Geothermal Heat Pump Cost Breakdown (2022)

Last updated 5/3/2022

The cost of a new ground source heat pump (GSHP) installation will vary based on a variety of factors, including the type of system, size of your home, and the physical characteristics of your property. While the upfront cost may look large in comparison to other heating and cooling technologies, the long-term savings of geothermal systems can often more than justify an installation.

Geothermal Heat Pump Cost Breakdown (1)

Key Takeaways:

  • Ground source heat pump installations range in price from $10,000 to $30,000
  • Ground source heat pumps are eligible for numerous incentives including statewide programs and the Residential Energy Tax Credit
  • GSHPs can offer between 25 and 50 percent savings on heating and cooling costs compared to conventional fossil fuel systems.
  • Heat pumps are a very effective way to use less fuel and reduce reliance on fossil fuels
  • Heat pumps pair well with solar panels that can be purchased on the EnergySage Marketplace.

How much does a ground source heat pump installation cost?

The total upfront cost of a ground source heat pump depends on many factors. Installing a ground source heat pump is a large project , so you might expect to pay between $10,000 - $30,000 on a system. For smaller homes with lower heating and cooling loads, expect to be on the lower end of this spectrum. For example, a 2,000 square foot home will cost between $3,000 to $5,000 to install. For larger properties or commercial buildings, higher upfront costs are the norm. For a 4,000+ square foot home, costs will be more than $10,000.


Ground source heat pump benefits, rebates and incentives

In most cases, a ground source heat pump system will save you money in the long run, but the upfront costs of installation can look a little daunting. If you are concerned about the price tag for geothermal energy, understanding the rebates and incentives available to you can help you determine if it is something you want to invest in. According to the International Ground Source Heat Pump Association (IGSHPA), GSHPs can offer between 25 and 50 percent savings on heating and cooling costs compared to conventional fossil fuel systems. They have a payback period of between 5-10 years according to the Department of Energy.

Some states–such as Massachusetts and Pennsylvania–offer residential rebates for ground source heat pump installations. Individual utilities may also offer financial incentives for geothermal, typically as Energy Efficiency incentives. Additionally, the federal Residential Renewable Energy Tax Credit (also known as the Investment Tax Credit, or ITC) gives homeowners everywhere a tax credit equal to 30 percent of the total installed cost of a ground source heat pump system, provided that it meets Energy Star criteria.

One of the biggest advantages of ground source heat pumps (and a big reason why you can save on energy costs by going geothermal) is their efficiency. A well-installed ground source heat pump system is capable of providing 3 to 4.5 times the amount of electrical energy it consumes in the form of heat energy for your home. This is possible because ground source heat pumps move heat, rather than burning fuel. As a comparison, the best oil-fueled furnaces can only approach a 1-to-1 ratio of energy consumed to heat energy provided.

Another great benefit of GSHPs is their longevity: you can conservatively expect a new geothermal heat pump ground loop to last for more than 50 years and the indoor components to last for about 15 years. This means you’ll have access to reliable, low-cost heating and cooling for several decades, which in turn means significant lifetime savings from geothermal.

For more information on what rebates and incentives are available near you for geothermal heat pumps, visit the Database of State Incentives for Renewables & Efficiency (DSIRE).

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Factors that determine the cost of a GSHP system

The total cost of installation for a geothermal heat pump system depends on a number of factors, from the type of ground loop you install to your heating and cooling needs, and ultimately to the geology of your property.

Geothermal Heat Pump Cost Breakdown (2)

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Type of ground loop

The three major types of ground loops–horizontal, vertical, and pond/lake–all come with varying costs. The most inexpensive option will usually be a pond/lake loop, but you’ll need to have a body of water on your property for this to be a feasible option.

Horizontal and vertical ground loops are much more common in GSHP installations, and the type you install will depend on the available space on your property. Horizontal ground loop geothermal systems are the most common residential geothermal option and are typically less expensive than vertical loop systems due to lower labor costs associated with the install.

