Key Takeaways
- Geothermal heat pumps cost $35,500 to install, on average, depending on loop type and size.
- Upfront costs are high, but you’ll still see net savings over time due to energy savings.
- Take advantage of the federal tax credit when installing geothermal, which saves up to 30%.
A geothermal heat pump costs an average of $35,500 to install, and most homeowners pay between $25,000 and $45,000*, depending on their home’s size, the heat pump’s capacity, the type of loop they choose, and the system efficiency. Depending on your existing heating system and the piece of property you have, your total could be as low as $18,000 or as high as $55,000. You may need to add between $1,400 and $5,600 for ductwork if you don’t already have it installed, according to contractor estimates used by Angi.
Geothermal heat pumps are expensive to install, costing an average of $19,000 more than a standard air-source heat pump. However, they’re some of the most efficient heating and cooling systems available because they make use of the constant temperature of the ground to transfer heat to and from your home as needed. They may cost more than other systems upfront, but many homeowners see utility bill savings that offset the higher cost in around 14 years. After that point, especially if you continue using the underground portion that lasts for 50 years or longer, you should see much higher net savings.
“Because no components are exposed to the outdoor environment, geothermal heat pumps tend to have lifetimes two to three times that of air source heat pumps,” said Kathy Hannun, CEO of Dandelion Energy, a geothermal installation company based in Somerville, Massachusetts. Ultimately, this extended lifespan continues to provide savings that help to offset the high upfront cost of geothermal heat pump systems.
In this guide, we’ll take a look at average geothermal heat pump costs, factors that affect your total, your expected payback period, and incentives and rebates you can take advantage of to reduce your geothermal installation costs and get the most out of your system.
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This site receives compensation from the companies featured in this listing, which may impact where and how products appear. This listing doesn’t feature all companies, products, or offers that may be available.
*Unless otherwise mentioned, cost data is from the experts interviewed for this article.
Average Cost of a Geothermal Heat Pump
A geothermal heat pump costs an average of $35,500 to install, and most installations total between $25,000 and $45,000. The size of your home is a major determining factor in how much you’ll pay for your heat pump, as larger homes require systems with higher tonnage ratings, which come with higher prices.
The best way to get an accurately sized heat pump for your home is to have a professional assess your needs and help you decide what system is right for you. To give you an idea of your costs based on the square footage you need to heat and cool, you can use the estimates in the table below.
| Living Space (Square Feet) | Recommended Tonnage | Average Cost | Typical Range |
|---|---|---|---|
| 1,000 | 2 | $24,000 | $18,000–$30,000 |
| 1,500 | 2.5 | $27,000 | $21,500–$32,500 |
| 2,000 | 3.5 | $33,750 | $27,000–$45,000 |
| 2,500 | 4 | $37,500 | $30,000–$45,000 |
| 3,000 | 5 | $45,000 | $35,000–$55,000 |
What Impacts the Cost of a Geothermal Heat Pump?
Calculating your geothermal heat pump costs based on square footage alone will only yield a rough estimate of the costs — many other factors can affect your total. These include the type of loop you have installed, your ceiling height, and your area’s climate.
Loop Type
Geothermal heat pumps transfer heat between your living space and the ground through a series of pipes that extend from your house and into the earth. You can install two main types of closed-loop systems: horizontal and vertical.
Horizontal loops extend horizontally beneath the ground, typically situated between 6 and 8 feet below the surface. These are easier and faster to install, as they require excavation, but the holes don’t go nearly as deep as those for vertical loops.
“Horizontal loops take up a very large amount of space, so much so that only rural homeowners are typically in a position to be able to choose horizontal loops,” Hannun said. “Even those homeowners with enough yard space still may prefer vertical loops because to install horizontal loops, you need to do a huge amount of excavation and temporarily destroy whatever is on the surface.”
Vertical loops extend down into the ground to between 200 and 400 feet, so they require more intensive excavation. These are more expensive, but they’re a good option for homeowners who have smaller property and don’t have enough space for a horizontal loop.
“Vertical loops can cost $5,000 to $15,000 more [than horizontal loops], mostly due to drilling,” said Jon Gilbertson, CEO of Chris Heating and Cooling, an HVAC company located in Chicago. “Horizontal loops are laid in shallow trenches, and vertical loops go hundreds of feet deep, perfect for smaller lots or rocky terrain or waterlogged soils or where horizontal space is limited.”
| Loop Type | Typical Cost Range |
|---|---|
| Horizontal | $18,000–$55,000 |
| Vertical | $23,000–$70,000 |
Heating and Cooling Load
Your HVAC professional will determine what size system you need, which is partially based on the square footage you need to heat and cool. However, your pro should perform a Manual J load calculation for more accurate sizing. This calculation takes a few additional things into consideration:
- Ceiling height: Square footage provides an accurate idea of the size system you’ll need if you have standard 8-foot ceilings. However, older basements with 7-foot ceilings and construction that includes vaulted or cathedral ceilings can add space that needs cooling and heating without adding square footage. A professional calculation will take this into account.
