What is the Price for Geothermal Heating and Cooling?

In this article, I will discuss the price for geothermal heating and cooling, including the cost of installation, and the overall cost of ownership throughout the life of the system.

If you are considering a geothermal heating and cooling system, this article also answers some of the most common questions I get asked.

Additionally, towards the end of this article, I’ll make some basic cost comparisons to traditional systems and give you some sample calculations that will help you estimate the geothermal heating and cooling price for your home.

Before jumping into numbers, I want to take a minute to review what geothermal heating and cooling is and how it works.

If you already know and are only interested in understanding the price for geothermal heating and cooling, here is a small index that will take you directly to the different sections of this article:

What is Geothermal Heating and Cooling, and How Does It Work?

People have been using geothermal technology to heat and cool their homes for more than 50 years.

More recently, thanks to reduced installation costs, governmental incentives, low cost of ownership, and a general increase in environmental awareness, geothermal heating and cooling has become a popular choice for homeowners who want to reduce costs while being more friendly to the environment.

So, how does geothermal heating and cooling work?

Geothermal technology works because:

4 to 6 feet below the surface, the ground is cooler in the summer and warmer in the winter than the air above it.

1 Major Distinction Geothermal heat pump systems have from traditional air-to-air heat pumps

No outdoor unit with geothermal systems

Outdoor unit vs. Ground loop

The most salient feature to the geothermal system is that it has no outdoor unit like with the traditional air-to-air heat pump we all know. Rather, the geothermal system has a ground loop. The ground loop is installed below the surface of the ground where the ground temperature always maintains a constant 50-55F temperature year round. It acts like the outdoor unit, but just one that is way more efficient. The ground loop feature and how it derives its efficient characteristics is best exemplified by examples of when the system operates in heating and cooling modes.

Heating Season

Air-to-Air Heat Pump – All heat pump systems derive their ability to heat a home by extracting heat from outside of the house and then transferring that heat to the air inside. With a traditional air-to-air heat pump, the system uses the unit that sits outside to extract heat from the outside air to heat your home. The problem with this method of heat pump heating is that it only works good when it is not that cold outside.

As the outside air temperature drops, so to does the air-to-air heat pumps ability to heat your home. This is simply due to the fact that there is less heat in the outside air to take for heating purposes. So, as the outdoor temperature drops, the systems heat output drops. To make matters worse, this is when the rate of heat loss from within your home is at its highest.

In order for the air-to-air heat pump to actually make up for its loss in heat production from the outdoor unit, it engages the electric backup heat in the indoor unit. This form of heat is called resistive electric heat and it is typically the most expensive form of heat. This is when air-to-air heat pump owners experience extremely high energy bills.

Air Source Heat Pump example of diminishing heating output as outside temperature falls

This chart was taken out of the heating performance literature for a Trane 3 ton air source heat pump. This is for one of Trane’s most efficient 20 SEER systems. The purpose of the chart is to inform the consumer that as the outdoor air temperature falls, so too does the air source heat pump’s ability to produce heat for the home with its compressor and refrigerant (mechanical heat). Mechanical heat is essentially the most efficient form of heating. So as the chart shows, on a the coldest days (20F) the system heating capacity of approximately 36,000 btu/h is reduced by 10,000 btu/h essentially only giving you the mechanical heating of a 2 ton system. On these days, the air source heat pump must turn on its electric backup heat inside the indoor unit to provide the additional heat to compensate for the lost heating capability of the outdoor unit. At this point, instead of the system consuming 15 amps to heat your home with the compressor, it is using a constant 60 amps to heat until your thermostat reaches its setpoint and turns off the system.

Geothermal Heat Pump – You guessed it! Geothermal systems do not have an outdoor unit. As a result, its ability to provide maximum heat to a home is not dependent at all on what the outside air temperature is. And that makes so much sense. Why would you want a heating system that can only heat your home really well when its not cold outside? You actually want a system that can heat when it is cold. That is what geothermal can do and it can do it efficiently. This is what separates geothermal systems from every other heating and cooling system out there on the market.

Instead of having an outdoor unit, geothermal systems have a ground loop. Heating works by harnessing heat energy from below the earth’s surface and converting it into warm air inside your house. The backup electric heat is only used if and when the structure hits its balance point which depends on how tight and  how well the house is insulated.

Cooling Season

The same geothermal heat pump cools your home by absorbing heat from your indoor air and releasing it through the ground loop buried in your yard.

