In this guide

How Does Geothermal Heating Work?

Geothermal heat pumps use the fact that Earth remains a fairly constant temperature year-round. In the summer, it is cooler beneath the surface, and in the winter, it is warmer.

The system uses a series of coils that spread beneath the Earth’s surface. They carry refrigerant through the coils, exchanging heat. In the winter, they take warmth from the ground and compress it, raising its temperature. This heat is distributed through a heat exchanger that creates forced hot air or hydronic heating, efficiently warming your home. In the summer, the system runs in reverse, taking the heat from your home and depositing it in the earth, where it cools down.

The system uses electricity to operate, but much less than other HVAC systems. Only the fan and compressor run on electricity, while the actual energy used to heat and cool your home comes from the earth.
This is different from geothermal energy, which creates electricity from inside the earth.

Geothermal Heat Pump Costs by Type

The type of geothermal system you install depends on whether this is new construction or a retrofit, how much land you have, what surface soil you have, and whether you have an aquifer or lake near your home.

There are two basic systems - closed and open loop. Closed-loop systems are the most common. Open loops may only be installed in very specific circumstances, so they are much less common and rarely installed.

Open Loop Geothermal Heat Pump

An open-loop system is less expensive to install, but it is rarely done. It requires a sufficient amount of groundwater - at least 7.5 gallons per minute. It uses this water directly to heat and cool your home, taking water in, heating or cooling it, then dumping the water out again. There are no pollutants, but most municipalities do not allow the water to be dumped out again, so they do not allow this type of system. It costs between $9,000 and $15,000 if you already have a well. There are additional costs if you need to drill a well.

Closed Loop Geothermal Heat Pump

Closed-loop systems operate in one of three basic methods - horizontal in-ground, vertical in-ground, and lake loop installations. In a closed loop, refrigerant or water is continuously circulated through the system - it does not take in or dump liquid at any time during its operation. It does not need an aquifer to work like the open-loop system, so you have more options for installation. It costs more with a range of $12,000 - $30,000 on average, depending on the type of closed-loop system you have.

Pond/lake Closed Loop Systems

If you have a pond or lake on your property and it is deep enough to handle the coils placed at least 6 feet below the surface at all times, you can install your system for slightly less money. Pond or lake closed-loop systems do not rely on drilling, so you often have lower costs. They take energy from the lake water, but unlike an open-loop system, this system uses refrigerant. Not every property with a lake or pond is eligible for this system, so check with your local authority to find out if your home qualifies. They cost between $12,000 and $15,000 on average.

Horizontal Geothermal Heat Pump

Horizontal closed-loop systems are one of the most common if you have enough space because they are very efficient and less expensive to install. They require a lot of space - about 400 feet per row to install the coils underground. But because they do not need to go down much deeper than the frost line, they are less expensive to install than vertical systems. However, the larger the system, the larger the area needed, and the colder the climate, the deeper it needs to go, increasing the total price. Horizontal systems cost between $12,000 and $25,000 on average.

Vertical Geothermal Heat Pump

Vertical systems take up less space than horizontal, burying the coils much deeper into the earth. Typically, several wells are dug, and the coils are sunk into the wells, connecting the bottom. So, they are installed in smaller footprints and smaller yards. They are also a good choice if the topsoil layer is not conducive to horizontal installations. Because of the drilling required, they tend to cost between $15,000 and $30,000 on average.

Heat Exchanger vs Direct Exchange

Closed-loop systems operate in two ways - a heat exchanger changes refrigerant for an antifreeze solution with flexible plastic tubing or a direct exchange system circulates the refrigerant through copper tubing. For direct exchange systems, the lack of a heat exchanger is made up of a larger compressor and the higher cost of copper, making costs about the same between the systems. Direct exchange is best in moist soil areas, while heat exchangers are best for corrosive soils that do not support copper.

Heat Pump Package Unit vs Split System

When you purchase your heat pump, the area where you plan to install it may influence the type of system. If the area is easy to access and has room for the entire unit in one space - two heat exchangers and a compressor - then purchase a packaged unit. This is less expensive and easier to install because the entire unit comes together, factory welded.

If you do not have room for all three pieces to be installed together, you need a split system. Split systems need to be connected and welded on-site, so they tend to cost more but provide more flexibility in where the components are installed.

The cost for a packaged unit is around $3,300 to $8,000, while the price of a split system is between $3,850 and $8,000. The real added cost comes during installation - expect to pay around $3,000 more to install a split system.

Water-to-air Heat Pump or Water-to-water Heat Pump

Your geothermal heat pump heats your home using forced hot air or forced hot water. The type of heat pump needs to change based on how it heats your home.

Water-to-air heat pumps use heated liquid inside the system to heat forced hot air that runs through your ducts. Water-to-water heat pumps use the liquid heated in the system to heat the water that runs through your hydronic heating system to your radiator or radiant floor heating.

Water-to-water systems are more complex and cost more to purchase and install. The system itself costs between $4,000 and $8,000 and roughly $2,000 to $4,000 more to install than a water-to air-system, which costs $3,300 to $7,500 for the system.

Geothermal Heat Pump Size

Like any HVAC system, heat pumps come in several sizes, usually sold as tons. A 1-ton system is equal to roughly 12,000 BTUs, so if you have a current system that uses 48,000 BTUs, you need a 4-ton geothermal heat pump.