- Local climate: The basic rule of thumb is to aim for 1 ton for every 600 square feet of living space, but in more extreme climates, you’ll likely need more power to keep your home comfortable. Homeowners in areas that see extreme temperatures in the summer and winter may require larger systems for the same amount of living space.
- Lifestyle: Your lifestyle also plays a role in your system size and, therefore, your geothermal heat pump costs. Homeowners who set their thermostats particularly high or low in the winter and summer may need larger systems to accommodate their needs.
Site Conditions and Drilling Complexity
“The most significant cost for a geothermal system will be the installation of the loop,” said Stephen Lake, founder of Jetson Home, an HVAC specialist with headquarters in Denver. “The number or length of loops needed can vary with tonnage, which may or may not affect the cost.”
Excavation accounts for around 40% of your total installation cost, according to Angi, or over $14,200 for a typical installation, based on our experts’ cost estimates.
Anything that makes this portion of the job more challenging or time-consuming will drive up your costs. Here are a few standout site conditions to consider that can increase labor costs:
- Soil type: Clay soil is heavy and more challenging to excavate than sandy or loamy soil. Your costs may increase if you live in an area with soil that has a high concentration of clay.
- Bedrock depth: Especially for systems with vertical loops, drilling into bedrock may be necessary to reach the proper depth. Bedrock can sit as close as 8 feet to the surface, so a loop that extends 200–400 feet down will require a lot of time-consuming drilling.
- Slope: For a horizontal loop system, the entire loop must be 6 to 8 feet underground. This may require excavating more land if your yard is sloped, ensuring the entire loop is at the proper depth.
- Yard accessibility: Professionals use heavy machinery to excavate or drill for geothermal heat pump installations. You’ll pay more for time and labor if your yard prevents easy access for excavators and drilling machines.
- New construction versus retrofit: Installing a geothermal heat pump loop on a new construction build will usually cost a few thousand dollars less than a retrofit on an existing home because excavation will already be necessary for foundation pouring.
Equipment Type and Brand
Just like air-source heat pumps used in ductless mini-splits and some central air conditioning systems, you have some options when it comes to the heat pump’s functionality and operation. You can choose from three types of heat pumps: single-stage, two-stage, and variable-speed systems.
Single-stage heat pumps are the most affordable but the least efficient. They operate at a single speed, so they can only regulate temperature by cycling on and off. They’re either heating/cooling, or they’re off. Two-stage heat pumps have a low setting and a high setting for more precise temperature control, and the lower setting can maintain temperature while using less energy, so they’re more efficient. Variable-speed systems provide the best comfort and long-term savings due to their improved efficiency, but they’re also the most expensive.
Your costs will also vary based on the energy efficiency ratio 2 (EER2) rating of your heat pump, which indicates the unit’s efficiency. Higher EER2 ratings will drive up your equipment costs but can save you money over time. According to the U.S. Department of Energy, an ENERGY STAR-rated geothermal heat pump can save you up to $9,500 on energy bills over the life of your system. Optimizing for efficiency will cost more upfront but can also save you more money in the long run.
The brand of your system can significantly impact your equipment costs by thousands of dollars. Premium HVAC brands such as Carrier, Trane, and Lennox will typically cost more than if you choose equipment from Goodman, Rheem, or American Standard. Be sure to check the manufacturer’s warranty and the EER2 rating of the heat pump before you commit, though, as paying more upfront could end up saving you money over time.
Labor and Permitting
Finally, the local cost of labor in your area can significantly impact your pricing. Labor costs account for anywhere from 50% to 70% of the total cost to install a geothermal heat pump, according to Angi. However, labor prices fluctuate widely based on where you live and the local cost of living.
You’ll also need permits to install a geothermal heat pump, as you would for any other HVAC equipment installation or major excavation project. Permit costs also vary widely and usually fall somewhere between $100 and $650, according to Angi. Check with your HVAC technician or your local building department to square away permit fees before you start the installation to avoid surprises.
Federal and State Incentives
Geothermal heat pumps cost more than traditional HVAC equipment, but since they’re some of the most efficient systems available, you may be able to take advantage of federal, state, and local incentives to reduce your effective costs.
Most importantly, geothermal heat pumps are eligible for a 30% HVAC tax credit offered by the federal government under the Inflation Reduction Act. If you owe enough in taxes to take full advantage of this incentive, you could effectively save an average of over $10,650 on your upfront system cost, as it applies to both the equipment and the installation labor. Keep in mind that you will need an ENERGY STAR-certified geothermal heat pump to qualify.
Tax credits reduce your tax liability, not your taxable income. This is good news for homeowners who owe a lot in taxes and want to make energy efficiency upgrades.
You may also qualify for state and local incentives from your township or utility company. Some states offer additional tax credits, but you can also find rebates to reduce your initial costs. You can check the Database of State Incentives for Renewables and Efficiency (DSIRE) for more information about incentives in your area.
How Much Can You Save With Geothermal?