Air-to-Air Heat Pump – Again, this system must use its outdoor unit to expel heat. Unfortunately, you need it to do this when it is hot outside and at a time when the outside air already has a lot of heat in it. During the cooling season, the outside air temperature can be anywhere from 70 to 100F outside. So, while you are trying to expel heat into the outside air, the outside air has less capacity to actually absorb it.

Geothermal Heat Pumps – Geothermal units are able to remove heat from a house more effectively and therefore more efficiently. Heat is being rejected into a constant ground temperature of 55F. Even when it is 95F outside, the geothermal unit is able to operate at the same pace and at the same efficiency as it can when its 70F outside. The geothermal system operates under lower pressures, under less strain, and more efficiently at extremely high outdoor temperatures than any air-to-air heat pump system.

Side by Side Comparison – The numbers prove Geothermal is the most efficient by a long shot

The efficiency is in the numbers. There are 2 important efficiency ratings to that tell you how efficienty a system can heat and cool.

EER – (energy efficiency ratio) The EER is the ratio of the cooling capacity in British thermal units (Btu/per hour) to the power input (in watts) from your electicty company. This rating is used to explain how efficiently a heat pump can provide air conditioning. The higher the EER rating, the more efficient the heat pump is at producing air conditioning.

COP – (coefficient of performance) The COP is the relationship between the power (kW) that is produced by the heat pump, and the power (kW) that is supplied to the compressor. This rating is used to explain how efficiently a heat pump can provide heating. The higher the COP rating, the more efficient the heat is at producing heat.

Brand name 24 SEER variable speed air source heat pump (most efficient air source ducted heat pump)

24 SEER brand name air source heat pump

As you can see the air source heat pump only has an EER of 13.5 cooling efficiency. As far as its heating efficiency using the heat pump compressor only with no electric backup heat assistance, the most efficient air source heat pump has a COP of only 3.80 (at 47F) and a 2.54 (at 17F). Throughout most climates, the heat pump is in heating the majority of the time with outdoor temperatures below 47F.

The above chart showing the performance of the highest efficiency air source heat pump does not explain the full story when it comes to actual heat output in btu/hr. The full picture can only be understood after taking factoring in the defrost cycle for the outdoor unit of an air source heat pump.

The Defrost cycle of the air source heat pump further decreases it heating efficiency and heating output in btu/hr.

Reduction of heating capacity for air source heat pumps as outdoor temperature falls

As shown in the above performance chart taken directly from the air source heat pump’s performance documentation, you will notice a couple of important numbers. First, the chart shows how the outdoor temperature has a significant effect on the heat pump’s heating output. For example, when it is 47F outside, the air source heat pump’s “Total Capacity” is claimed to be 46,730 btuh. But, when the outdoor temperature drops to 17F, the heat pump is only able to produce a Total Capacity of 41,610 btuh. This being a 4 ton unit (48,000 btu capacity system), its claimed heating ability is reduced by approximately 7,000 btuh. But that is not all. Look at the legend accompanying the performance chart for the reference noted for the system’s “Integ Capacity MBtuh”:

air source heat pump loss in heating output due to defrost cycle of outdoor unit

The defrost cycle of the air source heat pump further reduces the heating output rating of the unit. In this case, at 17F outside, the defrost cycle reduces the heating output approximaltey another 3,000 btuh. So all combined, the real heating output of the air source heat pump at 17F outside is only claimed to be 37,940 btuh. This is all because the air source heat pump has an outdoor unit. The outdoor unit is blowing cold air across its refrigerant coil trying hard to extract heat from it. Problem is, there is not that much heat to capture in 17F air. As a result, the outdoor coil temperature actually drops below freezing and it begins to form ice and ice up. This further compromises its abilty to heat your home. Then, to make matters worse, the outdoor unit throws the system into a/c mode in order to melt the ice off the outdoor unit. This defrost cycle can last as long as 15 mins. During this whole cycle, the system engages the indoor air handler electric heat. So for 15 minutes, the air source heat pump is actually using one of the most expensive forms of heat. The net effect is that the output air temperature from the air handler drops as the electric heat at that point is only tempering the air due to the indoor coil actually being in a/c mode.

