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August 15, 2009 @ 1:35 pm
Geothermal Heat Pumps Save Energy and Suction Taxes

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Geothermal heat pumps (aka GeoExchange, earth-coupled, ground-source or water-source heat pumps) are a remarkable, yet simple green technology that has been around for about 60 years. Anyone that’s visited a cave to see stalactites/stalagmites or do some rugged camping will remember the constant temperature that is cooler in summer and warmer in winter than at the surface. The ground is an efficient insulator, and depending on latitude, underground temperatures range from 45°F (7°C) to 75°F (21°C) year-round despite seasonal extremes at the surface. Heat pumps are able to take advantage of these temperature gradients for heating and cooling purposes, but how?

There is a detailed explanation here, I will summarize. Traditional heat pumps transfer heat utilizing a refrigerant that is acted on by an exchange medium (air in a standard A/C unit or liquid in a geothermal heat pump). The refrigerant absorbs heat and is compressed into a high temperature, high pressure liquid for heating purposes or allowed to expand into a low temperature, low pressure gas for cooling purposes. In winter, heat pumps pull heat from the air to be circulated in the home and during summer they take heat from inside and push it into the air. Significant amounts of electricity are used in this process because temperature extremes need to be overcome and air is an inefficient heat transfer medium. On the other hand, the liquid water or antifreeze solution of geothermal heat pumps is 30% more efficient than air. In summer, heat is pulled from the building and deposited in the much cooler earth very efficiently. In winter, the constant, relatively warm temperature of the earth provides much more than heat than the air so much less compression (and therefore less energy consumption) is needed vs. a conventional system. 


In fact, according to U.S. Department of Energy studies, geothermal provides system efficiencies of 300-600% on the coldest winter nights while air-source systems can reach only 175-250%. Integrated systems can handle all of your heating, cooling and hot water needs year-round. The result is significant energy savings over your current costs of electricity, heating oil, etc. While installation of geothermal systems costs more upfront, these energy savings cover the additional costs over 5-10 years. 50,000 units are now installed annually in the U.S. alone. The benefits outlined by the U.S. Department of Energy and the U.S. Environmental Protection Agency are listed below:

  • Geothermal heat pumps (GHPs) can reduce energy consumption and corresponding emissions up to 44% compared to air-source heat pumps and up to 72% compared to electric resistance heating with standard A/C equipment
  • GHPs improve humidity control by maintaining about 50% relative indoor humidity (particularly important for humid areas)
  • The systems are durable and easy to maintain; inside components last 20-25+ years and the ground loops can last 50+ years
  • GHPs do not have a noisy outdoor condensing unit like A/C systems while the indoor components are conveniently accessible and operate silently

They ignored arguably the biggest, immediate benefit however – tax savings! In 2008, homeowners could receive a 30% tax credit against the cost of geothermal system installations, but the total dollar value was capped at $2,000. Unfortunately, most systems cost more than the $6,667 implied by the cap. Although the equipment can be had for several thousand dollars (i.e. 1-2 times the cost of central heating/cooling), the added costs of drilling/excavating, labor, etc. can easily add $10,000 to the installation cost. Fortunately, the American Recovery and Reinvestment Act of 2009 removed the $2,000 cap and the credit counts against all of the costs: heat pump, ground loop and related equipment, labor costs for excavating and installing the loop, installing the heat pump, and any other plumbing, wiring and/or ducting needed to make the system work. This tax incentive covers installations placed into service from January 1, 2009 through December 31, 2016. 

If you’re considering the installation of one of these systems and would like a professional financial analysis of the project, contact me today.

Illustration: California Energy Commission

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3 Responses to “Geothermal Heat Pumps Save Energy and Suction Taxes”

  1. Henry Says:

    This has a lot of great information. Have you found there is a lot of interest and growth in the geothermal industry where you live? In Florida, we have had great success…we’ve even been featured in the news 3 times in the past month! It’s such a great advancement!

  2. Nate Says:

    Thanks for your comment Henry – I’m glad to hear geothermal is growing in Florida – keep up the good work! Here in Manhattan, it’s fairly difficult to install – there is almost no private residential land and between the subways, pipes and other infrastructure, there’s not much space underground…However, I have heard of a couple commercial buildings that use geothermal pumps – maybe I’ll do some research there and write a post in the future.

  3. GreenBldgBlog - Home Says:

    […] are college students –who are very creative. A 2007 team was unphased when they wanted to use a geothermal heat pump but wouldn’t be able to excavate the National Mall; they just designed their house with a rooftop […]


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