Although traditional HVAC still reigns, a May 2025 report by Transformative Strategies Consulting, in conjunction with Common Spark Consulting, considers another option worth considering to efficiently heat and cool multiple facilities owned by multiple parties—thermal energy networks (TENs).

TENs leverage heat pumps that circulate water through an uninsulated pipe network, capturing heat from the surrounding ground, water or air, and then warming or cooling the water to the temperature of the source. This “ambient temperature loop” is bidirectional, in that TENs supply and receive thermal energy from connected buildings.

“This enables the management of heating or cooling energy distribution to ensure that demand is met efficiently across all connected buildings or systems, a process known as ‘load balancing,’” according to the report. “They transfer renewable, passive or waste heat from sources to sinks, rather than generating new heat or cooling.”

TENs work especially well with decentralized energy sources, particularly those with available waste heat and renewable thermal resources.

Indeed, TENs based on geothermal heating and cooling carry “incredible efficiency”—upwards of 500% to 600%, because the ground remains at a relatively constant 55°F throughout the year, according to the report. While geothermal TENs can work in hot and cold climates and can be located in either rural or urban areas, they are most energy-efficient in medium-density, mixed-use neighborhoods when the heating and cooling loads are relatively balanced.

Eight states have enacted laws authorizing or expanding TEN projects, while four other states have either enacted or introduced legislation to study the feasibility of developing TENs with geothermal energy.

A variety of entities can now legally own and operate TENs, including private developers, investor-owned utilities, certain municipalities and co-ops. An emerging model is a community-owned system, in which the TEN would typically be owned and operated by a nonprofit or through another type of community partnership agreement, but the governance and fiscal management would be held by community members on behalf of a group.

“By prioritizing local ownership and governance transparency, policymakers and stakeholders can create an energy system that is more resilient, sustainable and responsive to community needs,” the authors wrote.

As the industry is still in its infancy, TENs have yet to be cost-competitive, though as the sector scales, costs will likely drop as they did in the solar and wind industries, according to the report.

“For TENs to be most economical, a whole zone or portion of a community will likely need to participate,” the authors wrote. “This will require the agreement of many building owners to participate in the TENs.”