Dear CFO: Why I'm Buying Your Borefield at a Discount

Dear CFO,

I want to buy your geothermal borefield — the hundreds of bores beneath your north quad, your recreation fields, and your newest parking structure. I want the loops your consultants designed, your contractor drilled, and your commissioning report declared complete.

I'd like to take that asset off your books and hand you a check large enough to fund the things a provost actually loses sleep over: the laboratory you can't recruit without, the residence hall you've deferred twice, the maintenance backlog that grows whether or not anyone looks at it.

Your peers have been making this trade for years.

In 2020, the University of Iowa transferred its steam, cooling, water, and electric utility systems to a private consortium for $1.165 billion in exchange for a fifty-year concession. Ohio State made a similar deal in 2017. Since then, Maryland, Idaho, Syracuse, and others have followed. The model is no longer unusual. An energy asset becomes capital for the academic mission while the campus keeps running.

But even these transactions — centered on visible, well-documented infrastructure — have proven difficult. Within three years, Iowa and its concessionaire were in federal court disputing fees, storm damage, outages, and contract obligations. The state's auditor called it the largest financial obligation ever undertaken by Iowa taxpayers. The parties settled in 2025, just weeks before trial.

Now consider. Two sophisticated parties performing nearly a year of diligence and negotiating more than a billion dollars. One bought a physical plant they could inspect with their own eyes, backed by maintenance records, operating history, warranties, and insurance policies.

And they still spent years arguing over value and risk. That is what the transaction looks like when the asset is fully documented and sitting in plain sight.

Now let me tell you how I'd value your geothermal field.

The pump house is easy. I can inspect headers, pumps, and controls in an afternoon.

The borefield is different. But before I could make an offer, I'd ask for the construction and inspection records. Everything that determines value comes down to three questions:

1. Can the field actually deliver its promised performance?
2. Does it remain entirely on your property?
3. Can either of those claims be proven?

Thermal interference is invisible from the pump house. If neighboring bores rob heat from one another, the field slowly loses capacity. I need to know that won't happen.

I also need to know every bore stayed where it belonged. A bore that wandered beneath neighboring property — or a thermal plume that extends beyond your boundary — creates subsurface trespass. I don't buy encumbered property.

Finally, I need confidence that the field can deliver what I'm about to sell back to you. The day I close, I'll be committing to supply heating and cooling for decades. I can't promise energy I'm not certain the ground can provide.

Thanks for the construction records. Here's what came back.

I asked which construction standard the field was built to.

…There wasn't one.

A bore construction standard does not exist, and your engineer of record told the driller to drill it the way that makes sense to them. That blind trust is risk to me. It means construction quality depends entirely on the practices followed during installation. Maybe they were exceptional. Maybe they weren't — and without documentation, neither of us can know.

I asked for the bore surveys: where every bore actually ended up, how deep it truly went, and how far it deviated from vertical.

…You didn't perform surveys, because your EOR didn't require them.

Without them, I can't verify that every bore remained on your property. Without that verification, I can't eliminate the risk of subsurface trespass. Without that, I can't treat the title as clean.

I asked for the thermal response test.

…You gave me a report containing a single conductivity value.

Recent research has shown that the standard interpretation of these tests can produce values that are confidently — and materially — wrong under common conditions. Your tester simply assumed the value of diffusivity without explanation and without uncertainty. Yet that single number forms the foundation of the entire borefield design. Without confidence in the test, I can't have confidence in the field.

I asked for the operating history.

…You gave me temperatures.

But what about pressure tests, or digital twins actually tied to positions and subsurface properties? You have utility bills, but you don't have the borefield's story.

Then there's the quiet risk few people think about. Five years into operation, the heat you've been injecting into the ground may not yet have reached the outer edges of the average bore's zone of influence. The thermal frontier is still moving. Neither of us actually knows whether the field will perform exactly as its design promised. The proof may not arrive for years. If it does, I'm the one holding the risk.

So here's my offer.

I take thirty percent off the top. Not because I know your field is deficient, but because I don't know that it isn't. Thirty percent is simply the price of uncertainty. I can't pay for performance you can't prove.

Consider how differently I'd value your chiller plant. I'd know exactly what I was buying. I'd have the commissioning records, maintenance history, warranty information, operating data, and equipment specifications. I'd understand its condition with confidence. I'd pay accordingly.

Your geothermal borefield is the same kind of infrastructure asset. It's simply the one I have to buy blind.

Don't take the discount personally. It's an economic law, and it has a name.

In 1970, economist George Akerlof published a paper about the used-car market. Two journals rejected it before the work eventually earned him a share of the Nobel Prize. His insight was simple. When buyers cannot distinguish good assets from bad ones, they stop paying for good ones. They price everything as average, because average is all they can see.

The owner who built a geothermal field perfectly — and documented nothing — receives exactly the same discount as the owner who cut every corner. Because, without evidence, the market cannot tell the difference. The market cannot reward what it cannot verify. Your borefield is trading in that market today. My haircut is simply the market doing what markets do.

If your field had been built to a recognized standard, professionally surveyed, honestly tested, and thoroughly documented, I couldn't justify this discount. I'd have to meet your price. I might even have to beat it, because every competing buyer would be looking at the same evidence. Your lender would finance a documented asset on better terms than a black box. Your insurer would underwrite known risk instead of guessing.

Here is my advice the next time you build a borefield. Treat it like any other asset. Make sure you can verify its values. Test it honestly. Begin assembling its operating history. Someday you may want to sell it, finance it, insure it, or simply prove what it's worth. Without documentation, every geothermal borefield becomes an average borefield, no matter how well it was built.