Geothermal Heating and Cooling for Homeowners: Overview, Average Cost, Payback

Dig down six feet into the earth and you’ll find that the temperature at any latitude in the US is stable within a range of 45-75 degrees Fahrenheit. That relatively constant temperature is the basis for geothermal, or ground source, heat pump systems, which can provide homeowners with a simple, reliable, quiet and low-polluting means of home heating and cooling. And though the up-front cost is typically higher than that of a gas-fired or central air-conditioning system, geothermal heat pumps more than pay for themselves over the course of their life cycles.

Popular in Europe, geothermal heat pumps (GHP) haven’t really caught on here in the US, at least not yet. Using natural gas, fuel oil, propane or electricity to heat and cool homes are the well-established norms. They remain easy, reliable and affordable, with well-established producers, distributors and service providers throughout the US. But the US market for geothermal heat pumps is growing, a network of suppliers, distributors and service providers is developing, and market participants are promoting and advertising their products and services and reaching out to educate the broad public about their benefits.

Pros and Cons of Geothermal Heat Pumps (GHP):

Geothermal heat pumps aren’t for everybody, though they could be used much more widely in the US than they are today. You’ll have to spend some time researching what size system could and would be right for your home and property and come up with a good estimate of installation costs and the energy cost savings that should result. If you do decide to install a geothermal heat pump, you’ll have to put up the capital and go through the process of having an in-ground loop of tubing installed, along with system components that include an outdoor condenser and an indoor evaporator coil.

That said, geothermal heat pumps are efficient: efficiencies range between 300%-600% on the coldest winter nights as compared to 175%-250% for air-source heat pumps on cool days. That’s one reason why installing a geothermal heat pump can significantly reduce home heating and cooling bills.

In use since the 1940s, geothermal heat pump technology is straightforward and the systems are self-sustaining. Compared to air-source heating and cooling systems, they are more efficient, more reliable and last longer. Indoor components last an estimated 25 years while the ground loop components last 50 years and more.

They also run quieter and require little maintenance. There are no monthly bills to pay outside of the small additional cost of the electricity required to run the system. Hence, they offer a cleaner, less polluting way of heating and cooling homes while at the same time cutting down on heating and cooling expenses.

How do Geothermal Heating and Cooling Systems Work:

At the most basic level, geothermal heat pump systems transfer heat and cold between the earth and the interior of your home or building. Closed loop systems are by far the norm; they absorb heat from the warmer ground in winter and pump it into the home or building. The reverse process occurs in summer: fluid circulating through the system’s ground loop of tubing absorbs heat from the house and radiates it into the ground.

A Coefficient of Performance (CoP) the ratio of heat provided (in Btus) per Btu of energy input indicates a GHP’s heating efficiency. Cooling efficiency is indicated by the Energy Efficiency Ratio (EER), the ratio of the heat removed (in Btus per hour) to the electricity required (in watts) to run the unit. Manufacturers can voluntarily have their systems qualified to use the EPA’s ENERGY STAR label, which equates to a heating COP of 2.8 or greater and an EER of 13 or greater.

The essential components of a geothermal heat pump system are a looped, in-ground network of tubing typically polyethylene or copper; a heat exchanger, a heat pump, a compressor, a fan, and the water or anti-freeze that circulates through the system and serves as the medium for absorbing and shedding heat and cold between the ground and the home.

Ground loops can be installed horizontally or vertically to deeper depths as deep as 100 feet or more — if you’re cramped for open space. They may also be installed, entirely or partially, in water. In any case, you’ll need enough to install a system sized to justify the expense of installation over a time frame you see as reasonable.

GHP Size & Scale, Cost & Savings:

Geothermal heat pumps are becoming more popular in the US. It’s estimated that approximately 50,000 geothermal heat pumps are installed each year. That’s expected to increase as a value chain of manufacturers, distributors and service providers continues to develop, homeowners learn more about their benefits, and costs come down as demand increases.

The scale required, and cost, of a geothermal system depends on a variety of factors: the size of the space to be heated and cooled, the type of soil and underlying geology you’ll need to dig into, the availability of surface and ground water — which may be used as a source of heat and cold in closed and open loop systems — the actual local ground temperatures over the course of a year and seasonal climate conditions. Your own home temperature preferences and habits will also factor into the economics of evaluating a system.

It’s difficult to find a widely representative average cost for a GHP system, but recent studies found the average total installed cost including drilling — for a 10 kW, 3-ton thermal capacity system for a detached rural residence in the USA at $14,000 in 2008 dollars. The DOE estimates a 2008 price of $7,500.

The initial cost of installing a geothermal system can be several times that of an air-source system of the same heating and cooling capacity, but it’s offset as GHP systems have the lowest operating costs of any HVAC option. Annual energy savings of 30%-60% are typical and depend on factors including the availability of financing and incentives, which can result in substantial cost savings.

Additional savings can be earned by installing a system equipped with a “de-superheater” that draws heat from the house in summer to heat water for free. In the winter, water heating costs are reduced by about half.

Return on your investment also varies with retrofits and new home purchases, as well as the possibility of including the cost of installing a GHP in a mortgage. The cost of a retrofit is typically recouped in 2-10 years, according to the US Dept. of Energy (DOE).

Installing a geothermal heat pump can generate a positive cash flow from the outset if included in a so-called ‘energy efficient’ mortgages, however. The energy cost savings should easily exceed the amount added to the monthly mortgage payment from the first year onward, the DOE says.

Special financing options and incentives that help offset the cost of installing a GHP system are also available. They’re available from federal, state, and local governments, power companies, as well as banks. You’ll need to find out what’s available and verify that the system you’re considering qualifies before making a purchase. The DOE’s Database of State Incentives for Renewable Energy (DSIRE) website is a great place to start.