This week, our geothermal team member and operations coordinator, Zack Parker, has taken over the blog to explain what he thinks are the main reasons more people have not yet installed geothermal heat pumps...
When we sit down and talk to our customers, or give a presentation on what geothermal heating and cooling is, this is one of the most common questions we encounter: Why don't more people go geothermal?
The average person usually does not even know what Geothermal energy is let alone understands the value proposition of a $30,000 Geothermal heating and cooling system involving multiple tax rebates/credits. These are the 2 major hurdles in the way of an average homeowner purchasing a socially/environmentally progressive Geothermal heatpump instead of replacing with yet another fossil fuel burning traditional furnace they are more familiar with.
Hurdle 1: Geothermal is not widely known or understood
As a geothermal sales representative I spend a lot of my time educating potential customer on the basic principals behind ground source heat pumps and how geothermal systems work. I am constantly amazed at how little the majority of people are aware of geothermal and the multitude of associated misconceptions. Even homeowners who have taken the time to reach out to a Geothermal installer and ask for a quote sometimes do not even know what they are buying. Some just know “My neighbors got one and they say it works great!”. In this case it is not just my job to convince these folks purchasing a geothermal system is a good investment but also make sure they know what they are buying, how it works, how it saves you money on utilities and the positive environmental impacts compared to traditional heating and cooling systems. The reality is that homeowners with geothermal systems are the best advocates for convincing others to make the same transition. It is essential that the general public start to understand how Geothermal energy works so we can start to transform the overall public perception of this technology and make it more universally accepted as the normal. Lack of knowledge creates skepticism, doubt and incorrect information to be spread regarding the geothermal industry in general. This lack of knowledge can be combated with responsible sales efforts from geothermal installers to make sure the public perception and understanding of geothermal heating and cooling is positive and digestible by your average homeowner. This is achieved by focusing on educating our customers to become Geothermal advocates instead of rushing through the sales process with only one goal in mind…..the signature.
Hurdle 2: Understanding the Value
In order to understand the real-world value of your Geothermal system you first need to understand how much your system actually costs. Sounds easy right? Residential geothermal heatpump installations are eligible for a 26% federal tax credit and a $1500/ton NYSERDA rebate. The NYSERDA rebate is paid to the installer upfront and typically is around $7,000-$8,000 (depending on system size, etc.). The federal tax credit is a real credit and not a deduction. This money is received as part of your income tax return check that you normally receive. The total cost after receiving these incentives is a homeowners “out of pocket” cost and the value that should be used to calculate a “payback period” on your investment.
With necessary utilities, like heating, you really need to know what you are “comparing to” in order to calculate a relevant “payback period”. For example, if you live somewhere with access to natural gas, you will have a longer payback period than somebody who lives in a rural location where natural gas is not available and therefore would need to heat with propane or fuel oil. Propane and fuel oil are more expensive than natural gas, thus producing a shorter payback on a geothermal investment as the utility savings add up quicker. A geothermal customer who normally spends $4,000 on propane annually will see faster savings than someone who normally spends $2,000 annually on natural gas. The most accurate and real world way in my opinion to calculate a geothermal system payback period is to take what your annual heating fuel cost from your previous system and subtract the amount of electricity that your geothermal system will use to come up with annual savings. At that point you can divide the “out of pocket” cost of your Geo system by the annual savings to come up with a payback value in number of years. This can be a bit misleading and not a “apples to apples” comparison for some people because Geothermal heatpumps also do your central air cooling and not just heating. So you need to either include prior A/C energy usage into your heating fuel expense total or decrease the estimated amount of electricity your heatpump will use to represent just heating and no cooling season. On Average, for a 2000 sq ft home with a forced air geothermal system, it costs between $600 and $1,000 for heating and cooling annually. Another aspect to complicate things is that your geothermal system will produce domestic hot water which is not factored into this basic calculation (More savings). Usually homeowners converting form propane see a payback period of 5-7 years where natural gas converts payback is 8-10 years.
After understanding the basic payback period and financial breakdown, it is time to consider all of the other less-obvious benefits and added value to homeowners...
Geothermal heatpumps run on electricity and is a huge step in getting your house free from dependence on volatile fossil fuels. Electricity is a much more sustainable and predictable form of energy than and eliminates the risk of inevitably rising fuel prices in the future.
Heating with electricity also means no combustion and therefore no venting required of the equipment. This reduces your risk of carbon monoxide in your home and can lower your homeowners insurance compared to traditional fuel source heating.
Another obvious benefit is the environmental and social responsibility of choosing an alternative energy source for your home. This can get lost in the shuffle when you start diving into all the numbers but the bottom line is that doing the “right thing” will have countless positive ramifications on the future of our planet and the attitudes of the next generation.