How much money can you save on heating and cooling with a geothermal heat pump? Chances are the figure is quite a bit higher than you might imagine.
Yes, the initial system installation costs can seem a bit intimidating, but the long-term payoff of using geothermal heating and cooling is well worth the upfront investment. How worth it? That depends on a few different factors.
Take a look below at typical geothermal system installation costs, financial installation incentives, and system operating expenses to get a rough idea of just how much you’ll save by going geothermal.
Upfront Cost of Geothermal System Installation
Every geothermal heating and cooling system is unique, so installation expenses can vary considerably from home to home. The type of heat pump your home requires, the size and type of the ground loop you need, and whether you need new ductwork will all factor into your overall system expenses.
On average, you can expect to pay between $30,000-50,000 (before incentives and rebates) for comprehensive geothermal system installation.
Why the huge price range? Because your expenses depend on the size of your home, the amount of space you have in your yard, and the geothermal system features you select.
If your home is large, it will require a more powerful (and more expensive) heat pump. If you lack space for a horizontal ground loop, you’ll need to opt for a vertical ground loop, which will increase your installation costs.
If you need ductwork installed, that will also raise your initial investment.
Financial Incentives for Geothermal Heat Pump Installation
One huge perk of opting for geothermal heating and cooling is that you have an opportunity to claim a hefty credit on your federal taxes after you have the system installed.
If you install a geothermal heat pump by the end of 2022, you can claim a 26% tax credit off the total system installation price.
If you install a geothermal system in 2023, you’ll be eligible to claim a 22% federal tax credit.
In addition to federal geothermal installation incentives, your local utility provider may also offer credits or rebates on your monthly energy bills. Depending on your utility company these rebates can be substantial! Combined, federal tax credits and local financial incentives can save you a considerable amount of money on your initial system investment.
For everything you need to know about the financial incentives associated with geothermal systems, check out Tax Incentives for Geothermal Installation.
Geothermal System Operating Expenses vs. Traditional Heating & Cooling
How much does it cost to run a geothermal system compared to a traditional HVAC system? That really depends on the size of your home and the efficiency of your heat pump.
The primary cost of operating a geothermal system is the electricity required to power the fan, compressor, and circulating pumps. Since geothermal heat pumps don’t use electricity to create heat — they simply move it from one place to another — they’re significantly more efficient than combustion-based systems.
On average, geothermal heat pumps are 400% efficient, which means that for every unit of energy the system consumes, it generates four units of energy.
To break it down a little further, a geothermal system only needs a single unit of energy to transfer three to five units of heat energy into or out of your home. Compare that to a high-efficiency furnace, which averages about 98% efficient, and the difference is clear.
Even the most efficient traditional furnace or air conditioner will waste energy in the process of heating and cooling air, whereas a geothermal heat pump actually creates more energy than it consumes.
Minor maintenance expenses will also factor into the overall cost of operating a geothermal system. However, maintaining the system over its considerable lifespan is still less expensive than maintaining a furnace or a/c unit.
For the most part, geothermal is a hands-off system once installed, but it’s smart to schedule professional checkups at regular intervals. With very little routine maintenance, a heat pump will last about 24 years and a ground loop can last for more than 50.
How Much Money Can You Save?
According to the Environmental Protection Agency (EPA), homeowners who use geothermal systems can enjoy energy savings of up to 72% compared to the cost of heating and cooling with a traditional furnace or air conditioner.
Geothermal also offers an average 44% energy savings over air-source heat pump systems. For the average home, that translates to about $2,200 in energy savings annually, and over the heat pump’s lifespan, a savings of $52,800 or more.
Adding in the tax credits and local utility incentives for geothermal installation, most homeowners recoup their initial investment within seven to 10 years. After that, it’s straight savings for decades to come!
Check out the other benefits you’ll enjoy when you switch to geothermal.
Curious About Geothermal Installation?
Ready to find out how much you can save on heating and cooling with geothermal? Schedule a consultation with our team at The Comfort Company! We provide comprehensive geothermal heat pump and ground loop installation for homeowners throughout Duluth, the Twin Cities, and northwest Wisconsin.
To get started, give us a call today at 218-231-4436 or fill out our contact form to request a consultation.