Some of the advantages of using geothermal energy include the facts that they are eco friendly, comfortable, versatile, and long-lived. But there is one advantage that stands above them all and that is how geothermal cost savings. Heat pumps are the most cost effective source of heating and cooling on the planet, which means you’ll have incredibly low monthly utility bills. You may wonder how they accomplish this so let’s walk through the process of how heat pumps will save you money, starting with a lesson on efficiency.
Geothermal Heat Pumps are Efficient
Geothermal heat pumps are able to deliver low-cost heating and cooling because they tap into a free, renewable energy source: the heat beneath your feet. A geothermal heat pump absorbs free heat from the warm earth and transfers it into your home.
Unlike conventional heating systems like oil, natural gas, coal or wood heat, there is no combustion or fuel source required. These conventional forms of home heating burn fuel to create heat. This is an inefficient process because some energy is lost up the flue, which means less energy is put into the home than what the actual fuel contains. Have you ever seen a furnace that advertises 97% efficiency? That means for every $1 you spend on heating, you’ll get $0.97 of heat energy.
In contrast, heat pumps are just moving existing heat from one place to another. Since there is no cost for the heat itself, a heat pump can put out more heat energy than the power it consumes. For every $1 you spend on heating, you get $4 of heat energy. This process makes heat pumps far more efficient than conventional sources, and that’s why they’re known as the most efficient heating and cooling source available today.
This increase in efficiency means you pay less to get the same amount of heat as shown in the following example.
Geothermal Cost Savings
Your home is currently heated by electric baseboard heat and is 1,750 square feet. Electric baseboards are 100% efficient, meaning every 1 watt of electricity consumed generates 1 watt of heat energy. Your geothermal installer has estimated your home is consuming 150kwh per square meter, per year, for a total heat load of 24,750kwh per year. Since electric baseboards are 100% efficient, you’ll need to consume 24,750kwh in electricity to get 24,750 kwh in heat energy. Let’s calculate how much it’ll cost you to heat your home for one year with electric baseboards, using a local utility rate of $0.16/kwh. The formula is:
Since geothermal heat pumps can also pre-heat your domestic hot water for additional savings, let’s also calculate how much you will spend on domestic hot water heating if you have a household of four people with an estimated 1,412.5kwh per person:
By adding those two costs ($3,960 + $904) together we get a total cost of $4,864 to heat your home and domestic hot water with conventional heating equipment.
Now let’s do the same example with a geothermal heat pump instead. While electric baseboards are 100% efficient, geothermal heat pumps are 400% efficient. This means that for every 1 watt of electricity you use, you get 4 watts of heat energy for your home. The additional watts come from the free energy in the ground. Let’s estimate the cost to heat your home and domestic hot water with a geothermal heat pump:
You still need 24,750kwh of heat, but since geothermal heat pumps are 400% efficient, you’ll only need (24,750/4) 6,187kwh of electricity to extract that heat. Using the same local utility rate of $0.16, here is the cost to heat your home with a geothermal heat pump:
That’s a 75% cost reduction! Now let’s look at domestic hot water use. Geothermal heat pumps only pre-heat your domestic hot water, so the cost savings isn’t as great because you still need to use your hot water heater to top it up. Let’s assume you’re able to save 35% on your domestic hot water use. That means you’ll only need (1,412.5kwh per person x 0.65) 918.125kwh of electricity per person.
So the total annual cost of heating your home and domestic hot water with a geothermal heat pump is:
Compare the number above to $4,864 and you can see that you’ll save 67.5% on your heating costs every year, for the lifespan of the heat pump. Geothermal heat pumps are a great way to vastly reduce your spending on heating and cooling.
If you’re wondering how much you’ll save by installing a heat pump, find a geothermal heat pump installer near you to get your home’s personalized cost savings estimate.