How much does a geothermal heating and cooling system cost to install?

Geothermal heat pump cost

A geothermal heat pump costs $15,000 to $35,000 to install on average, depending on the system size and loop type. A geothermal heating system costs $4,000 to $8,000 per ton to install on average. Geothermal heating and cooling costs 25% to 65% less to run than conventional heat pumps.

*Based on 24 project costs reported by HomeGuide members.

Key facts for geothermal heat pumps (GHP) and ground source heat pumps (GSHP):

• Geothermal systems provide both heating and air conditioning using renewable energy from the constant temperature below the surface.
• Fossil fuel-produced electricity is only necessary to run the fan and circulation pump.
• The geothermal energy tax credit allows homeowners to claim 22% to 26% of the total cost from their federal taxes throughout 2023.
• Geothermal HVAC reduces utility bills and uses 25% to 65% less energy and electricity than conventional systems.
• In comparison, a standard heat pump installation costs $3,800 to $8,200 on average and has higher operating costs.
• Geothermal systems last 20 to 25 years for the indoor heat pump and 40 to 60 years for the ground loops. A standard heat pump lasts 10 to 15 years.

Geothermal heating cost calculator

Geothermal heating costs $4,000 to $8,000 per ton on average, with prices ranging from $2,200 to $12,000 per ton, depending on the system type and site-specific work.

*Prices use the average cost per ton. 1 ton = 12,000 BTU = 3.5 Kw per hour.

A geothermal installer designs and sizes the system based on home energy audits, Manual J calculations, and specialized software.

Ground source heat pump cost

A geothermal closed-loop system costs $15,000 to $38,000 on average, depending on the loop placement. Open-loop systems cost $10,000 to $28,000 on average. Installers select a geothermal loop type to suit the climate, soil, available space, and water quality of a well, pond, or lake on the property.

*Total installed cost.

• Both open and closed geothermal loops have underground lines circulating water, refrigerant, or antifreeze to transfer heat.
• Closed-loop ground source heat pump systems account for 85% of the installations and include horizontal-in-ground, vertical-in-ground, or water-submerged types.
• Open-loop systems are submerged pipes circulating well, lake, or pond water.
• Vertical loops are for urban areas. Horizontal loops are more cost-effective but need large yards.

Horizontal geothermal ground loop

Installing a horizontal closed-loop geothermal system costs $15,000 to $34,000 on average. Contractors install multiple horizontal loops 4’ to 10’ deep in rows 100’ to 400’ long. Most homes need 0.25 to 0.75 acres of land for the trenches.

Pros and cons

• Ideal for new constructions on large plots
• Pipe length depends on the climate, soil temperature, and moisture content
• Not suitable for sloped hills
• Horizontal hole drilling prevents full-yard excavation
• Comes in straight pipes or overlapping slinky design
• A slinky-coil design allows more pipe to fit in shorter trenches, but only works in highly conductive soil, and they overheat in hot climates

Vertical geothermal cost

Installing a closed-loop vertical geothermal system costs $20,000 to $38,000 on average. Vertical loops are ideal for homes with limited backyard space and rocky soil conditions.

Pros and cons

• Minimizes disturbance to existing landscape
• Requires less piping than horizontal systems
• Vertical drilling takes 1 to 2 days on average
• Costs more to install due to the required drill rig and grout machine
• Most common option for retrofits
• Can be installed under a driveway

Geothermal pond closed-loop cost

Installing a geothermal pond closed-loop system costs $10,000 to $32,000 on average, depending on the size and pond location. Submerged loops require a nearby water source to transfer the water's natural heat to the home through underground pipes.

Pros and cons

• Cheapest installation costs of all geothermal systems.
• More energy-efficient than other ground loop systems.
• Requires no extensive drilling or trenching.
• Pond’s surface area must be 0.3 to 1.0 acre across or 14,500 to 43,500 square feet minimum.
• Coils stay submerged 8’ to 12’ deep to prevent freezing.

Open-loop geothermal system cost

Open-loop geothermal systems cost $10,000 to $28,000 installed on average. Open-loop systems circulate well, pond, or river water as the heat-exchange fluid through the geothermal heat pump. After circulation, the water either returns to the same well, a separate recharge well, or back to the pond.