Geothermal Heat Pump Cost Breakdown (3)

Equipment quality

Any home technology upgrade will come with a range of equipment options to choose from. Some equipment is on the lower end of the quality scale (sometimes called “contractor grade”). This may be driven by the efficiency of the system and the reputation of the manufacturer. Geothermal heat pumps have several ratings associated with them to indicate product quality, including the Energy Efficiency Ratio (EER) and the Coefficient of Performance (COP)

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A geothermal heat pump’s EER is a metric that rates its ability to cool an area efficiently. The number is a ratio of the heat removed from your home over the amount of electricity used to do so, meaning that a higher EER rating means a more efficient system. Geothermal heat pumps typically have an EER rating between 13 and 18.

A heat pump’s heating efficiency is rated by COP. Ground source heat pumps typically have COPs between 3 and 5, which is also a ratio also representative of heat produced to electrical input. In general, ground source heat pumps with higher EER and COP ratings will cost more money to install but heat more efficiently.

In addition to EER and COP, you can look for a government-certified ENERGY STAR label on some geothermal heat pump products. Ground source heat pumps with an ENERGY STAR label are certified by the Department of Energy as having above-average efficiency, making them the best choice for saving energy (and, therefore, saving on your utility bills). Ground source heat pumps with the ENERGY STAR level have high EER and COP ratings: to receive an ENERGY STAR label, a ground source heat pump must be over 45 percent more efficient than standard products. Additionally, these products must have an EER rating above 17.1 and a COP rating above 3.6 (for closed-loop systems).

Geothermal Heat Pump Cost Breakdown (4)

Installation complexity and additional upgrades

Along with the heat pump unit and ground loop, your home duct system is a vital component to any GSHP system. If you have a pre-existing duct system that is well-insulated and sized appropriately for your geothermal system, you won’t have to pay extra money to retrofit your home with new ducts or update your current ductwork. For large homes with ductwork needed, expect to pay more for your geothermal installation.

Geothermal Heat Pump Cost Breakdown (5)

(Video) Geothermal 5 - Cost Analysis

System size/heating and cooling load

The installed cost of a GHSP depends on the size of the area that you want to heat and cool. Based upon the size of your home, the performance of your insulation systems, and more, your geothermal installer will recommend a certain size heat pump. Expect to pay more money for a heat pump with a higher capacity if you have an especially large area to keep warm or cool.

Geothermal Heat Pump Cost Breakdown (6)

Site conditions

Lastly, the geology and accessibility of your property can have an influence on the price of a GSHP installation. Given the heavy equipment that installers need to dig the appropriate trenching for ground loops, it’s important that your property is accessible to large machinery. The more time and effort it takes for an installation crew to get to your property, the more you might have to pay. Additionally, geological conditions can influence costs. Depending on the soil and rock type under your property, your installer may need to use a more or less expensive material for the ground loop to make sure your system isn’t at risk of being damaged.

Calculating “payback period” for ground source heat pumps

The payback period for a geothermal heat pump system can vary greatly depending on local utility rates and your upfront costs. In general, if you live in an area with high energy prices, you can expect a shorter payback period with geothermal. It’s safe to assume that most ground source heat pump systems will pay for themselves in somewhere between four and fifteen years.

FAQs

What are the running cost for a ground source heat pump? ›

The running cost of a ground source heat pump will be around 3.4p/kWh, while a gas boiler is around 6p/kWh (as it will vary with different suppliers and assuming 90% efficiency) and an air source heat pump will be around 5p/kWh.

How do I calculate what size geothermal I need? ›

A useful benchmark: about 400 to 600 feet of horizontal loops are needed for each ton of energy required to heat or cool. A mid-sized house usually requires a 3 ton unit, and so it would need space for approximately 1200 t0 1800 feet of coils.

How much will a geothermal system save me? ›

Numbers from US Environmental Protection Agency (EPA) show that homeowners using geothermal systems may realize savings of 30-70% on heating costs and 20-50% on cooling costs, compared to other conventional systems. That can translate to savings of $1,500 annually.

How long does it take for a heat pump to pay for itself? ›

So while heat pumps cost more upfront, their savings can often pay themselves off within 8-12 years.

