Growth in the geothermal heating and cooling market averages 12% annually, as demand continues to rise for highly efficient HVAC systems that leverage sustainable energy.
Today, Geo system pricing is more competitive than it was a decade ago because there are many more manufacturers selling ground-source heating and cooling systems and there are more experienced installers competing for projects.
The current national average cost ranges between $20,000 and $28,000 for the installation of a new mid-range Geo heat system. This is before the 26% federal tax credits for the geothermal home energy efficiency upgrades that were recently extended by congress through the end of 2022. The federal tax credit rebate amount will be reduced to 22% in 2023.
On a wider pricing range: Most homeowners can expect to pay between $20,000 and $36,000 for a complete mid-range geothermal heating and cooling system fully installed, before the 26% federal tax credits. This wider range captures 80% of all residential Geo installations.
High-end ground-source heat pump systems for larger homes can cost as much as $30,000 to $48,000.
The size of your home and its location, available land, the type of soil, local climate, condition and usability of current duct work, and the type of heat pump you choose will impact the overall cost.
Let’s itemize the cost of a geothermal heat pump system in the following table:
|Equipment||Equipment Cost||Total Cost with
|Total Cost with
|Packaged Water to Air Heat Pump*||$3,500 to $8,000||$15,000 to $25,000||$17,750 to $28,000|
|Split Water to Air Heat Pump||$4,250 to $8,500||$16,250 to $28,000||$18,500 to $30,000|
|Packaged Water to Water System**||$4,500 to $9,000||$18,250 to $30,000||$20,500 to $36,000|
* Water to air systems are forced air systems. In winter, heat is collected with water circulating through the pipes in the ground and transferred to air being forced by a blower fan through your home’s ductwork.
The opposite occurs in summer. Heat is collected from the air in your home, transferred to the water in the pipes, which are then cooled by stable ground temperatures.
** Water-to-water systems are hydronic systems. Heat is transferred between the water in the loop system and water in an indoor radiant heat floor system or baseboard heat system.
Did you Know? Geothermal heat pumps are called ground source heat pumps or GSHPs.
GSHPs collect heat from the ground to heat your home and disperse (dump) heat underground when cooling it. The term distinguishes them from air source heat pumps or ASHPs that collect and dump heat using the outside air.
As you can see from the table, most of the cost is in the installation of the loop system. There are two common loop system types:
Horizontal loops systems feature a series of coiled plastic (HDPE) pipe laid in horizontal trenches dug deep enough to avoid freezing and take advantage of the consistent year-round temperatures not far below the surface.
Horizontal loops systems have lower installation cost, but they require a plot of land sufficient for 3-5 trenches 130 to 160 feet long and 12 to 20 feet apart. Water or antifreeze circulated through the pipes collects heat for heating in the winter and dumps heat for air conditioning in warm months.
Vertical loop systems are installed where horizontal trenches aren’t possible due to a lack of space. A series of wells are dug, and the pipe loops are installed in the wells.
The wells often are deep enough to hit water, which is not a problem. Water or antifreeze is circulated through the pipes for heating and cooling, as it is in horizontal loop systems.
Loop systems submerged in a pond or other body of water are installed too, at comparable costs. But they are not an option for most homeowners.
Pro Tip: Beware of online geothermal heating and cooling system cost estimates. Most are far too low.
Many quote US Department of Energy information that says, “An average geothermal heat pump system costs about $2,500-$3,000 per ton of capacity.
If a home requires a 3-ton unit, then it would cost about $7,500-$9,000.” That’s the figure these estimators give for the entire system installed. It’s not accurate.
The DOE guide gives that price for the heat pump equipment only, and then says, “plus installation and drilling costs” on top of the $2,500-$3,000 per ton for equipment.
The drilling or excavation required and installation cost for the system accounts for 55% to 75% of the total cost! In short, $7,500-$9,000 for the equipment becomes a minimum of $16,500-$20,500 for the total installed cost of the system.
It’s also worth noting that some geothermal heat pumps cost as little as $1,500-$2,000 per ton of capacity.
This guide contains current, rather than outdated, costs for equipment and installation.
That said, here is the DOE Guide to Geothermal Heat Pumps (PDF). It includes a lot of sound information those new to geothermal technology might find useful.
Your GSHP price will be determined by:
Size/capacity – The larger it is, the more it costs. Residential units range from 2.0 ton/24,000 BTU to 10.0 ton/120,000 BTU. Most homes require a unit between 2.5 and 5.0 tons.