Pros and cons

• Easiest and most economical to install
• Requires an ample supply of clean water nearby
• Many building codes and regulations apply for open loops with groundwater discharge. In some cities, discharge permit fees for pumping into ponds costs $2,500 to $10,000 annually, depending on the system size.
• Open-loop systems are prone to mineral and sediment buildup and require more maintenance than closed-loop systems.

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Geothermal installation cost factors

Geothermal heat pump prices alone are only 20% to 40% of the total system cost. The geothermal installation cost is the biggest expense, which depends on various home and property conditions:

• Retrofitting or installing with new home construction – Installing geothermal in coordination with laying new foundations is 20% to 40% cheaper than retrofits.
• Home size – Larger homes require bigger systems, increasing the unit and the loop system costs.
• Thermostat settings – Maintaining high heat settings indoors during extreme winters requires much larger systems.
• Home’s heat loss – The current energy efficiency of a house depends on its insulation, and well-insulated homes need smaller geothermal systems.
• Compatibility – Geothermal systems often aren’t compatible with ductless HVAC mini-split systems and boilers. Most installers recommend removing them and installing new air ducts.
• Using existing radiant heating – A water-to-water geothermal heat pump can sometimes replace a boiler to power an old home’s radiators or radiant floor heating. However, this project requires many expensive modifications.
• Ductwork modifications – Depending on the condition and age of existing ductwork, modifications or replacements may be necessary. Replacing ductwork costs $1,400 to $5,600 on average.
• Basement & attic size – Installers mount geothermal heat pumps in the basement, but extra labor costs apply to place parts in the attic if it’s too small.
• Loop type – Depending on if the system is horizontal, vertical, pond, or open loops, each design has different excavation and pipe-laying requirements.
• Site accessibility – Remote and hard-to-access areas have higher costs to bring in heavy machinery.
• Plot size – Small yards only accommodate drilled vertical geothermal wells, which cost more. Horizontal loops require at least 0.25 acres of land.
• Well drilling – Geothermal well drilling costs $5 to $40 per foot for vertical-system installs. Boreholes are 4” to 8” wide, 100’ to 500’ deep, and spaced 10’ to 20’ apart. Most homes need 3 to 5 boreholes with 300’ to 500’ of piping per ton of system-heating capacity.
• Permits – Geothermal installation permits cost $100 to $650 on average. Contractors typically pull the permit and include it in the total project cost.
• Features & performance – Higher-efficiency systems, additional features or upgrades, and top brands increase the project cost. Variable-speed geothermal pumps cost more but are more energy efficient.
• Climate – Ground loops must lie below the local frost line. Colder climates need deeper installations that have higher excavation and drilling fees.
• System configuration – The installer will recommend different configurations based on the current home’s HVAC setup.
• Landscape repairs – Closed-loop installations need drilling or excavations that disrupt the yard. Landscaping costs $4 to $12 per square foot for landscape repairs, moving in-ground sprinklers, and re-seeding lawns.
• Desuperheaters – An optional desuperheater tank system costs $1,400 to $3,000+ to heat domestic hot water with excess geothermal heat.
• Electrical wiring upgrades are sometimes required for the new system to work correctly in old homes.

Geothermal heating rebates, tax credits, and financing

The federal tax credit for geothermal systems is 26% throughout 2022 and decreases to 22% in 2023. The tax credit disappears from 2024 onwards unless reinstated by the government. Only ENERGY STAR certified systems are eligible.

• Check for additional local city and state incentives for renewable energy.
• Energy-efficient mortgage loans are also available to finance geothermal system installations.

Geothermal heat pump cost in new construction vs. retrofit

Installing a geothermal heat pump for a new home or building construction costs 20% to 40% less than a retrofit installation for an existing home. Retrofitting a geothermal system to adapt to the current HVAC system is highly complex and typically requires:

• Ductwork modifications
• Extensive excavation and landscape repairs
• New piping, electrical wiring, and connections
• Removals and disposals of old HVAC components

Geothermal heating packaged units vs. split systems

Packaged geothermal units cost $2,500 to $8,000 on average, while split systems cost $3,500 to $8,000 for the unit only. Installing split systems costs $3,000 to $5,000 extra for the additional labor. Packaged one-piece units go in basements, while homes with attic ductwork or low-ceiling basements typically have split systems.