The U.S. Department of Energy reports that installing a geothermal heat pump vs. a standard AC system can cut your energy bills by up to 65%.
Upgrading from a natural gas furnace to a geothermal heat pump could boost your heating efficiency by up to 500%. Plus, you gain the option to cool and heat with one system for overall savings.
According to the most recent data from the Energy Information Administration (EIA), the average electric bill in the U.S. is $136.84, or $1,642.08 annually. Installing a geothermal heat pump would save up to $1,067.35 per year, and since these heat pumps last for 25 years, you’re looking at average lifetime savings totaling nearly $26,700. Geothermal heat pumps cost an average of $19,000 more than an air-source heat pump, but you’ll still save thousands in net savings by going geothermal. Lifetime savings will be even higher since the underground portion of the system is the most expensive to install and lasts twice as long.
A geothermal heat pump should pay for itself in around 14 years and then provide net savings compared to more traditional types of HVAC systems. Since the underground part of the system is the most expensive part to install and lasts for 50 years or more, your savings should increase even further if you replace the interior components after 25 years and continue using the underground loop. Also, remember that these numbers represent averages, so your long-term savings will vary depending on factors such as climate, local energy costs, and installation costs.
Geothermal heating systems are cost-effective, but they provide more than just savings. They can be set up to heat water in addition to heating and cooling your living space, they last longer than central AC and heating systems, and they’re usually quieter during operation.
Maintaining a Geothermal Heat Pump
Long-term savings are great, but what kind of maintenance is required for a geothermal heat pump? Luckily, not much.
“Like most heat pump systems, the maintenance required for a geothermal system is low compared to traditional HVAC systems,” Lake said. “A geothermal system that is installed properly can work for decades with little maintenance.”
It’s a good idea to have a professional HVAC technician inspect your system once a year and perform a tuneup to reduce the risk of damage and maintain smooth operation and high efficiency. However, your system will need little maintenance beyond that.
“Occasionally, the ground loop can require service to check or top up fluid levels (often Glycol in cold climates) and the pumps can require service or replacement,” Lake added. But there’s no combustion like you’d see with a gas-fired or oil-fired boiler, and there are no above-ground components — like condensers — exposed to the elements, so you’ll get more from a geothermal system than you would from most other types.
Next Steps
Geothermal heat pumps cost more than traditional systems, totaling $35,500, on average, to install. However, they last longer than central AC and traditional heating systems, provide both heating and cooling, and can save you up to 65% on annual electricity costs compared to other electric heating and cooling options. The upfront cost is high, but they almost always pay for themselves and provide net savings over time.
If you think geothermal is for you, reach out to a local HVAC contractor who holds North American Technician Excellence (NATE) certification and has experience specifically with geothermal systems. Confirm that they’ll perform a Manual J load calculation to size your system properly, and ask if they can help you apply for incentives and rebates like the federal tax credit.
FAQs About Geothermal Heat Pump Costs
Why is geothermal so expensive to install?
Geothermal heat pump systems cost more than other HVAC system options largely because they use an underground loop to transfer heat to and from the earth. Installing that loop requires excavation, laying the loop, and backfilling, all of which are labor-intensive and time-consuming.
You could see cost spikes for your installation if there are complications related to the excavation process, such as heavy clay soil, bedrock that’s near the surface, or small property sizes that require a deep vertical loop rather than a wide horizontal loop. System size, efficiency, and brand can also affect prices.
How long does it take to pay off a geothermal heat pump?
A geothermal heat pump will pay for itself in an average of 14 years, or an average of 10 years if you can take the entire 30% federal tax credit to effectively reduce the installation cost of your heat pump. Since these systems last for 25 years, on average, you should see substantial net savings over the equipment’s lifespan, totaling over $11,000.
The upfront system cost, local electricity costs, the climate in your area, and your home’s size can all impact your savings. You can ask your installer about an estimated payback time frame to see how the conditions in your specific home affect these numbers.
Do I need a big yard for a geothermal system?
The average home requires a geothermal heat pump with a capacity of between 3.5 and 4 tons. To install a horizontal loop, you need approximately 2,500 square feet of horizontal area in your yard per ton. That means the average home will require between 8,750 and 10,000 square feet of yard space available for excavation to install a standard geothermal system.
However, homeowners can opt for a vertical loop system, which can cost $5,000–$15,000 more upfront but can be installed in much smaller yards. You can install a vertical system on just about any property size, as you only need a single hole that’s a few inches in diameter. Even for vertical-loop systems that require multiple loops, they only need to be spaced about 20 feet apart.
Can geothermal heat my whole house?
A properly sized geothermal system can heat your entire home, regardless of the square footage, but larger homes will need substantial yard space — around a quarter of an acre for every 3 tons you need — for a horizontal loop setup.
Geothermal heat pumps are more efficient than most other heating systems, so they’ll even save you money while they heat your living space. You can even set up your geothermal heat pump to heat your living space and your domestic hot water for cleaning and bathing.
