Geo vs. Fossil Fuels

How does  a Geothermal Heat Pump Stack up against fossil fuels?

The biggest question is how does a geothermal heat pump compare to other fossil fuel/conventional systems in dollars and cents of operation, payback, and ROI?  That is always the toughest question to answer due to all the variables that go into utility costs and installation costs.  There are no two homes exactly the same, with the same lifestyles, utility rates, etc.  All the cost calcalulators and software programs on the market are pretty good, but keep in mind that those programs are factoring average weather patterns from the past 20 years, and then using that to come up with an estimate, but they are all you can really go by to calculate accurate energy usage.  Obviously the weather changes day to day and year to year so the first year of your new geothermal heat pump system maybe slightly different than what one of the software programs told you.

The MNGHPA has put this sample cost analysis together with a few assumptions being made.  First, we are using an average home with relatively good construction.  We are using utility rates that are averages from around the state for electricity, gas, and propane.  Last, we are using average installation costs for a forced air system that would provide heating, cooling, and hot water.  Again, utility rates flucuate based on supply and demand so this is an estimate.  Installation costs are going to vary depending on a lot of variables, size of the lot, type of system, age of the home, size of the home, etc. etc.

Here is a chart showing how geothermal systems compare to fossil fuel systems:

Geothermal Natural Gas Propane
$583 $1,003 $1,864 Heating
$129 $157 $157 Cooling
$138 $362 $688 Hot Water
$850 $1,579 $2,709 Annual Utility Costs
$25,000 $10,000 $10,000 Installed Cost
$7,500 $- $- 30% Tax Credit
$17,500 $10,000 $10,000 Net Installed Cost
$- $729 $1,859 Additional Utility Cost
$7,500 $- $- Net Additional Installation Cost
10.28 4.03 Simple Payback (Years)
9.7% 24.8% Return on Investment (ROI)
$22,500 $42,500 $72,500 20 Year Cumulative Utility Cost
$20,000 $50,000 20 Year Cumulative Utility Savings
24,900,000 95,600,000 95,600,000 Annual Heating Btu’s Used
70,700,000 0 0 Annual Heating BTU’s Saved

Assumptions that were made: 60MBH heating load, 36MBH cooling load, 4 people using hot water, $.08/kwh electric rates, $1.00/therm gas rates, and $1.75/gal propane rates.  The cumulative utility costs all included 3% escalation over time.