*Not including labor.

• Packaged units are the most common, easier to install, have all components and refrigerant circuit inside one factory assembled box, but require more space.
• Split systems consist of multiple components connected through refrigerant lines. Installing split systems requires more work on-site and refrigerant charging, but these systems have more flexibility for the unit locations.

Water-to-air heat pump or water-to-water geothermal heat pump

A water-to-air geothermal heat pump costs $3,600 to $8,000, while a water-to-water heat pump costs $2,400 to $8,000, for the units only. The best type depends on the existing HVAC system. Installation costs vary widely according to the home design.

*Not including labor.

• Water-to-air heat pumps use forced air systems and ductwork for heating and cooling. This type is more common and easier to install.
• Water-to-water heat pumps supply heat only through water-based heating systems like radiators, baseboard heaters, or radiant floor heating. These systems are more complex to install and common in older homes.
• Retrofit installation of water-to-water geothermal heat pumps in homes with radiant heating and no central air ducts is the most expensive due to all the modifications required.

Ground heat exchanger cost vs. direct exchange

Both ground heat exchange and direct-exchange systems have closed loops that use the ground as an energy source. However, they transfer the energy in distinct ways with different piping.

• Heat exchanger systems are the most common types that circulate water-based liquids or refrigerants through plastic pipes. Then the pump’s heat exchanger transfers the heat from the ground loops into the air to heat the home.
• Direct exchange systems cost $2,500 to $6,000 more due to circulating refrigerant through underground copper pipes into a larger compressor. While copper is more conductive, it’s prone to corroding. Environmental regulations prohibit copper pipes in some areas.

Geothermal heating monthly cost

A geothermal heating system costs $100 to $200 monthly in electricity fees when properly sized. The average electric bill increases when backup heaters run during extreme temperatures or if the geothermal lines freeze. Backup heating costs up to twice as much to run.

Geothermal heat pump maintenance, repair, and replacement costs

Geothermal systems should get annual service to clean the coils, filters, ducts, and condensate traps. Check for leaks and correct ground loop pressure as well.

• Geothermal heat pump maintenance costs $150 to $350 per year on average in a service agreement from the installer. Some warranties include coverage for all repairs, replacements, and maintenance.
• Geothermal repairs cost $200 to $2,000+ on average. Repairs typically involve work on the heat pump unit, compressor, or leaking air coils.
• Geothermal heat pump replacement costs $1,900 to $6,500 on average for pumps on 0.5- to 7-ton systems, not including underground loops.

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Geothermal energy costs for improvements

Reduce energy bills by 5% to 30% by improving the home’s overall insulation to boost a geothermal system’s energy performance. Geothermal systems use electricity to power the heat pump only.

• System size – When buying a new geothermal energy system, choose larger ground-loop designs for more efficiency.
• Energy assessment – A home energy audit costs $200 to $500 to identify any leaks and inefficiencies. Auditors recommend improvements to save energy and provide information about qualifying tax credits.
• Home insulation – Adding or upgrading insulation costs $900 to $3,000 on average. Installing higher R-value materials makes HVAC systems work more effectively on less power.
• Energy-efficient windows – Window replacements cost $400 to $800 per window, while window glass replacement costs $150 to $500 on average. Old homes lose 10% to 35% of their energy through the windows. Argon-filled insulated glass with Low-E coating is the most energy-efficient.
• Duct cleaning – Air duct cleaning costs $300 to $700 on average or $25 to $45 per vent. Clean ducts improve the air quality and boost the heating or cooling power of the geothermal pump.
• Zoning – HVAC zoning costs $1,700 to $4,500 on average. Zoning lowers energy bills by 30% per month by controlling the heating and cooling in each area of the house. Smart thermostat installation costs $225 to $400 on average.
• Solar connections – Installing solar panels costs $10,600 to $26,500 to power a home and geothermal heat pump. Solar-power systems direct excess energy to store heat in the home’s geothermal hot water tank.

