Save Money with a Geothermal Heat Pump

One of the houses we looked at this summer had a geothermal heat pump, something the realtor saw as a big selling point. I didn't know anything about them so it didn't really mean anything to me at the time. But since then, I've studied a bit about them and I recently found an article on them in This Old House magazine. It seems like they can both save money and help the environment, so I thought I'd post on what I know about them.

We'll start with this overview from Wikipedia which says:

A geothermal heat pump system is a heating and/or an air conditioning system that uses the Earth's ability to store heat in the ground and water thermal masses. This system will take advantage of a land mass as a heat exchanger to either heat or cool a building structure. These systems operate on a very simple premise; the ground, below the frost line, stays at approximately 50 °F (10 °C) year round and a water-source heat pump uses that available heat in the winter and puts heat back into the ground in the summer. A geothermal system differs from a conventional furnace or boiler by its ability to transfer heat versus the standard method of producing the heat.

So basically, it's easier for a geothermal heat pump to heat in the winter and cool in the summer because it's using 50-degree water as a base. Compare this to trying to get heat from 10-degree air or cooling from 90-degree air (something conventional heating/cooling systems have to battle with), and you can see why the geothermal heat pump has such an advantage.

In addition, a geothermal heat pump is much quieter (the equipment is usually in the basement, like other systems, but the rest is buried underground -- nothing to make outside noise) as well as better for the environment (This Old House says it reduces greenhouse gas emissions by the equivalent of planting 750 trees or taking two cars off the road.) But let's get down to brass tacks. How does it stack up financially? More from Wikipedia:

The initial cost of installing a Geothermal Heat Pump system can be two to three times that of a conventional heating system in most residential applications, new construction or existing. In retrofits, the cost of installation is effected by the square footage of living area, the home's age, insulation characteristics the geology of the area, and location of the home/property. For new construction, proper duct system design and mechanical air exchange should be considered in initial system cost. These systems can save the average family from 400-1400$/year, reducing the average heating/cooling costs by 35-70% per household. The cost of installation may be reduced by many governmental programs which all the home owners use to reduce their taxes at the end of the year.

This Old House uses the following numbers:

• Installation cost: $15,000-$20,000
• Savings to heating/cooling bills: 30 to 70%
• Break-even point: Seven to eight years (according to an Air Force Institute of Technology study)

Of course, the actual payback depends on your power usage as well as your local utility rates. Still, even a 10 to 12 year payback would seem pretty good to me.

My main thought was "what happens if this unit breaks down somehow -- much of it is underground, wouldn't it be costly to repair?" I'm guessing the answer is "yes" to this, but This Old House says the units rarely need repairs -- and the parts that do are the ones inside the house, not the ones buried in the yard.

Supposedly, only 47,000 geothermal heat pumps were installed last year -- a small fraction of all heating/cooling systems. Anyone out there have one or have experience with one? I'd sure love to hear your thoughts.

If you want to read more about geothermal heat pumps, check out the Wikipedia article above (with cool pictures) as well as this one.

Comments

[PaulD]

You might want to investigate a high-efficiency heat pump combined with a gas furnace that operates only on very cold days when heat pumps become inefficient. For my home, the heating and cooling savings are significant and the initial costs are much lower.

[George]

We use one of these at our home. It was the best investment, outside of our solar panels, we could have ever made. Right now, the payback will will be in about 10-12 years. But thats assuming energy prices stay flat, which is obviously not going to occur.

[Matt]

They were installing these on Dirty Jobs last night for new home construction - of course Mike got blasted with a ton of mud, but it was interesting to see how they installed them.

[Money Blue Book]

Interesting...never heard about it before. I don't know anyone who has solar panels either. I'm thinking most of these houses must be located out in the countryside or somewhere in the midwest..
-Raymond

[FMF]

MBB --

The one I saw was in Michigan.

[DaveW]

I have one and love it. Cost about $15K to install 3 years ago. That included 5 wells for the water pipes, so it would never cost that much to repair/replace. My highest electric bill was $180, and that was during the summer. Typically it's about $140 every month. My house is 3200 sq/ft and is all electric, so those bills include hot water, dryer, etc. I figure my pay back to be 7 years or so. Also - I don't use any set back at night or when we're at work, and we keep the house at 71 degrees in the winter. We're in Northern Ohio so it gets quite cold. Everyone else has their furnaces set to 65 degrees and they're still getting $350/month heating bills.

[Kevin]

The first I ever read about it was a piece by Malcolm Gladwell. He raises some good points both pro and con:

http://gladwell.typepad.com/gladwellcom/2006/08/the_case_for_ge.html

[segfault]

A standard electric heat pump (air conditioner with reversing capability) is still more efficient than gas, at a much smaller cost. The dual-fuel setup (gas furnace plus standard heat pump) that was mentioned above doesn't cost much more than a standard furnace/air-conditioner setup.

That said, I live in an area of the country with extremely low electricity prices, and I have an all-electric setup. If the heat pump can't keep up, the less-efficient (but more powerful) electric heating strips kick in.

[Elaine D]

We installed a closed-loop geothermal unit in 2005 in Pennsylvania. Cost: about $14,500. 1st year savings were about $2,800 over our old oil furnace at the $2.29 per gallon price oil was when we got it up & running. It should pay for itself in 5.17 years. Our unit has a desuperheater that removes the heat from the house in the summertime and heats our hot water with it - the water heater is completely off all summer. We love it. The systems also are supposed to last longer than conventional oil, gas systems, etc. The warranty is for 25 years, but 50 years, they say, is not atypical. Wish more people would explore it as a way to reduce dependence on oil & non-renewable resources.

[akb]

Recently as part of the stimulus package a 30% federal tax credit for installation of these systems was put in place. That would cut the payback period substantially.