While several factors go into determining the system size you need, calculate a basic approximation by either checking your current system size or determine your climate zone and the amount of space in square feet you need to heat.

Find your climate zone by consulting this U.S. climate zone map.

Because heat pumps heat and cool your home, the system size needed varies greatly depending on where you live. To determine the size of the system you need, multiply the square feet of your home by the number of BTUs required by your zone.

Each ton is equal to 12,000 BTUs, so assuming a 2,000 sq.ft. home, it needs the following tons based on climate:

Because heat pumps both heat and cool, you need to size up for very hot or very cold climates to meet the demands of the space. While furnaces only get larger in cold climates, heat pumps need to be large enough to handle the needs of very hot weather.

Heat Pump Compressor Cost by Type

The compressor is an important part of your geothermal heat pump system. It raises the temperature of the ground energy to effectively heat your home.

They come in three different types, which impacts the system cost, how well the system works, and how efficient it is.

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Single-stage Compressor

A single-stage compressor is the cheapest but the least efficient and comfortable of the three types. It runs at one constant speed at all times, meaning it may run at a higher speed than necessary, using more electricity. Because it turns on and off more quickly, it produces cold and hot spots in the house. These units cost between $2,300 and $3,400.

Dual-stage Compressor

A dual-stage compressor runs at low or high speeds depending on the need. During more moderate times of the year, it runs at low speed, only going to high when needed. This makes the temperature consistent and lowers energy bills without hot and cold spots. Expect to pay between $3,100 and $5,400.

Variable-stage Compressor

A variable-stage compressor has multiple stages it switches between, so it runs at just the right speed for the temperature required. Therefore, it is much more efficient and produces more even temperatures. But some people in colder and hotter climates find that it does not save enough on energy bills to offset its higher cost. They cost around $4,000 to $7,000 on average.

Cost to Install a Geothermal Heat Pump

Most of the expense - roughly 50% to 75% depending on the system - comes from the installation. This is because it is extremely labor-intensive and requires a great deal of equipment to excavate, lay the pipes, weld the system shut, fill it with refrigerant, and then hook it up to your ducts or hydronic heating system. If you need ductwork or new radiators as well, this increases costs even more.

The cost to purchase and install the entire system is between $12,000 and $30,000 for most homes, with installation making up roughly $7,000 to $22,000 of that cost. The system and supplies make up the rest of the price.​

Geothermal Heat Pump Replacement Cost

The outdoor portion of your heat pump lasts up to 100 years, depending on conditions, and likely will not need replacing during your lifetime. The indoor portion of the system may need to be replaced, but only after decades of use. If you have an older system and are upgrading the interior portion, expect replacement costs to be around $8,000 on average for a 5-ton system, including installation and parts.

Geothermal Heat Pump Efficiency Rating

All HVAC systems have varying degrees of efficiency, meaning how much energy they use to produce heat. Because heat pumps provide both heating and cooling, they have two different efficiency ratings, one for each.

The Coefficient of Performance (COP) for heating is the measurement of how well the unit uses energy to heat the home. A geothermal heat pump has a COP of 3 to 5, meaning that for every unit of electricity it consumes, it produces 3 to 5 units of heat. This is much more efficient than other systems, which may have COPs of just 1 or 2 in very high-efficiency systems.

For cooling, the system is rated on the Energy Efficiency Ratio (EER). The higher the EER on a cooling appliance, the more efficient it is at cooling your home. Geothermal heat pumps have an EER from 13 to 30. Anything above an EER of 12 is considered high efficiency, which makes all geothermal heat pumps high-efficient cooling appliances.

Factors Affecting the Cost of Installing a Geothermal Heat Pump

Like any system, a wide range of factors affect the total system cost. These include location, climate, energy efficiency of your home, soil type, yard space, install location, and whether this is a new installation or a retrofit. If you need ducts installed or have steam radiators, your costs are higher than if you already have usable ducts in your home.

Cost to Run a Geothermal Heat Pump

Geothermal heat pumps are much more efficient to run than other heating systems. They save you between 30% and 60% on heating and between 20% and 50% on cooling. According to Energy.gov, they pay for themselves in 10 years.

Benefits of Geothermal Heating

Geothermal heating is one of the most energy-efficient heating and cooling methods used for your home regardless of climate. This method sees savings year-round over other types of heating and cooling systems.

Geothermal heating is also better for the environment because it does not directly use fossil fuels and uses less electricity than other systems. Therefore, it does not contribute as much to greenhouse gasses. It is also safer with no risk of carbon monoxide or gas leaks, and you do not need to store additional fuel on your property like oil or propane. In addition, if a desuperheater is added, you may also use the system to heat your hot water.

Enhancement and Improvement Costs

Duct Zoning

Zoning your home gives you better control over the heating and cooling of each area. It is more complicated to install with additional thermostats, a zone control board, and dampers. Expect to add at least $3,000 to $4,000 to the cost of the project.

Home Insulation

Adding more insulation to your home increases energy efficiency, which means that you may use a smaller-sized system. Home insulation costs $3,500 to $4,500 on average.

Energy-efficient Windows

Making your windows more energy efficient also lowers heating and cooling costs. A new set of replacement windows is around $650 to $1,500 each.

Home Energy Audit

Before making any changes to your home’s HVAC or insulation, getting an energy audit pinpoints the exact changes you need to make to create a more energy-efficient home. The cost of an audit is around $250.