Top 10 Factors Influencing Geothermal System Installation Costs

You may be considering a renovation by upgrading your current HVAC system, replacing an old one or considering a more sustainable option from the ground-up when building a new home. In any scenario, geothermal heat pump systems are a long-term, renewable solution that bring value to homeowners not only in monthly savings for heating in the winter and cooling in the summer, but also in the long-term investment of their home’s value. One industry survey found that 82 percent of buyers report that they are willing to “pay more for a sustainable home over a traditional one.” 

As more homeowners seek out renewable energy, geothermal systems are gaining in popularity. For those building new homes, installing geothermal as the HVAC system of choice provides a lifetime of climate benefits and cost-savings over fossil-fuel burning appliances from day one. For those looking to learn more about the factors that go into installation processes and costs in the case of renovation with a replacement or upgrading an old system to geothermal, we created this “top 10 guide”. Keep reading to better understand the factors impacting the installation costs of a geothermal heating and cooling system. 

While a virtual energy consultation and site survey is the best way to get an accurate quote, the following information will get you started.

What is Geothermal Heating & Cooling?

Whether it’s a winter cold snap or a summer scorcher, the ground five feet below the surface maintains a constant temperature year-round. This temperature is higher than average winter temperatures and lower than average summer temperatures.

Geothermal heating and cooling leverages this difference to keep homes comfortable in any situation. During summer, the geothermal system draws heat from the air in your home and transfers it to the ground. During winter, it draws heat from the ground and transfers it to your home. This allows homeowners to tap into the endless heat below their yards while offering a 2-in-1 system with the most efficient heating and air conditioning system available. 

With low operating costs and convenient operational capacity, it’s no wonder that geothermal heating and cooling is becoming even more popular than ever before.  According to the Rocky Mountain Institute (RMI), geothermal heat pumps “are a win today for households, businesses, and communities across the United States. They deliver energy savings and comfort, reduce climate-warming pollution, and create jobs.”

10 Factors Influencing Geothermal System Installation Costs 

Many factors influence the installation and cost of a geothermal heating and cooling system. Here we will identify and explain each element so you have a comprehensive understanding of the factors influencing geothermal system installation costs.

1. Equipment

Drill rigs needed for installing vertical geothermal ground loops are expensive and a major investment for installers. Contractors need to recoup this investment, along with the cost of specialized expert drillers and fuel, and they recoup this investment through each individual installation.

2. Geology

Subsurface conditions are different by location and in some cases, make sites easier or more difficult depending on conditions, such as when installation teams run into excessive water or a wide variability in types of material. 

3. Ground Loop Piping Depth

The length of ground loop required, and therefore the depth of drilling and piping installation depends on the home’s heating and cooling load, the amount of rock, and the local climate. It is important that ground loops be properly sized, but the deeper the drill depth, the higher the cost. 

4. Ground Loop Borehole Location

The length of the horizontal piping between the vertical borehole loop and the house can have a significant impact on costs, especially on properties where drilling is done far from home. 

This is another stage in our installation process that involves heavy machinery that has to be transported to the site, crews on site, material costs, and other expenses. 

5. Labor

A drilling crew usually includes a master driller with years of experience and several assistants.

6. Materials & Supplies

Installing a vertical ground loop requires materials like piping, grout, heat transfer fluid, bore headers, drill bits, and more.

7. Ductwork 

The Dandelion Heat Pump is a water-to-air heat pump. That means it’s only compatible with homes that use ductwork to heat or cool.

A single-zone home has “all or nothing” heating and cooling, meaning the warm or cool air will distribute throughout the entire home while the system runs. Homes with multiple zones are divided into areas that each have their own individual temperature control. The number of zones can impact the number of heat pumps needed for a geothermal system.

Sometimes, a home’s existing ductwork is in poor condition or needs other modifications.

If a home does not have any ductwork, adding it increases costs, depending on the home’s size, complexity, and other factors, or homeowners can consider Dandelion’s VRF ductless product to circulate air throughout the home. 

8. Permitting 

In most places, you need permission from your local municipality to install a geothermal heating and cooling system. Permitting application and review can take weeks or even months. 

While it might be inconvenient to wait, the permitting process is a necessary tool municipalities use to regulate what’s getting installed and protect the homeowners in their community.

Each permitting application is unique regarding the required information, the turnaround time, and the application fee. This fee can vary widely between $75 and over $1,500. In general, most permits cost a few hundred dollars. Staff time to submit permit applications and work with municipalities to resolve questions and concerns adds to the cost of geothermal systems.

All permitting fees are included in Dandelion’s final installation price.

9. Electrical Upgrades 

Installing a geothermal heat pump is often part of ‘electrifying’ a home. That is, transitioning away from using fossil fuels on-site to using electricity for all of the home’s needs. Electrifying a home increases the total amount of electrical power pulled, which sometimes means that the homes’ main line and/or panel must be increased in size. This increase is sometimes minor, so the cost will be lower. However, some homes require a significant ‘Main Panel Upgrade’ which adds to costs. Geothermal systems use less electricity than air source heat pumps, so customers can sometimes avoid panel upgrades while electrifying by going geothermal instead of air source.

10. Financial Incentives That Off-Set Costs 

There has never been a better time to invest in a geothermal heating and cooling system, as federal, state, and local incentives offer numerous opportunities for homeowners to offset the upfront installation costs. 

This includes: 

• Federal Tax Credit Investment Tax Credit (ITC): 30 percent off the system price until  2032.
• NY State Incentive: NY homeowners are eligible for a 25% State tax credit up to $5,000 plus up to $35,000 in additional NY Clean Heat incentives from their utility provider.
• CT State Incentive: CT homeowners qualify for up to $15,000 in EnergizeCT geothermal heat pump incentives. 
• MA State Incentive: Most MA homeowners qualify for up to $15,000 in MassSave geothermal heat pump incentives

Additionally, check with your local utility provider to learn about potential rebates or other offers that help make geothermal systems more affordable from day one. 

The Bottom Line 

Every Dandelion Geothermal system is designed specifically for that home, so it’s hard to price without knowing more information. Some factors that affect cost are the size of the home and the utility company rebates available. There are $0 down financing options available to all qualified homeowners. The best thing to do is to call or see if your home qualifies, and we will give you a price range after learning more about your home.

This price can increase based on additional complexity like ductwork modifications, electrical upgrades, zoning, bedrock removal, or if multiple heat pumps are needed. 
For a custom estimate for your unique home, contact us for a free home consultation.