Economics of Geothermal Heat Pumps

DOE logoAlthough the purchase and installation cost of a residential geothermal heat pump (GHP) system is often higher than that of other heating and cooling systems, properly sized and installed GHPs deliver more energy per unit consumed than conventional systems. For further savings, GHPs equipped with a device called a “desuperheater” can heat household water. In the summer cooling period, the heat that is taken from the house is used to heat the water for free. In the winter, water heating costs are reduced by about half.

Depending on factors such as climate, soil conditions, the system features you choose, and available financing and incentives, you may recoup your initial investment in two to ten years through lower utility bills. And — when included in a mortgage — your investment in a GHP will produce a positive cash flow from the beginning. For example, if the extra $3,500 cost of the GHP will add $30 per month to each mortgage payment, the energy cost savings will easily exceed that added mortgage amount over the course of each year.

On a retrofit, the GHP’s high efficiency typically means much lower utility bills, allowing the investment to be recouped in two to ten years. It may also be possible to include the purchase of a GHP system in an “energy-efficient mortgage” that would cover this and other energy-saving improvements to the home. Banks and mortgage companies can provide more information on these loans.

There are also special financing and incentives available to help offset the cost of adding a GHP to your home. These provisions are available from federal, state, and local governments; power providers; and banks or mortgage companies that offer energy-efficient mortgage loans for energy-saving home improvements. Be sure the system you’re interested in qualifies for available incentives before you make your final purchase.

Source: U.S. Department of Energy, Choosing and Installing Geothermal Heat Pumps