Geothermal heating and cooling systems use the temperature beneath the earth to regulate the climate in both homes and businesses. If you are interested in purchasing such a system, you are likely aware how they work in general, and this site is not intended to a technical description of their operation. This is intended to be a simple consumer resource to help understand the benefits of having a geothermal system installed in your home or business.
Heating and cooling generally account for 44% of your utility bill. Geothermal heating and cooling systems can save anywhere between 40-70% of your heating and cooling costs. So where does that put the savings?
If your monthly electric bill is $350/month (which is the U.S. average as of January 2009), then you are paying around $154/month for climate control. A geothermal heating and cooling system will save the average consumer between $62-108/month, or $744-1296 annually.
Those living in areas with high utility rates, or with larger homes/businesses, stand to save significantly more. A person with a utility bill of $600/month will save between $1267-2217 annually, while an $800/month bill jumps to $1690-2957 in savings each year. Bear in mind this assumes that utility rates never rise. In reality, the savings from a geothermal system are likely to increase each year.
In addition, the Stimulus Bill signed on February 17th, 2009 lifts the $2000 limit on the 30% tax credit for those who chose to install geothermal heating and cooling systems in 2009 or later. This means that if you install an $18,000 geothermal system in your home this year, you receive a $5400 tax credit. Remember, tax credits are a dollar for dollar reduction in tax liability. Many state governments and utilities also offer rebates for installing a geothermal system.
Geothermal systems are, however, a long term investment. If we use the example of an $18,000 installation, and a $600/month utility bill, you will, on average, recoup $7100 of the cost in the first year from the tax credit and energy savings. This leaves $11,900, which will take about 7 years to equal in savings. If you are in a 30 year mortgage, the annual savings on utility costs is likely to exceed the cost of the additional loan. Additionally, a geothermal system adds value to the home, so that selling after one year will likely net a profit over the installation costs.
A geothermal heating and cooling system can be a smart, eco-friendly, and profitable investment. After contacting a local installer for a quote, ask your financial institution to help crunch the numbers to see exactly what you stand to save each month compared to the cost of the loan.