How much electricity does a geothermal heat pump use? ›

That's why it takes only one kilowatt-hour of electricity for a geothermal heat pump to produce nearly 12,000 Btu of cooling or heating. (To produce the same number of Btus, a standard heat pump on a 95-degree day consumes 2.2 kilowatt-hours.)

What is the one bad thing about using geothermal heat pumps? ›

There also some *cons* when it comes to geothermal energy:

The introduction of water is considered wasteful and possibly harmful to the environment. Emissions of sulfur dioxide and silica are often an issue. The process of drilling into heated rock is problematic.

Is a geothermal heat pump worth it? ›

As stated by the U.S. Department of Energy, investing in a geothermal heat pump can mean a 25% to 50% decrease in energy consumed compared to traditional systems that use air. In addition, your geothermal system can be as much as 300% to 600% more efficient, making this a great HVAC investment long term.

Do you need backup heat with geothermal? ›

This means that as the outdoor air temperature drops, your geothermal heat pump maintains its efficiency and continues harvesting heat as it normally would. You never have to use backup heat, and you'll never be cold.

Is it better to oversize or undersize a heat pump? ›

Overall, an undersized heat pump is better than an oversized one. An undersized heat pump will take longer to change the temperature. But, the unit won't be as loud and will last longer. An oversized heat pump will turn on and off more frequently, which will use more electricity.

How big a geothermal heat pump do I need? ›

As a rule of thumb, 500-600 feet of pipe is required per ton of system capacity. A well-insulated 2,000 square-foot home would need about a three-ton system with 1,500 - 1,800 feet of pipe.

How many square feet does a 4 ton heat pump cover? ›

4 ton heat pumps

Most can easily cover areas as large as 2,000 square feet. Just like with any other size of heat pump, you must ensure that a four-ton heat pump is right for your space before investing in one. If the unit is too large for your home, it will short cycle and possibly damage the motor.

Does geothermal increase electric bill? ›

Your electric usage will increase with geothermal, but that additional cost won't be divided equally throughout the year. Your electric bill will likely be lower in the summer than you paid previously. You'll be spending less money overall than when heating with oil or propane – even with an increased electric bill.

Is there a geothermal tax credit for 2022? ›

The federal tax credit initially allowed homeowners to claim 30 percent of the amount they spent on purchasing and installing a geothermal heat pump system from their federal income taxes. The tax credit currently stands at 26 percent throughout 2021 and 2022 before decreasing to 22 percent in 2023.

Do you really save money with a heat pump? ›

Over the course of an average year, heat pumps save our clients about 20-70% on their annual heating and cooling bills. Heat pumps can also save money through reduced maintenance expenses and by completely eliminating fees for services such as oil delivery.

How warm can a heat pump get your house? ›

The average heat output can be 85-92°F; however, how warm the output from your heat pump will be is determined by several factors, including age and condition of the heat pump. Newer heat pumps with R410a refrigerants can extract more heat from the outside air, which improves output.

How much does it cost to run a heat pump per day? ›

The running cost estimates beow are from the Gen Less Running Cost Calculator assuming a 4-star heat pump, an electricity cost of 26c per kWh for 6 months of the year. Anything under $183 means it costs less than $1 per day.

How much does it cost to heat a house with geothermal? ›

On average, a homeowner can expect total expenses to reach between $18,000 to $30,000 on geothermal heating and cooling cost.

Can solar panels run a geothermal heat pump? ›

A geothermal heating and cooling system works well in tandem with solar panels because the geothermal heat pump helps regulate your home's temperature using the electricity provided by your solar panels.

What temp does geothermal stop working? ›

Using the in-ground loop field, a geothermal unit (or "ground-source heat pump") is able to pull heat energy from the 45°F-70°F earth to heat your home at efficiencies of over 400%. It's a totally unique technology and is well suited for heating and cooling spaces when the weather gets rough.

Why do people not use geothermal energy? ›

Geothermal energy isn't more used today mostly because of three reasons. First, the high costs it has compared to other energy sources. Second, the limited locations it can be installed in. And third, because of the risk of earthquakes its installation brings.