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Geothermal heating pros and cons

Benefits of geothermal energy systems

• Save on utility costs – Geothermal heating is 25% to 65% cheaper in electricity than conventional systems and air-source heat pumps.
• Return on investment – According to the Department of Energy, geothermal energy savings pay for themselves in 5 to 10 years.
• Environmentally friendly – Geothermal systems cut greenhouse gas emissions by up to 65% compared with baseline HVAC systems.
• Durable – The indoor heat pump lasts 20 to 25 years, and the ground loops last 40 to 60 years.
• Low maintenance – With few moving parts and protection from most outdoor elements, this system requires minimal maintenance.
• Quiet operation – Heating with geothermal units is quieter than other HVAC systems. The indoor unit is quiet as a refrigerator.
• Saves space – Geothermal heat pumps require less indoor space than conventional systems and eliminate the need for any large outdoor air-compressor units outside.
• Lower water-heating costs – Installing a desuperheater allows excess heat from the geothermal system for home water heating, further reducing utility costs.
• Safer HVAC system – Unlike natural gas, geothermal heating never has a risk of fire-safety or indoor air-quality issues.

Common problems with geothermal systems

Aside from the high initial cost, the most common geothermal heating problems come from improper system planning and wrong installation of the loop fields and controllers. Geothermal heat pump problems include:

• Installers put in undersized ground loops that can’t match the home’s heating needs.
• Expensive backup power units run too often with undersized ground loops.
• Fluids inside the lines of shallow loop fields freeze in colder climates when not installed far enough below the soil’s frost line.
• Wrong settings on the geothermal controller prevent it from running in the winter.
• Underground pipes break from growing tree roots, earthquakes, or tunneling animals.
• Leaks from refrigerant-containing pipes pollute the local groundwater.
• Older geothermal systems with copper or metal heat-exchange coils corrode over time, preventing efficient heating and cooling.

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What is geothermal heating, and how does it work?

Geothermal heating is an energy-efficient HVAC system that brings the earth’s natural underground heat indoors in winter or provides cooling by moving heat outdoors in summer. A geothermal system draws heat from below the frost line where temperatures remain 45° F to 75° F.

A closed-loop geothermal heating and cooling system works with these parts:

• An underground loop field of liquid-filled piping absorbs natural ambient heat.
• A geothermal or ground source heat pump is the heat exchanger that extracts heat from the liquid in the lines through compression.
• The heat distribution system circulates heated air from the heat pump up through the building ventilation system.
• An optional desuperheater tank preheats domestic hot water using either the excess heat extracted from the home in summer or some of the heat from the underground lines in winter.
• In summer, this system reverses to extract hot air from indoors. Excess heat goes to the desuperheater tank or underground.

Open-loop geothermal systems work similarly, except they transfer heat by pumping water from a backyard body of water. Older systems use to discharge water into the sewage system, but new systems recirculate contained water instead to avoid possible environmental hazards.

How long does a geothermal unit last?

Geothermal heating systems last 20 to 25 years for the indoor heat pump and 40 to 60 years for the ground loops on average. The geothermal system life expectancy is longer than all other conventional HVAC systems that only last 10 to 15 years.

Can geothermal be installed anywhere?

Customized geothermal system designs are available for every climate and soil type. Consider the following property requirements to install every kind of geothermal system:

• Outdoor space – Horizontal loops need 0.25 to 0.75 acres of land on average for geothermal heat. Vertical-loop systems require 3 to 5 small boreholes 10’ to 20’ apart.
• Indoor space – All geothermal systems need space in the basement or attic for the heat pump parts and sometimes for additional water tanks.
• Open-loop systems – These types need a contained, private water supply like a well or pond 8’ to 12’ deep. Ponds should be 0.3 to 1.0 acres wide.
• Underground utility lines & sprinkler systems may need relocating to make space for geothermal drilling or excavating.

Can you drive or build over geothermal lines?

You can drive over geothermal lines once contractors compact the soil above them. You can typically build a concrete slab over geothermal loops that are 12+ inches below the frost line and remain accessible for repairs. Hire a structural engineer first to follow building safety codes.

