably quantified and likely occurs beyond the five-year timeframe
covered by this analysis. No effect on revenues.
Local Effect: None.
Small Business Effect: Potential meaningful.
Analysis
Current Law: The Department of General Services (DGS), in cooperation with the
Maryland Energy Administration (MEA), must establish standards and procedures,
including energy conservation performance guidelines, for evaluating the efficiency of the
design for any proposed State-financed or State-assisted building construction. The
standards must be based, in part, on the best currently available methods of evaluating
design efficiency. The standards must be updated every two years.
To determine life-cycle costs, DGS, in cooperation with MEA, must establish standards
that require at least, among other factors:
 an energy consumption analysis of each major piece of equipment in the cooling,
heating, hot water, lighting, and ventilation systems; and
 a comparison of possible alternative energy systems.
DGS must adopt and uniformly apply a definition of the “life of the building” and provide
defending criteria for the definition adopted.
State Expenditures: DGS advises that its design process manual requires a life-cycle
assessment of four different heating and cooling systems and that geothermal must be
one of the types included. DGS further advises that there is no standard timeframe used for
life-cycle assessments but that 20 years is typical because most systems have to be
replaced, in whole or in part, after 20 years.
For State buildings, geothermal systems are already being installed when the 20-year
life-cycle analysis concludes that it is favorable to do so. However, the bill may result in
the installation of a geothermal system when it is not the most financially favorable. The
bill requires the installation of a geothermal system any time the payback period is 20 years
or less. In some instances, a geothermal system may meet this standard, but a
nongeothermal system may have a lower payback period. Normally, the nongeothermal
system would be installed in that instance, but the bill requires that the geothermal system
be installed instead.
MEA advises that the upfront cost of installing a geothermal system is substantially higher
than the installation of nongeothermal systems. Therefore, the cost of some State
construction projects may be higher under the bill. This has no effect on total funding
available from the capital budget for construction projects that is a set amount determined
annually by the Governor and General Assembly through the capital budget process.
However, to the extent that some projects are more expensive, fewer funds are available
for other projects, so fewer projects may be funded in a given year.
Small Business Effect: The bill’s requirement to use geothermal energy systems may
increase the demand for contractors that install such systems.
HB 520/ Page 2
 Additional Information
Prior Introductions: None.
Designated Cross File: None.
Information Source(s): Department of General Services; Maryland Energy
Administration; Department of Legislative Services
Fiscal Note History: First Reader - January 29, 2021
rh/ljm
Analysis by: Michael C. Rubenstein Direct Inquiries to:
(410) 946-5510
(301) 970-5510
HB 520/ Page 3


Statutes affected:
Text - First - State Buildings – Geothermal Energy Systems – Requirement: 4-410.1 State Finance and Procurement