Type – Your options are a packaged water-to-air system ($$-$$$), split water to air system ($$$-$$$$) and water-to-water system ($$$$).
Loop type – Horizontal loops are more affordable than vertical systems
System efficiency – Currently, efficiency ranges from a low of about 15 EER to a high of more than 30 EER for cooling. COP ratings are about 3.0 to more than 5.0 for heating. Higher = more efficient.
Performance – Most brands make single-stage ($$-$$$) and two-stage ($$$-$$$$) components for water-to-air systems.
Some like WaterFurnace make variable-stage ($$$$) models. Two-stage and variable models often have variable-speed blower fans.
Features – Popular features include domestic hot water (DHW) production in addition to heating and air conditioning and WiFi monitoring and control.
Pros and Cons
Here are the advantages and disadvantages of geothermal heating and air conditioning systems compared with other options.
What we like:
Efficiently eco-friendly: Geothermal systems are much more efficient (up to 40+ EER) than standard air-source heat pumps (up to 17 EER) and moderately more efficient than most ductless heat pumps (up to about 20 EER). Here are the EnergyStar’s most efficient geothermal heat pumps.
Low operating costs: Less energy use means lower utility costs.
Short payback period: While upfront cost is high, the DOE says the extra cost compared with air source heat pumps is 5-10 years.
Renewable energy: Geothermal takes advantage of constant ground temperatures between 45F and 55F for heating and cooling, so fossil fuel-produced electricity is only needed to run the circulation pump and fan. Even that need can be eliminated with the use of photovoltaic solar energy.
In-floor and baseboard systems: Hydronic systems are available with geothermal, but not with air source heat pumps.
Retrofit options: When replacing a traditional forced air system or radiant heat system, your current ductwork or in-floor/baseboard system can probably be used. Only slight modifications might be needed.
DHW production: They can produce domestic hot water for your home with installed accessories including a storage tank (an extra cost).
Federal credits: Current tax credits for geothermal systems are 26% of the entire cost for equipment and installation. That means with the credit, the cost of a $20,000 system is effectively reduced to $14,800. The credit is reduced over the next few years though. Here are the details from the DOE.
State and local assistance: Most states, some cities and many energy companies offer rebates, grants, loans and other types of incentives for the installation of geothermal systems.
Search for incentives where you live on the Database for State Incentives for Renewables and Efficiency.
Durability: GSHP equipment can be expected to last 20-25 years with normal maintenance. Loop system longevity is 40-60 years.
Wireless: Most brands make systems that can be monitored and controlled with a smart device and app.
Quiet operation: Most GSHPs run at 40-48 decibels while air source heat pumps range from about 54 to more than 70 decibels.
What we don’t like:
Initial cost: While costs are much more competitive with other system types than they were 10+ years ago, geothermal systems still cost significantly more than your other HVAC options. See the table below for comparison.
Loop repair cost: Loop damage that causes a leak is rare. If it does occur through frost, tree roots or shifting ground, finding the leak is difficult, and making the repair is expensive.
Some inexperienced installers: We noted that there are more qualified geothermal system installers than ever before. However, as the popularity of these systems grows, inexperienced installers are vying for a piece of the market.
Pro Tip: Because there are a growing number of installers, many without the experience needed to do the job properly.
We recommend that you get written estimates from several installers. Check their certifications and experience before hiring a contractor.
Geothermal System Cost Comparison vs. Peer HVAC Systems
The table below shows average costs for the most common types of heating and air conditioning systems. Annual operating costs are included for comparison:
|System Type||Average Cost||Operating Cost|
|Mini split air source||$12,250||$1,380|
|Standard air source||$8,600||$1,840|
|Your annual costs will vary based on the efficiency of the system you choose, the size and condition of your home and local climate factors.|
Who Should Consider a Geothermal System?
Here are factors to consider when deciding if a ground source heat pump system is right for your situation.
Environmental concerns: If reducing your carbon emissions is a top priority for you, then geothermal is the best way to do it, perhaps powered by solar where that is an option.
Plans to stay or move: The longer you intend to stay in your current home, the more cost-effective a geothermal system is in the long run.
Space in the landscape: Your upfront cost will be lower if you have room in your yard for a horizontal loop system.
Climate and payback: The more extreme heat and/or cold in your climate, the faster you will recoup your investment through lower energy costs.
Retrofit costs: If a ground source system can be fitted with your current ductwork or hydronic system with little or no modification, your costs will be lower than if major changes must be made.