Geothermal Heat Pumps
Learn about

Geothermal Cost

Learn More

With TERRASource geothermal, you can slash your home heating bills by up to 70% and your home cooling by up to 50%

  • Save Thousands Annually
  • Minimize Your Ecological Footprint
  • Receive Gov't Kickbacks for Doing So

TERRASource Can Help You

  • Retrofit Your Home
  • Work With Your Builder/Architect
  • Achieve Heating/Cooling Zen
  • Boost Efficiency
  • Maximize Your Energy-Savings Potential

Geothermal Systems Cost

Environmentally Smart

The U.S. Environmental Protection Agency (EPA) has called ground source heat pumps the most energy-efficient, environmentally clean, and cost-effective space conditioning systems available.


Geothermal power is considered to be sustainable because any projected heat extraction is small compared to the Earth's
heat content.

How Much Will I Save with a Geothermal Heat Pump?
Find Out How Geothermal Systems Work

Geothermal Systems Cost

Geothermal energy is a type of renewable energy that encourages conservation of natural resources. Based on recent prices, geothermal heat pumps currently have lower operational costs than any other conventional heating source almost everywhere in the world.  In fact, a  geothermal heat pump is amazingly 450% efficient.

Natural gas is the only fuel with competitive operational costs, but only in a handful of countries where it is exceptionally cheap, or where electricity is exceptionally expensive.  In general, a homeowner and/or business may save anywhere from 30% to 70% annually in heating costs, and 20% to 50% in cooling costs by switching from an ordinary system to a TERRASource geothermal system.  The lifespan of a TERRASource system is longer than conventional heating and cooling systems, too.  With routine maintenance, a TERRASource system can last well over 50 years or more.

The investment in a geothermal system above conventional oil, propane or electric systems may be returned in energy savings in 2–10 years for US residential systems.  The payback period for large commercial systems in the US is 1-5 years, even when compared to natural gas.  Most large and/or luxury homes require commercial geothermal systems.

TERRASource geothermal systems are recognized as one of the most efficient heating and cooling systems on the market.  So efficient in fact that Federal and State offer incentives of up to $10,000 to encourage and promote the usage of geothermal systems.

In some states, utility providers offer special, lower winter rates for geothermal customers, compounding even more savings.  When you make a commitment to purchase a TERRASource Geothermal system our Financial Experts will advise you on all the preparation of documents needed for submission to your local and Federal government so you promptly receive your rebates and get the most out of your investment.

How much you'll save

Geothermal heat pumps save money in operating and maintenance costs. While the initial purchase price of a residential GHP system is often higher than that of a comparable gas-fired furnace and central air-conditioning system, it is more efficient, thereby saving money every month. For further savings, GHPs equipped with a device called a “desuperheater” can heat the household water. In the summer cooling period, the heat that is taken from the house is used to heat the water for free. In the winter, water heating costs are reduced by about half.

On average, a geothermal heat pump system costs about $2,500 per ton of capacity, or roughly $7,500 for a 3-ton unit (a typical residential size).  A system using horizontal ground loops will generally cost less than a system with vertical loops.

In comparison, other systems would cost about $4,000 with air conditioning.

Although initially more expensive to install than conventional systems, properly sized and installed GHPs deliver more energy per unit consumed than conventional systems.

And since geothermal heat pumps are generally more efficient, they are less expensive to operate and maintain — typical annual energy savings range from 30% to 60%. Depending on factors such as climate, soil conditions, the system features you choose, and available renewable tax incentives, you may even recoup your initial investment in two to ten years through lower utility bills.

But when included in a mortgage, your GHP will have a positive cash flow from the beginning. For example, say that the extra $3,500 will add $30 per month to each mortgage payment. The energy cost savings will easily exceed that added mortgage amount over the course of each year.

On a retrofit, the GHP’s high efficiency typically means much lower utility bills, allowing the investment to be recouped in two to ten years. It may also be possible to include the purchase of a GHP system in an “energy-efficient mortgage” that would cover this and other energy-saving improvements to the home. Banks and mortgage companies can provide more information on these loans.

There may be a number of special financing options and incentives available to help offset the cost of adding a geothermal heat pump (GHP) to your home. These provisions are available from federal, state, and local governments; power providers; and banks or mortgage companies that offer energy-efficient mortgage loans for energy-saving home improvements. Be sure the system you’re interested in qualifies for available incentives before you make your final purchase.

