The Cost of Geothermal Heating and Cooling

March 2011

Dear Friends,

Today very few geothermal-informed people doubts the high energy efficiency of a properly engineered and installed geothermal heating and cooling system. For many projects, the decision to go geothermal rather than conventional is straightforward: with the tax credit offsetting the upfront cost and the significant down-the-road operational cost savings, there is no reason to go otherwise but geothermal; or, for some special projects such as historical  renovations where there is no place to put the cooling towers or condensing units outside, geothermal system may be the only attractive option.

But for many other projects, the obstacle preventing people from going with geothermal, is still the considerably higher upfront cost compared with conventional systems. The key to decision-making usually involves the calculation of payback time of the geothermal cost differential or the ROI (Return Of Investment), based on current or forecasted electricity, oil or gas prices. Great environmental benefit as a 70% energy-saving geothermal system gives to our planet, on an individual level, however, who could blame people for forgoing the high energy efficiency after such sensible economic calculations?   

On a collective level, however, we human beings are utterly fooled by such economic calculations. Fossil fuel not only is non-renewable, but also produces great amount of  greenhouse gases to our planet. Its purchase price reflects neither its preciousness of being non-renewable, nor does it fully account for the harm to our environment during the process of exploration, production, transportation and actual use. The conflicts in the oil-producing regions, the not-so-long-ago oil spill in the Gulf of Mexico …What other reminders would one need for this love/hatred mixture of oil?

How about nuclear power? You may fill me in here, my friend, about the tragedy that’s taking place right now in Japan.  It could, perhaps, be a matter of technology. Nuclear power plant may be built earthquake-proof, new technology may be found for nuclear waste disposal so that the radioactivity lasts not thousands of years (how long has humankind’s civilization been?), but a more tolerable duration. Nevertheless, to say the bare minimum, nuclear power, like the fossil fuel, does not come to us easy. It comes with huge, even catastrophic environmental and social cost that is not accounted for in its purchase price.

On the other hand, a geothermal heat pumps system with a COP (Coefficient Of Performance) of 4.0 extract 3 units of renewable energy from the ground with 1 unit of electricity input during heating, and what harm could a system failure do to our environment? minimum to none. For a close-loop system, the worst scenario I can imagine is that the food-grade glycol solution leaks into the ground, causing no harm really. Considering the disasters oil and nuclear power could bring to us, how much does the differential geothermal upfront cost really weigh? I’d say, it weighs nothing!

When people make a donation for a good cause, they do not do the ROI calculations. Our mother earth would really appreciate it if her inhabitants use this same kind of thinking when they are faced with the options of geothermal and conventional heating and cooling systems: yes you may be paying more upfront if you choose geothermal, and you may not get your money back for a long time, but would you consider this extra cost a donation to our earth? It is truly a good cause.

Very Truly Yours,

George Hu, PE, LEED AP, President
AWE | Air Water Energy Engineers, Inc.


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