Are geothermal heat pumps expensive to maintain? ›

According to the US Environmental Protection Agency, “geothermal heat pumps are the most energy-efficient, environmentally clean, and cost-effective systems for heating and cooling.” They're predictably low-maintenance, don't burn expensive fossil fuels, and can reduce energy bills by 65% or even more.

How much does a 5 ton geothermal unit cost? ›

5 Ton Geothermal Heat Pump Cost

A 5 ton geothermal heat pump costs $20,000 to $35,000 to install. Homes around 2,500 to 3,000 sq. ft. with three, four, or five residents can use a 5 ton heat pump for adequate heating and air conditioning.

Does a geothermal heat pump increase home value? ›

Geothermal systems can raise a home's value because buyers like to purchase properties that will save them money and help protect the environment.

Do geothermal heat pumps work in hot climates? ›

While a geothermal heat pump in a hot climate would not be a bad thing, in most cases, people who live in areas with hot summers and very mild winters will not get maximum benefit. They can use air-source heat pumps and not have to worry about the units freezing over in winter.

Can geothermal pipes freeze? ›

If your earth loop is installed above the frost line, yes it will freeze, but even if you install your earth loop below the frost line, the fluid may still freeze. Freezing in an earth loop is caused by the geothermal heat pump taking heat from the loop fluid, not the winter air temperatures.

How long do geothermal pipes last? ›

The underground pipe loop section of the geothermal system is able to last up to 50 years, generally. Meanwhile, the actual unit tends to last between 15 and 20 years. If your geothermal system is older than that, consult a professional about whether or not it needs to be replaced.

How long do geothermal loops last? ›

What's the lifespan of a ground loop? Geothermal ground loops can last 50+ years — even up to 100 years! Once installed, the buried ground loop will be a permanent fixture on the property for as long as there is a building to heat and cool.

How big of a heat pump do I need for 2000 square feet? ›

If you Google “heat pump calculator,” you'll probably find a rule of thumb like this: “You need 30 BTUs of heat for every square foot of living space you want to heat or cool.” If you have a 2,000-square-foot home, this rule of thumb suggests you need a 60,000 BTU heat pump.

How many square feet does a 3 ton heat pump cover? ›

1,500 square feet: 3 tons. 2,000 square feet: 4 tons. 2,500 square feet: 5 tons. 3,000 square feet: 6 tons.

What size heat pump do I need for a 3000 square foot house? ›

Heat Pump Sizing Chart By Square Footage
Home Size:Heat Pump Size (In BTUs):Heat Pump Size (In Tons):
1,500 sq ft45,000 BTU3.75 tons
2,000 sq ft60,000 BTU5.0 tons
2,500 sq ft75,000 BTU6.25 tons
3,000 sq ft90,000 BTU7.5 tons
4 more rows

How deep does a geothermal heat pump need to be? ›

It requires trenches at least four feet deep. The most common layouts either use two pipes, one buried at six feet, and the other at four feet, or two pipes placed side-by-side at five feet in the ground in a two-foot wide trench.

How big of a yard do you need for geothermal? ›

A geothermal installation requires a team of installers to drill a 3-500 foot ground loop that's 4-6 inches in diameter in your yard.

How much does a 4 ton geothermal system cost? ›

The cost to install a geothermal heat pump 4-ton system averages about $21,000 for most homes. Total range for all systems is $12,000 to $27,000, though some large, complex systems cost more.

How much does a 5 ton heat pump cost? ›

Expect to pay between $4,500 and $8,000. Homeowners opting for a high-end 5-ton heat pump can expect to pay up to $10,000 or more. Your actual cost will primarily depend on two factors, your heat pump's capacity and it's brand.

Which heat pump has the best reviews? ›

The best heat pump brands include common names like Trane, American Standard, Carrier, Bryant, Payne, Armstrong Air, Lennox and a few others. Those are the first tier in terms of quality. There is a second tier worth considering when buying a heat pump. It includes well-known brands like Rheem, Heil and Amana.

Can I heat my whole house with a heat pump? ›

A whole-house heat pump can provide heating and cooling for your entire home, making it a great choice for those who want an energy-efficient solution.

Do ground source heat pumps use a lot of electricity? ›

A ground source heat pump can deliver 3 to 4 kilowatts (kW) of heat for every 1 kW of electricity it consumes. Using freely available heat energy from the ground, it achieves higher efficiencies than any other heating system.