WaterFurnace variable speed Geothermal (most efficient ground source ducted heat pump)

None of the heating performance issues of the air source heat pump mentioned above are experienced by the geothermal system. It does not have a defrost cycle. It does not have the same requirement of using its backup electric heat to “thaw out” an outdoor unit. Typically, a geothermal unit’s backup electric heat is only required when the house is not insulated well and/or its has above average air or thermal leakage. This only occurs when the outside temperature is extremely low and the rate of heat loss from the house is rapid. Geothermal technology is what allows these systems to achieve such high heating and cooling efficiencies as indicated by the EER and COP ratings of the WaterFurnace 7 Series Variable Speed water-to-air heat pump.

7 Series WaterFurnace Geothermal ground source heat pump

Nature is behind the extreme efficiencies

The earth’s surface absorbs about 50% of the sun’s energy into the ground. The sun’s energy and the natural heat produced and stored by the earth allows geothermal to harness this energy on a continual non-interrupted basis. This is the main distinguishing feature that puts geothermal on a pedestal above solar and wind renewable energies, which are only capable of intermittent energy production of up to 30% of the time.

In a geothermal heating and cooling system for a home, pipes filled with liquid are buried below your home’s surface, usually below your yard or your driveway.

The liquid in the pipes rejects or extracts heat energy in the ground and transfers it to or away from the geothermal heat pump, also known as a ground source heat pump.

A geothermal heat pump can be in your garage, in your basement, or in another section of your home. The geothermal unit can also be a split system type where the heat pump is in your basement and the air handler section is in your attic. This allows for flexibility to meet any project requirements.

Because a geothermal heating and cooling system doesn’t use fossil fuel energy to operate, it is up to four times as efficient as traditional heating and cooling systems that utilize oil and propane to heat.

Here you can see an example picture showing pipes for a residential geothermal heating and cooling system:

The Two Main Types of Geothermal Closed Ground Loops and Price

If you have been looking into the price for geothermal heating and cooling, you’ve probably heard about the horizontal and vertical loops. These are the most common types of ground loops installed.

Because each system requires substantially different labor and material costs, the type of loop system you choose can have an impact your initial installation costs for a geothermal heating and cooling system.

To give you a better idea, I will provide you with a quick overview of the 2 most widely used types of geothermal loop systems and their average prices.

closed loop geothermal system

Horizontal Ground Loops

Horizontal loops require a certain size yard but are typically less expensive to install since they do not require well drilling and may be easier to maintain in the case of damage. Horizontal loop geothermal systems are the most widely used residential systems.

Installing a horizontal ground loop costs up to $15,000 on average. Multiple horizontal loops a minimum of 5′ deep in trench rows 150′ to 400′ long are usually installed. The length of the trench depends on the loop style whether slinky or raceway. The arrangement of the loop piping and the tonnage of the system will determine the extent of digging and material and labor required. The type of soil is also relevant.

Vertical Ground Loops

Vertical loops are better for projects that aim to reduce the impact on the existing landscape and are appropriate for smaller properties. However, vertical loops tend to be more expensive to install because a drilling company is required and it is expensive for them to drill with their well drilling machinery. Also, additional steps must be taken to fill the bore hole with a special grout so that the loop piping is properly separated and so that the proper thermo-conductivity to is achieved for proper heat transfer between the loop fluid and the soil.

Installing a closed vertical loop can cost up to $25,000 on average. The actual price depends on several factors such as the subsurface ground type, tonnage of the system, and how many seprate vertical bore holes are drilled. Vertical loops are ideal for homes with limited backyard space and rocky soil conditions.

Five Factors to Consider When Calculating the Price for Geothermal Heating and Cooling

Apart from installation and maintenance costs, one of the biggest questions I get asked is, “is geothermal heating and cooling worth it?”

Yes, a geothermal system is a change from the standard HVAC system you’ve been using for so many years, but I like to see it as a positive change! Case in point, people I know who have chosen geothermal heating and cooling over a new standard traditional fossil fuel or air source heat pump system are pleased with their choice.

Today over 1,000,000 homes and buildings across the US use geothermal heating and cooling.

At the start of this article, I said I would discuss the price for geothermal heating and cooling by reviewing:

  1. Cost of installation and
  2. Cost of ownership

In a moment, I will discuss both; however, to help you better decide if a geothermal heating and cooling system is suitable for your home, I wanted to address one of the most significant discussion points of geothermal heating and cooling:

Is Geothermal Heating and Cooling Less Expensive Than a Traditional HVAC System?

