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How to Buy a Geothermal Heat Pump

Published Nov. 17, 2016

Geothermal heat pumps, also known as ground source heat pumps (GSHPs), use the earth’s stable temperature as a source of heat. They provide heating and cooling at higher efficiency than heating and cooling systems based on fossil fuels or electricity.

Geothermal heat pumps (like traditional air-source heat pumps) use a refrigerant-based system to extract and transfer heat. The difference is that, while traditional systems rely on ambient air temperatures as a heat source, while geothermal systems use a liquid-filled loop system buried in the ground as a source of heat.


Geothermal heat pumps are among the most efficient heating and cooling systems available, with efficiencies 30 to 70 percent higher than other systems. A desuperheater, which preheats tank water, can be added as a supplement to a conventional water heater, providing additional savings. Some units come standard with a desuperheater, while it is optional with others.

Types of Geothermal Heat Pumps

A geothermal heat pump circulates heat between the ground and your house through long loops of underground pipes filled with either water or refrigerant. Like a traditional heat pump, a geothermal heat pump system contains a compressor, condenser, expansion valve and evaporator. During winter, heat from the underground pipes is pulled into the house and during summer, the process is reversed.

There are three types of closed-loop geothermal heat pump systems: horizontal, vertical, and pond/lake. There is also an open loop system, which is less common.

horizontal ground loop
  • Horizontal System – This method uses straight runs of pipe side-by-side in trenches between 4 and 6 feet deep and 2 feet wide. It’s the least expensive option but can require a lot of space. A 2,000 square foot house would require a total of 400 feet of 2-foot wide trenches. A horizontal system can be installed in a smaller area using the "Slinky" method, in which pipe is looped to allow more pipe in a shorter trench.
  • Vertical System – A vertical system is used when space is limited or the soil is too shallow for trenching. In this system, holes approximately 4 inches in diameter are drilled about 20 feet apart and 100-400 feet deep. Two pipes are inserted into the holes and connected at the bottom, forming a loop. Horizontal pipes in trenches are connected with these loops and then brought into the building.
  • Pond/Lake System – This system uses heat from water instead of the ground and is a good option if there is a body of water nearby. Pipes are coiled bout 8-10 feet under water.
  • Open Loop System – An open loop system uses well water or surface body water instead of refrigerant as the heat exchange fluid. The water circulates through the system and then is returned to the ground through the well, a recharge well, or surface discharge.

Which system is best for your home depends on several factors, including climate, soil conditions, and amount of available land.

Installation and cost

The upfront cost of a geothermal heat pump can be frightening – often between $10,000 and $20,000, including ground loops, heat pump, and controls. The payback period on these systems vary but according to most estimates is between 5 and 15 years. According to estimates from the Environmental Protection Agency (EPA), homeowners can save approximately $400 to $1,500 annually. The good news is, geothermal heat pump systems are expected to last a long time, with typical warranties of up to 25 years on indoor components and up to 50 years on the underground loop.

In 2009 a 30% federal tax credit for the installation of Energy Star qualified ground source heat pumps (geothermal systems) was enacted. There is no cap on the monetary installation amount on which the 30% can be credited, and labor costs and materials are included. However, as of this time, the tax credit has not been extended beyond December 31, 2016.

The price of a geothermal system can depend on the type of system installed. Horizontal systems are simpler and therefore less expensive to install. Vertical systems tend to cost more because of the higher cost of drilling, but because of area or soil constraints may be the only option. Something to consider is that, although the upfront cost of a vertical system is higher, vertical systems are often more efficient because the heat exchanger (pipes) is buried deeper. This higher efficiency could make up the difference in initial cost.

Installing a geothermal heat pump system requires drilling, trenching and thermal fusion of pipe, and is definitely not a do-it-yourself project. Besides the drilling and trenching, a professional will be required to make sure the system is properly sized. Sizing and designing a geothermal system consists of 4 steps:

  1. Ask a contractor to perform a heat loss calculation
  2. Calculate the size of heat pump that you need
  3. Calculate the ground loop field size
  4. Determine the size of the distribution system (air ducts, radiation)

If a unit is undersized or oversized it will not work as efficiently, affecting both comfort and utility bills.

When installed by professionals, both horizontal and vertical systems can be completed in between 2 - 5 days. This technology is still relatively new and there are fewer installers than there are for traditional heat pumps. However, because of high efficiency and eco-friendly technology, geothermal systems are becoming more common and finding an installer should not pose a problem.

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