Winona Area Public Schools (WAPS) has received a $5.5 million federal tax credit for the groundwater-enabled geothermal heating & cooling systems Darcy Solutions designed and installed at Jefferson Elementary and Washington-Kosciusko Elementary in Winona, Minnesota. It is one of the largest geothermal-related Section 48 ITC payouts to a school district in the country, and among the first awarded to a Minnesota district for a geothermal project.
The credit was made possible by the elective pay (or “direct pay”) provision of the Inflation Reduction Act of 2022, which allows tax-exempt entities like public school districts to receive the value of the Section 48 Investment Tax Credit as a direct payment from the U.S. Treasury. WAPS submitted its application in December 2025 and the funds came through in March 2026.
The two retrofitted buildings — both built in the 1930s — were originally evaluated for HVAC upgrades in 2021. Neither had air conditioning, and ventilation challenges during the COVID-19 pandemic stressed the urgent need for better indoor air quality. After an extensive design review with Wold Architects and Engineers and construction manager Kraus-Anderson, the district selected Darcy’s groundwater-enabled geothermal solution for its high efficiency, compact wellfield footprint, and long service life. Construction on the schools began in the summer of 2023 and was complete before the start of the 2024-2025 school year.
The completed systems deliver substantial capacity in a small footprint:
- Washington-Kosciusko Elementary — 4 Darcy wells, 310 tons of cooling, 4,080 MBH of heating
- Jefferson Elementary — 5 Darcy wells, 200 tons of cooling, 4,320 MBH of heating
Because the project met federal Prevailing Wage and Apprenticeship requirements during construction, WAPS qualified for the full bonus credit value. The district plans to direct the funds toward one-time facility upgrades rather than ongoing operating expenses.
A Working Example for Public Schools
The Winona projects are a working example of how K-12 districts can use Section 48 ITC elective pay to meaningfully reduce the cost of decarbonizing aging facilities while improving comfort, air quality, and long-term operating economics. Darcy continues to advocate alongside organizations such as the National Ground Water Association in Washington, D.C. to make the geothermal ITC permanent and to expand access for the institutions and communities that benefit most from it.
To learn more about these projects, visit the Washington-Kosciusko and Jefferson Elementary project pages, or download the case study.
Read more about the process and experience from the perspective of WAPS here.