Geothermal System Costs

Very Low Geothermal Operational Costs Help to Quickly Recoup High Installation Costs

By Mark J. Donovan

Geothermal heating and cooling systems are becoming increasingly popular with residential building. Geothermal systems offer many advantages over traditional heating and cooling systems. Though geothermal system installation costs are significantly higher than traditional home heating and cooling systems, geothermal operating costs are extremely low. Depending upon the size of the home, and the local terrain, an average size home can typically recover the differential in the geothermal installation costs within 10 years.

Geothermal Advantages

Geothermal has many advantages. First, it can provide both heating and cooling by taking advantage of the earth’s constant temperature.

Second, geothermal is extremely efficient. For example, a geothermal heating and cooling system is 75% more efficient than an oil based heating system. Another key geothermal advantage is that a geothermal heating system requires virtually no fossil fuel to operate. Geothermal heating systems are also extremely compact, typically only requiring the space of a small refrigerator. They are also very quiet as there are no furnaces that need to cycle on and off.

Geothermal System Costs

Geothermal system installation costs vary with the size of the home and the location of it. Based upon the local terrain, vertical columns or horizontal trenches may be used to create the geothermal loop. Drilling vertical column wells or putting in a network of horizontal pipes can cost anywhere from several thousand dollars to tens of thousands of dollars. Inside the home, a geothermal heat pump is required. Geothermal heat pump costs are about double the traditional heat pump.

Expect to pay about $2,500 per ton, with the average home requiring 3 ton (10Kw) for adequate heating. This translates into a $7,500 geothermal heat pump cost. Then there is the network of duct work and/or piping required within the home for transferring the heat, though this is required for any type of heating system. In the end, expect total geothermal system costs of $20 to 35K.

Though the geothermal system cost of $20 to $35k is expensive there are a couple of key points to keep in mind. First, a geothermal heating system qualifies for a 30% federal tax credit, thus the net cost to you for installing a geothermal system is actually $14K to $24.5K. Second, geothermal system operating costs are much lower than other home heating and cooling solutions. A 2,000 square foot home, for example, can typically be heated or cooled for less than $1 per day.

Traditional residential heating and cooling systems, on the other hand, will typically run you $5-7 per day to operate. As a result of this huge operating cost differential it is very possible to recoup the difference in installation costs for a geothermal system in less than 10 years.

Open loop geothermal heating system

To conclude, though geothermal system costs are significantly higher than oil, gas, or propane heating and cooling system costs, their extremely low operating costs quickly make up the difference. When you consider all the other geothermal system advantages, it is no wonder why an increasing number of homes are being built or retrofitted with this technology.

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