Do geothermal units use Freon?

Older closed-loop geothermal units did use Freon R22 in their lines. After the EPA banned R22 production in 2020, new closed-loop geothermal units now use either:

• R-410A refrigerant, also called Gentron AZ-20®, Suva® 410A, or Puron®
• Antifreeze like propylene glycol or methyl alcohol
• Plain water
• Water and antifreeze mixture

Converting geothermal systems from Freon R22 to R-410A refrigerant costs $3,000 to $10,000 to replace parts. In some cases, conversions aren’t possible. Avoid buying geothermal systems with R22 as the price of Freon R22 in circulation keeps increasing.

How much water does a geothermal heat pump use?

The closed-loop design doesn’t consume water in 80% to 90% of modern geothermal heat pump systems. Closed loops only recirculate the same 60 to 80 gallons of water through the system over and over without needing more water. Open-loop systems use 5 to 8 gallons of water per minute.

Do geothermal systems run all the time?

Some geothermal systems work best by running continuously at variable speeds to meet the home’s climate-control demands. Highly optimized geothermal systems don’t run all the time because larger loop fields supply extra heating or cooling in extreme climates.

Is a geothermal heat pump worth it?

A geothermal heat pump costs $15,000 to $35,000 and provides heating and cooling 25% to 65% cheaper. However, the high upfront costs and $150 to $350 in annual maintenance, isn't worth it to some homeowners. In comparison, a new furnace costs $2,000 to $5,400 on average.

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DIY geothermal heat pump and cooling

Geothermal heat pump installations are not DIY projects because:

• Both a custom home energy-loss analysis and industrial software are necessary to calculate the geothermal system size needed.
• Heavy machinery that requires special operator training is necessary to drill boreholes down to bedrock.
• Experience is needed to properly design, size, and install geothermal lines to work efficiently.
• Specialized training is necessary to avoid problems with drainage, damaging utility lines, and connecting to home electrical and HVAC systems.
• Mistakes made when installing geothermal lines cost thousands of dollars to fix.

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Hiring a geothermal installer

• Select contractors accredited by The National Ground Water Association, The International Ground Source Heat Pump Association, or The Geothermal Exchange Organization.
• Get three itemized quotes to compare from different companies. Beware of ultra-low quotes that often mean lower-quality work.
• Choose installers who use EPA-approved refrigerants in their ground-loop lines, such as R-410A. Don’t accept the recently banned Freon R22 in any new system.
• Compare the company’s reviews from past jobs on HomeGuide, the Better Business Bureau (BBB), and Google.
• Select contractors with several years of experience installing geothermal lines.
• Check that the whole team, including the drilling-rig operator, has licenses.
• Verify that the company has insurance and bond guarantees covering all workers.
• Collect written contracts and warranties before making payments.
• Set up a payment schedule instead of paying all costs upfront.

Questions to ask pros

• Do you have an in-house installation and drilling team, or do you subcontract a driller from the geothermal system manufacturer? Otherwise, who supervises drilling subcontractors?
• Is additional ductwork necessary for this installation, and do you supervise that work as well?
• How many geothermal systems have you installed in this area?
• Will you perform an initial energy audit of my home before calculating the size of the system I need?
• How do you determine my home’s peak heating and cooling loads? Do you use the official Manual J calculation method?
• In cold climates, is this size system big enough to heat my home at sub-zero outdoor temperatures?
• Can you recommend design options to get the most-efficient geothermal system that prevents heat loss?
• Will the drillers make a borehole to the exact specifications needed for my system? Do they have experience pressure grouting the space between the loop tube and the borehole wall after drilling?
• Can you use any part of my existing heating system as a backup heater for the new geothermal system when retrofitting?
• How have you handled past drilling complications?
• What’s the best way to contact the project supervisor?
• How do you manage hauling away or processing excavation debris? Are there extra fees for this service not listed in the quote?
• Can you list references from your past geothermal installations?
• Are all labor and materials fees in this estimate? What other incidental costs should I expect?
• Will you pull all the permits for this project?
• What kind of warranty do you offer?
• How long will this project take, and how do you handle unexpected delays?
• Does this installation meet all local building code requirements?

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