Are ground source heat pumps cheaper to run? ›

Advantages of Ground Source Heat Pumps – Pros and Cons

Heat pumps are much cheaper to run than direct electric heating. They are cheaper to run than oil boilers and can be cheaper than running gas boilers. Because heat pumps can be fully automated they demand much less work than biomass boilers.

Do heat pumps use a lot of electricity? ›

Heat Pumps will raise your electricity bill – but lower your costs for other heating fuels. Each single unit (often referred to as a one-to-one) heat pump that is used daily will increase your electricity bill by $50 to $100 per month.

How much electricity does a heat pump use UK? ›

For every 1 kWh of electricity, an air source heat pump can produce 3kWh of heat. The average annual demand for most homes in the UK is at 12,000 kWh. At 4,000 kWh of electricity priced at £0.13 a unit, it will cost you around £520 in annual heating costs.

Why is my heat pump bill so high? ›

Improper maintenance of your heat pump could lead to a 25 per cent increase in your energy bills. Blocked and dirty filters reduce the amount of airflow that can pass through the system and may harm performance. It's also worth checking the fan regularly to ensure there isn't any debris, such as leaves, stuck in it.

Does geothermal increase electric bill? ›

Your electric usage will increase with geothermal, but that additional cost won't be divided equally throughout the year. Your electric bill will likely be lower in the summer than you paid previously. You'll be spending less money overall than when heating with oil or propane – even with an increased electric bill.

What temperature does a heat pump work down to? ›

It is important to note that the vast majority of air-source heat pumps have a minimum operating temperature, below which they are unable to operate. For newer models, this can range from between -15°C to -25°C.

Is a geothermal heat pump worth it? ›

As stated by the U.S. Department of Energy, investing in a geothermal heat pump can mean a 25% to 50% decrease in energy consumed compared to traditional systems that use air. In addition, your geothermal system can be as much as 300% to 600% more efficient, making this a great HVAC investment long term.

Which is better heat pump or geothermal? ›

According to the EPA, a geothermal heating and cooling system can reduce energy consumption and corresponding emissions by more than 40 percent as compared to an air-source heat pump, and by over 70 percent as compared to standard heating and cooling equipment.

What is better than a heat pump? ›

A gas-fired furnace generally has a longer lifespan than a heat pump. Furnaces with proper maintenance can last 20 years or more.

How much does a heat pump cost to run per hour? ›

A plug-in electric heater will cost you 26 cents/kWh, while a heat pump will cost you 8.5cents/kWh.

How many hours a day should a heat pump run? ›

Typically, a heat pump should cycle two to three times an hour. The heat pump should stay on for 10 to 20 minutes during the cycle. However, during cold outside temperatures (below 30-40 degrees), a heat pump will constantly run to maintain the home temperature.

What is the best heat pump for cold weather? ›

Based on our research, the best cold climate heat pump is Mitsubishi's Hyper-Heating, or H2i. Listed as Mitsubishi's M-Series or P-Series for home installation, these heat pumps maintain their full heating capacity down to 5F, and can produce useful heat down to -13F.

How can I heat my house cheaply? ›

The cheapest way to heat a room
  1. Gas central heating. There's a good reason why many houses have gas central heating installed – it's the cheapest option. ...
  2. Oil-filled heaters. ...
  3. Electric heaters. ...
  4. Change your energy supplier or tariff. ...
  5. Reflect the heat. ...
  6. Fit thermal curtains. ...
  7. Insulate your attic. ...
  8. Carpet the floor.
4 Sept 2022

Is a heat pump cheaper to run than gas? ›

Instead, they move existing heat energy from outside into your home. This makes them more efficient. Since they deliver more heat energy than the electrical energy they consume. So a heat-pump system can cost less to run than a traditional fossil fuel heating system.

Do heat pumps work with radiators? ›

Yes. Heat pumps can be used to heat buildings either with underfloor systems, with radiators or a mix of both. While underfloor systems are often used on lower floors, it might be that your preferred choice for heating upstairs is radiators.

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