Heating and cooling for our home will be provided by a ground source heat pump which is commonly referred to as "geothermal."  This is a replacement for both the typical combination of a natural gas furnace and air conditioner used in our part of the country.

Main benefits of geothermal

  • Overall energy savings for heating and cooling. (No natural gas heating.)
  • Turns heat removed in summer into "free" hot water for domestic use
  • No noisy outside air conditioner condenser unit
  • Few moving parts means long life expectancy
  • Quieter than conventional equipment
  • 30% tax credit on installation cost

How geothermal works

How much it costs

As I was researching geothermal installations, the one thing I could not find anywhere was an exact cost. When you read the below numbers, please keep in mind that your situation may vary considerably from ours. You should work with a contractor who will perform a heat-loss calculation to size your system accordingly.

  • 5 ton, 2 stage geothermal system & duct work - $15,600
  • Well drilling (vertical wells) - $11,000
  • Cost before incentives - $26,600
  • Tax credit (30%) - ($7,980)
  • Focus on Energy rebate - ($250)
  • Total geothermal - $18,370

Initial Cost

We had obtained the following quote for a conventional system:

Conventional system (for reference):

  • Builder's standard natural gas furnace & duct work - $6,000
  • 3.5 ton air conditioner - $2,400
  • Total conventional - $8,400

One additional point must be made to compare "apples to apples." Our geothermal contractor's quote includes a manual J heat loss calculation, insulated and sealed duct work, all returns ducted, air flow balancing, optimized duct work, and spring-loaded, weather-stripped dampers for all bath fans. These all seek to optimize efficiency and indoor air quality (and get us green-built points).

With the geothermal quote we accepted, this was all standard (except the spring-loaded dampers which were +$200). We had already ruled out conventional HVAC by the time we got this, but the quote from another geothermal HVAC vendor was about +$2,000 for these items. We therefore believe that the most accurate comparison of our geothermal quote to a conventional system would be to use $10,400 as the cost of the conventional system.

In rough numbers, then, the geothermal system will cost us about $8,000 more than the conventional system.

Operating Cost

We have the following projection from Modern Heating and Cooling. They compare the cost of the geothermal system to the cost of a natural gas furnace and air conditioner. If you are interested in Geothermal, your contractor should be able to provide this.

Some quick math if interested in a purely economic "payback":

$232 - $153 = $79 per month

$8000 / $79 = 101 months / 12 = 8.4 years

This does not include reduced hot water heating costs (would make payback more favorable), longer life expectancy of the equipment (more favorable), or mortgage interest on the $8,000 difference (less favorable, but some may be tax deductible). It also assumes that energy prices remain the same, when in reality they will likely increase, making the payback more favorable.