Geothermal cost vs. conventional HVAC systems

While geothermal works everywhere, it’s most cost-effective when the only energy options are all-electric and/or propane. Considerations include climate, cost of energy, type of ground heat exchanger, whether there is qualified contractor in your area, and experience of local regulators (those who issue construction permits).

In California, for example, cost efficiencies vary widely depending on the climate and types of available conventional energy. California has 16 different climate zones, and the deep earth temperatures range from 48 deg F in the Sierra Nevada mountains to 76 deg F in some areas of southern California. There are also pockets of hot water geothermal in the state that may reduce the viability of a ground heat exchanger. In colder climates where propane is used for heat, geothermal is more cost-effective than in milder climates where lower cost natural gas is available.

Geothermal installation costs, tax credits and utility company incentives

Many factors will affect the installation cost of a residential geothermal system, but a typical system will cost 2-3 times as much to install as a conventional HVAC system. However, tax credits and utility company incentives can reduce initial installation costs. Click here for a list of credits and incentives.

For a non-residential system, the following table will give you a rough estimate of costs:

Installed Costs (US Estimated Range 2009)

Geothermal Vertical $16 to $23 per sf
Geothermal Horizontal $13 to $17 per sf
Geothermal Surface Water $13 to $16 per sf
Geothermal Vertical / Hybrid
$14 to $18 per sf
VAV – Water Cooled w/ Boiler $16 to $20 per sf
VAV – Air Cooled w/ Boiler $14 to $18 per sf
Fan Coil WCC w/ Boiler $12 to $16 per sf
Fan Coil ACC w / Boiler $12 to $16 per sf
Rooftop Gas / Electric $10 to $16 per sf

Maintenance Costs (Estimate 2009)

Geothermal Vertical
$.11 to $.22 per sf
Geothermal Horizontal $.11 to $.22 per sf
Geothermal Surface Water $.11 to $.22 per sf
Geothermal Hybrid – Tower $.18 to $.30 per sf
VAV – Water Cooled w/ Boiler $.25 to $.40 per sf
VAV – Air Cooled w/ Boiler $.20 to $.35 per sf
Fan Coil WCC w/ Boiler $.25 to $.29 per sf
Fan Coil ACC w / Boiler $.20 to $.25 per sf
Rooftop Gas / Electric $.35 to $.55 per sf

Cost estimates courtesy of FHP

Geothermal Heat Pumps

How Geothermal Works

Geothermal Cost

Types of Geothermal Systems

Find Rebates / Tax Credits

Federal Tax Incentives for Residential Geothermal Heat Pumps

Federal Tax Incentives for Commercial Geothermal Heat Pumps

Resources & Links


Hiring an engineer vs. a mechanical contractor

If you have a standard-size home (about 2000 sf) or small business, there is a good chance that a qualified mechanical contractor can provide both the design and installation costs in a single price or quote. In California, it is legal for mechanical contractors to “sign” their own designs provided that they are building that particular design. For states outside California, check with your state board of professional engineers to find out whether you need to hire an engineer to design your system. To find a qualified contractor, click here.

If you want to put your project out for bid, you’ll need to hire an engineer to design a system that can be permitted by your local regulators and built by a qualified contactor. For information about working with Meline Engineering, please contact us at (916) 366-3458 or me_info@meline.com.