There are three significant incentives available to reduce the net cost of installing a residential geothermal (ground source heat pump) heating & cooling system:
- If you pay a monthly “system benefit charge” or SBC to your electric utility, they offer a rebate for a qualified installation of a ground source heat pump system. (RG&E, NYSEG, and National Grid electricity customers pay the SBC; municipal electric, e.g. Spencerport Municipal Electric and Fairport Electric, customers do not and, therefore, are not eligible for this incentive… but may offer incentives of their own.) The system must be designed and installed by NYSERDA-qualified contractors, such as Lake Country Geothermal. The rebate is paid directly to the contractor, who applies all but up to $500 of it as a credit toward the installation price invoiced to the client. The rebate is worth $1500 per 10,000 Btu/hr of heat pump heating capacity. A typical home requires 30,000 to 60,000 Btu/hr of heat capacity, so most rebates are worth between $4500 and $9000. Application is made by the contractor on behalf of the client and is typically applied for and approved before the project begins. The project must be completed, and start-up performance data submitted within 12 months of approval for existing buildings and within 24 months for new construction. This program is expected to continue through at least 2024.
- The Federal government offers a tax credit for qualified geothermal system installations. For residential installations, this was being phased out by the end of 2023 until the so-called Inflation Reduction Act (IRA) was signed into law in the summer of 2022. The IRA extended returned the tax credit to 30% (retroactive to January 1, 2022) and extended it through 2032. The client is responsible for applying for this incentive at the time (s)he submits tax returns. See IRS Form 5695 https://www.irs.gov/pub/irs-pdf/f5695.pdf for more information.
- In 2022, New York State implemented a state tax credit for qualified geothermal energy system equipment and expenditures installed at a residential property. The credit is equal to the lesser of 25% of your qualified expenditures or $5000, and is expected to extend through installations completed by the end of 2026. The client is responsible for applying for this incentive at the time (s)he submits tax returns. See Form IT-267 https://www.tax.ny.gov/pdf/current_forms/it/it267_fill_in.pdf and its instructions https://www.tax.ny.gov/pdf/2022/printable-pdfs/inc/it267i-2022.pdf for more information.
We suggest that you contact your electric utility, as they may also offer additional incentives.
Please visit the Database of State Incentives for Renewables & Efficiency (DSIRE) website https://www.dsireusa.org/ for the latest state and federal incentives and rebates.