Geothermal

A typical residential geothermal system costs between $15,000 - $40,000. While these costs are 2-3 times the cost of installing a traditional HVAC system, the savings in energy costs are significant and payoff in a few years.

The Geothermal system is primarily driven by two key factors:

• Cost of the heat pump: Heat pumps for residential applications generally cost between $2,500 - $7,500. A typical home may require a 3-ton system.
• Cost of installation and ground work:  This is the cost of work required to dig the ground and install pipes and / or coils.  Installation costs can be $5,000 and up. Installation cost is highly dependent on the type of soil, ground conditions (e.g., rocky) and type of loop (closed vs. open) being installed.
  • Open loop systems, while cheaper to install, are less common
  • Closed loop systems are more common but cost more to install

Commercial systems can run in tens of thousands to hundreds of thousand dollars, depending on the size of the building, ground characteristics, and type of systems installed.

The Federal government allows homeowners and commercial property owners to deduct 30% of the net cost of the system from their income taxes. This tax break is available through 2016.

• Some states offer additional tax incentives for geothermal systems
• Some utility companies may offer additional cash rebates to install a high efficiency heat pump.

• Typical residential systems generate an annual return on investment (ROI) of 5%-20%.
  • A single system can reduce the cost of heating by 50% - 70%, and cost of air-conditioning and hot water by up to 50%. The savings may be significantly higher if you are replacing an old, inefficient heating and air-conditioning systems.
• Commercial systems costs can be significantly higher, but the annual ROI can exceed 30%.
• ROIs increase every year, consistent with rising energy prices.

There are several options available to you to finance an investment in geothermal system:

• Home equity or other collateralized loans
• Subsidized loans
• Peer-to-Peer loans
• Specialized loans

For a detailed discussion, refer to our Financing Options page or search for banks and leasings companies that provide financing.