When we buy a car, many factors influence our decision including comfort, safety, reliability, environmental impact, and, of course, cost. Many of those factors are also applicable in deciding among home heating & cooling alternatives. If cost was not a factor, geothermal would be the clear choice in most every case as it provides exceptional comfort, does not have the issues associated with burning fossil fuels, and is incredibly efficient.
So what about cost? Just like the car analogy, the holistic or total cost of a heating & cooling solution includes not just purchase price, but cost to operate, maintain, and repair… and let’s not forget about longevity – the average life of the system.
In order to compare one-time (e.g. purchase) costs to ongoing costs, we can annualize those costs by amortizing them over the expected life of the system.
Consider the following example for a typical 10-year-old two-story 2400-ft2 home with a full basement in the Rochester / Finger Lakes area occupied by a family of four. Each forced-air heating & cooling system would be considered mid-efficiency in its class.
These 10-year average energy costs have been applied:
| Electric | $0.10/kwh |
| Natural Gas | $1.38/therm |
| Oil | $3.20/gal |
| Propane | $2.47/gal |
The estimated annual operating costs for each system are:
| System | Heating | Cooling | Hot Water ** | Total ($) |
| Geothermal | 458 | 83 | 541 | |
| Natural Gas w/ ASHP cooling* | 1049 | 244 | 191 | 1484 |
| Oil w/ ASHP cooling | 1921 | 244 | 374 | 2539 |
| Propane w/ ASHP cooling | 2080 | 244 | 451 | 2775 |
| Electric w/ ASHP cooling | 2077 | 244 | 495 | 2816 |
*Air-sourced heat pump, typical central air conditioning system. 30% Federal tax credit applied to geothermal components.
**Hot water costs are relative to a 2-tank supplemental hot water system where the geothermal heat pump provides 50% of the demand and conventional fuel the balance.
The estimated installation cost, expected life, and resultant annualized cost of each system (assuming the cost of money, i.e. financing interest rate, to be 6%) are summarized by component below.
| Component | Installation Costs ($) | Expected Life (yrs) | Annualized Cost ($) |
| Geothermal equipment | 12,780*** | 30 | 919 |
| Geothermal horizontal earth loop | 5,245*** | 75 | 318 |
| Natural gas furnace | 6,000 | 20 | 516 |
| Oil furnace | 8,000 | 20 | 688 |
| Propane furnace | 6,500 | 20 | 599 |
| Electric Furnace | 3,000 | 20 | 258 |
| Central A/C (ASHP) | 3,500 | 15 | 354 |
When you add the annualized installation costs to the annual operating costs, you have a more holistic estimate of total annual costs (TAC) for each system. These are summarized below.
| System | TAC ($) |
| Geothermal | 1778 |
| Natural Gas w/ASHP cooling | 2354 |
| Oil w/ ASHP cooling | 3581 |
| Propane w/ ASHP cooling | 3688 |
| Electric w/ ASHP cooling | 3428 |
So, when viewed holistically, geothermal systems are superior for features AND cost!!
***NYS grant ($1500/ton) applied to geothermal components.