On average, a standard heating and cooling system makes up about 40% of your total electricity bill. With that in mind, here are several factors to consider when doing the math on whether geothermal makes financial sense:

1. Geothermal heating and cooling systems may in some cases have a higher upfront cost to install than traditional HVAC systems.

2. Geothermal heat pump systems have a lower overall cost of ownership over the life of the system than traditional HVAC systems.

3. After installation, you will realize immediate savings with geothermal systems, with up to a 65% drop in energy consumption for heating and air conditioning compared to traditional air source heat pumps.

4. Those using fossil fuels to heat their homes benefit the most by converting to geothermal systems. These homeowners will benefit from the double impact of money savings from no more fossil fuel and a lowered monthly electric bill.

5. A geothermal unit can provide up to 30% of the hot water in your home when connected to your existing hot water heater.

6. When it comes to routine maintenance, geothermal systems are very affordable and cost between 50-60% less to maintain than standard HVAC systems.

7. A geothermal heating and cooling system lasts between 20-25 years, compared to traditional HVAC systems, only lasting 10-15 years. In many cases, homeowners will have installed two new traditional heat pump HVAC systems before having to replace a geothermal system.

8. The ground loop piping has a lifespan of up to 100 years that can be re-used when it comes time in 25 years to replace your geothermal unit. With a traditional air source heat pump or air conditioner, you have to pay for a new indoor and outdoor unit, the refrigerant piping and labor to connect them.

9. A federal tax credit is available for homeowners who install a geothermal heating and cooling system for their homes, making a geothermal system considerably more affordable. The amount of the credit changes each year; currently, 26% through 2022. This tax credit is used to help offset the cost of installing the ground loop piping below the yard. ***UPDATE – this tax credit has been increased to 30% for the next 10 years!!!

10. States offer additional incentives including grant money of up to $3,000 in Maryland.

11. Utility companies provide rebates of up to $1,500 for geothermal systems. Even the highest efficiency air source heat pumps only receive up to a $600 rebate. The amount of rebate is based on the efficiency of the HVAC system and the reduced demand on the grid.

12. Geothermal Renewable Energy Credits (GRECs) – most homes qualify for up to $600 / year in GRECs that homeowner’s can sell and further use to offset the upfront cost of installation of the system.

13. There are favorable financing options and loans available for homeowners tailored just for geothermal heating and cooling and renewable energy. These loans allow the consumer to stretch out the period of the loan requiring lower monthly payments and an opportunity to payoff the loan at the homeowner’s own pace.

14. Most homeowners are on track to payoff the cost of installation of the geothermal system within 2-8 years.

In summary:

A geothermal heating and cooling system may in some instances cost more to install but will help reduce your heating and cooling costs by up to 65%. It will also cost less to maintain, can last up to twice as long as a standard HVAC system, and you’ll be able to claim significant financial incentives after installation.

Because geothermal heating and cooling systems don’t burn fossil fuel energy, many clean-energy financing options exist that make it easier to cover the initial costs of installation.

So now the big question is, how much does a geothermal heating and cooling system cost?

Price for Geothermal Heating and Cooling

Geothermal System, Cost of Installation

On average, you can expect to pay between $12,000 and $35,000 for a middle of the road residential geothermal heating and cooling system. This cost covers a complete geothermal ground loop system installation.

The above infographic is based on average prices and in no way is a true and accurate statement of the price of the geothermal system required for your home. The price for a geothermal heating and cooling system can vary depending on the size of your home, how much yard space you have available for the ground loop, and the extent of options added on, including any extended warranties.

Cost of Installation – Air Source v. Geothermal

Here is a rough estimation of the cost difference between installing the highest efficiency air source heat pump and the highest efficiency geothermal ground source heat pump.

13.5 EER  /  3.8 COP

Air Source Heat Pump

Highest SEER air source heat pumps cost of installation

43.5 EER  /  5.1 COP

Geothermal Ground Source

Geo real example of installation cost


Suppose you are willing to invest in the initial cost of installation. In that case, a geothermal heating and cooling system is an excellent way for you to significantly reduce your heating and cooling energy bills and increase the overall comfort of your home – all while being environmentally friendly.

To get a better idea of the price for geothermal heating and cooling for your home, I would be happy to discuss your scenario, budget, and options and answer any questions you have. Call 410-877-6100 or visit our Process page to send a message.



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