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Cost of Geothermal Heating Systems:

A geothermal heating system can save you a lot of money on energy costs while benefiting the environment. You will want to install one almost immediately. Until you hear the costs. A geothermal system costs so much that you will be tempted to forget the whole idea.

Cost of Geothermal Heating

Cost of Geothermal Heating

So, how much does it cost to install a geothermal heating system?

Conventional forced-air HVAC systems cost about $3,000 per ton of heating or cooling capacity for a new house. Average homes typically use between two and five tons.

Geothermal systems start at about $5,000 per ton and can go as high as $7,500 or $9,000 per ton. The price varies depending on the type of loop system, equipment used and the cost of labor.

Since more work is required to install geothermal systems, this also changes the initial installation cost. Drilling and costs follow the same path.

The industry has experienced severe fluctuations in recent years. Nearly every part used to install an HVAC system has undergone price increases. Building code modifications now demand higher equipment performance, duct systems require greater insulation values and a number of other details that influence the bottom line.

Prices of refrigerant continue to rise. So do fuel costs, labor rates, managing costs, etc.

As a rule of thumb, in Southern Ontario, an average home of 2300 square feet, with a heating load of 80,000 BTU and a cooling capacity of 60,000 BTU will cost between $22,500 to $29,000 to install.

The cost to install a geothermal heating system can differ widely.

Many systems are feasible. The refrigerant could be distributed directly through the ground loop, or we can circulate air through larger underground pipes. We could also use groundwater from a well, and return it back to the ground through another well.

Groundwater systems are also known as open-loop; as opposed to the more typical closed-loop systems.

Of the closed-loop systems, distribution pipes can be run horizontally or vertically, or even laid on the bottom of a deep pond. Of these closed-loop systems, the pond is the least expensive. On the other hand, vertical systems are frequently the most expensive. Vertical loops can run as much as $25,000.00 or more by themselves.


Courtesy of CTV News

Before jumping into Geothermal Heating  Systems, do the math.

Don’t rely on somebody else to do the math, unless that person has your best interests at heart. If you already have a gas forced air heating system in place, your costs will be lower. If all you have are baseboard heaters, it can still be done, but the costs will be much higher.

The easiest way to judge system conversions is simple payback. Take the total cost of the conversion and divide it by the annual savings. Both systems (standard and geothermal) will require ducting and electrical, so leave these out of the estimate.

As a reference, you can use the following figures given by the “Ontario Contractor’s Association” and “Geothermal Systems LLC” – Jan 2014.  Figures relate to a newly constructed single-family home; 2300 sq.ft. bungalow.

  • High-efficiency gas furnace supply and install  $5,500.00 – $6,500.00
  • Air Conditioner $3,000.00 – $3,500

Total installed cost for standard install: $8,500.00 (low), $10,000.00 (high).

  • Geothermal Heat Pump $10,000.00 – $15,000.00
  • Pond Ground Loop $9,500.00 – $10,500.00
  • Horizontal Ground Loop $12,000.00 – 15,000.00
  • Vertical Ground Loop $19,200.00 – $25,000.00

Total installed cost of geothermal heating system: $19,500.00 (low), $40,000.00 (high).

If we take the lowest figures and calculate the difference, cost for geothermal heating system is about $11,000 more ($19,500 – $8,500 = $11,000).

If the difference translates to 50% annual energy savings (approx. $1,500.00), it will take nearly 7.5 years to pay for itself. If, on the other hand, we take into consideration the highest figures and calculate the difference

Payback = ($40,000 – $10,000) / 1500 = 20 years

Simple payback of 20 years may not sway you the geothermal way, especially if you learn that as a reference, most utility companies use a 9-year payback as the cut-off point. The lower the payback, the higher the priority.

Clip Art Graphic of a Yellow Residential House Cartoon Character

Now consider the effects of installing a geothermal system (These facts can be found on various websites)

  1. There are around 1,000,000 geothermal systems installed in the US and Canada to date, saving more than 21,000,000 barrels of crude oil each year!
  2. Installing a geothermal system has the same effect on the environment in greenhouse gas emission reductions to equal planting an acre of trees!
  3. Replacing an existing fossil fuel burning appliance further reduces Co2 emissions and reduces our dependency on foreign crude.
  4. Safe and Clean – No flame, no flue, no odors, and no danger of fire or carbon monoxide. High-efficiency filters remove dust and pollen to improve indoor air quality
  5. Quiet operation – A super-efficient compressor and soft-start, variable-speed fan make the system so quiet that many people find themselves checking to make sure the system is actually on.
  6. Comfortable – Provides precise distribution of warmer air in winter. Gone are the uneven temperatures experienced with ordinary furnaces. In the summer, you get central air conditioning with better dehumidification.
  7. Flexible – Heating, central air conditioning, and domestic hot water — three systems: all from the same compact unit.
  8. Environmentally Friendly – The system emits no carbon dioxide, carbon monoxide, or other greenhouse gasses that are considered to be major contributors to environmental air pollution.
  9. Attractive – The completely self-contained unit is maintained indoors. There is no need for noisy, unsightly, outside condensing equipment.
  10. Reliable – Microprocessor controls and state-of-the-art components allow smooth operation and years of maintenance-free service.
  11. Much lower operating costs than other systems. A geothermal heat pump will immediately save you 30 to 60 percent on your heating and 20 to 50 percent on your cooling costs over conventional heating and cooling systems.
  12. Uses clean, renewable energy (the sun). With a geothermal heat pump, there’s no onsite combustion and, therefore, no emissions of carbon dioxide, carbon monoxide or other greenhouse gasses. Nor are there any combustion-related safety or air quality issues inside the house. (However, the pump unit uses electricity, which may be generated using fossil fuels.)
  13. It can be installed in both new construction and retrofit situations. However, it’s a lot more expensive in retrofits requiring ductwork modifications.
  14. Much quieter than other cooling systems. There’s no noisy outdoor compressor or fan. The indoor unit is as loud as a refrigerator.
  15. Low maintenance and long-lived. The indoor components typically last about 25 years (compared with 15 years or less for a furnace or conventional AC unit) and more than 50 years for the ground loop. The system has fewer moving parts and is protected from outdoor elements, so it requires minimal maintenance.

These are just a few of the many benefits of geothermal systems. Now, do these systems make sense?

Please click here to download Buyers Guide Geothermal Systems from Natural Resources Canada 


1 Comment
  1. Considering the maintenance cost and other costs, the conventional Force-Air HVAC system seems to be perfect for my job.
    Conventional force-air HVAC systems cost about 3,000 3,000,000 per ton of heating or cooling capacity, and geothermal systems start at about $ 5,000 per ton and cost 7 7,500 or ,000 9,000 per ton.

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