Under What Conditions is Converting to Geothermal Heating & Cooling the Most Economically Attractive?
Several factors play a part in determining (1) the cost of installation and (2) the annual energy savings, which together determine how quickly your investment is going to pay you back.
- The unit cost of heating energy is typically the most significant factor – the higher your current heating fuel cost, the more you’ll be saving by converting to geothermal heating. Here are typical annual heating costs for an average 2400sf, 2-story house in the Finger Lakes Region for common heating fuel types:

If you’re currently heating with oil, propane, or electric resistance, you can expect a dramatic decrease in your annual heating bill by converting to geothermal heating.
- The amount of heat required to maintain a comfortable indoor temperature is largely determined by the size of the heated space, and how airtight and well insulated the space is. Large, leaky and/or poorly insulated homes will have higher heat requirements, resulting in greater energy savings from conversion to geothermal.

- If there is enough open space – at least a quarter of an acre – adjacent to the building you’re heating so that the ground heat exchanger (aka loop) can be installed in trenches or if a sufficiently large pond is nearby in which to immerse the loop, the upfront cost of installation will be thousands of dollars less than if outdoor space is tight and the ground loop has to be installed in vertical wells.
- If the existing heat distribution system does not require modification to accommodate the geothermal system, the upfront cost of installation will be less. Generally, forced-air ductwork and radiant floor systems will not require accommodations, whereas baseboard or stove heating likely will.
- If you need to replace an aging furnace/boiler or need to install a new heating system (e.g. new construction), then the economic comparison between fossil fuel and geothermal becomes one of incremental (rather than total) cost of a geothermal system. Even in situations where relatively inexpensive natural gas is available, geothermal heating is often the more economic choice.
If all these factors line up in favor of geothermal, the payback could be as short as a year or two. Even if only three of the factors are applicable, the payback period is often just 3 to 7 years.
Finally, in recent years (as geothermal heating has become more popular), many banks and other financial institutions have made available equity-based and unsecured loans with terms to 20 years. These can make it possible to install a system with no upfront investment. If most of the factors outlined above apply, it’s likely that the energy savings will exceed the loan repayment installments, enabling the project to be immediately cash flow positive.
Give us a call to find out what the economics of converting to geothermal heating and cooling are for your situation.