Economic Benefits

Geothermal heat pumps are characterized by high capital costs and low operational costs compared to other HVAC systems. Their overall cost depends primarily on the relative costs of electricity and fuels, which are highly variable over time and across the world. Based on recent prices, geothermal heat pumps currently have lower operational costs than any other conventional heating source almost everywhere in the world. Natural gas is the only fuel with competitive operational costs, and only in a handful of countries where it is exceptionally cheap, or where electricity is exceptionally expensive. In general, a homeowner may save anywhere from 20% to 60% annually on utilities by switching from an ordinary system to a ground-source system. However, many family size installations are reported to use much more electricity then their owners had expected from advertisements. This is often partly due to bad design or installation: Heat exchange capacity with groundwater is often too small, heating pipes in house floors are often too thin and too few, or heated floors are covered with wooden panels or carpets.

Capital costs and system lifespan have received much less study, and the return on investment is highly variable. One study found the total installed cost for a system with 10 kW (3 ton) thermal capacity for a detached rural residence in the USA averaged $8000–$9000 in 1995 US dollars. More recent studies found an average cost of $14,000 in 2008 US dollars for the same size system. The US Department of Energy estimates a price of $7500 on its website, last updated in 2008. Prices over $20,000 are quoted in Canada, with one source placing them in the range of $30,000-$34,000 Canadian dollars. The rapid escalation in system price has been accompanied by rapid improvements in efficiency and reliability. Capital costs are known to benefit from economies of scale, particularly for open loop systems, so they are more cost-effective for larger commercial buildings and harsher climates. The initial cost can be two to five times that of a conventional heating system in most residential applications, new construction or existing. In retrofits, the cost of installation is affected by the size of living area, the home's age, insulation characteristics, the geology of the area, and location of the home/property. Proper duct system design and mechanical air exchange should be considered in the initial system cost.

Payback period for installing a ground source heat pump in a detached residence
Country Payback period for replacing
natural gas heating oil electric heating
Canada 13 years 3 years 6 years
USA 12 years 5 years 4 years
Germany net loss 8 years 2 years
  • Highly variable with energy prices.
  • Government subsidies not included.
  • Climate differences not evaluated.

Capital costs may be offset by substantial subsidies from many governments, for example totaling over $7000 in Ontario for residential heat pump systems installed in the 2009 fiscal year. Some electric companies offer special rates to customers who install a commercial geothermal systems for heating/cooling their building. This is due to the fact that electrical plants have the largest loads during summer months and much of their capacity sits idle during winter months. This allows the electric company to use more of their facility during the winter months and sell more electricity. It also allows them to reduce peak usage during the summer (due to the increased efficiency of heat pumps), thereby avoiding costly construction of new power plants. For the same reasons, other utility companies have started to pay for the installation of ground-source heat pumps at customer residences. They lease the systems to their customers for a monthly fee, at a net overall savings to the customer.

The lifespan of the system is longer than conventional heating and cooling systems. Good data on system lifespan is not yet available because the technology is too recent, but many early systems are still operational today after 25–30 years with routine maintenance. Most loop fields have warranties for 25 to 50 years and are expected to last at least 50 to 200 years. Ground-source heat pumps use electricity for heating the house. The higher investment above conventional oil, propane or electric systems may be returned in energy savings in 2–10 years for residential systems in the USA. If compared to natural gas systems, the payback period can be much longer or non-existent. The payback period for larger commercial systems in the USA is 1–5 years, even when compared to natural gas.

Ground source heat pumps are recognized as one of the most efficient heating and cooling systems on the market. They are often the second-most cost effective solution in extreme climates, (after co-generation), despite reductions in thermal efficiency due to ground temperature. (The ground source is warmer in climates that need strong air conditioning, and cooler in climates that need strong heating.)

Commercial systems maintenance costs in the USA have historically been between $0.11 to $0.22 per m2 per year in 1996 dollars, much less than the average $0.54 per m2 per year for conventional HVAC systems.

Governments that promote renewable energy will likely offer, renewable energy incentives for the consumer (residential), or industrial markets. For example, in the United States, incentives are offered both on the state and federal levels of government.


Because of the technical knowledge and equipment needed to properly design and size the system (and install the piping if heat fusion is required), a residential geothermal system installation requires a professional's services. TERRASource Geothermal Systems offers qualified geothermal installation services in the USA and Canada.

Visit TERRASource