The 21st century will see the world converting to other forms of clean energy because of global warming. Climate warming is one of the hottest topics of this century and “Green Technologies” will be the solution to the problem. The main “Green Technologies” which almost everyone focuses on are Solar and Wind systems as well as electric vehicles however there are several others such as Ocean Energy, harnessing energy from waves, tides and currents, Vertical Farming which doesn’t even require soil thereby reducing water usage exponentially contributing towards a sustainable energy infrastructure and Geothermal Heating and Cooling Systems to name a few you probably haven’t even considered.
But which of these “Green Technologies” named herein is the most energy–efficient, environmentally clean and cost–effective for you, the consumer? You will be surprised to learn that according to the U.S. Environmental Protection Agency (EPA), Geothermal Heating and Cooling systems are “the most energy–efficient, environmentally clean and cost–effective space conditioning systems available today”. Additionally, installing a geothermal system is equal to planting 1 acre of trees or removing 2 cars from the road.
Also, according to data supplied by the U.S. Department of Energy, a typical residential 3-ton geothermal heat pump system produces an average of about one pound less carbon dioxide (CO2) per hour of use than a conventional system. To give you an idea as to the environmental impact of this residential Geothermal system, this would have an environmental equivalent of reducing emissions from one automobile over that same time period by nearly 60% or planting 12 acres of trees annually!
Having a Geothermal Heating and Cooling system increases the value of your home since there are no monthly costs for heating or cooling your house once your initial investment is made installing one of these systems. Not only does it eliminate those monthly costs but also gives you a huge advantage in the market when you go to sell your house in the future. You can ask for a higher price and be justified in doing so as your appraisal will support it. Additionally, your “days on market” will also be less because of this one main advantage.
Geothermal Heating and Cooling Systems – Applied to Large Developments
Now imagine this… if just 100,000 homes across the United States were converted to only a 3-ton geothermal heating and cooling system, the following environmental effects would be realized according to data provided by the United States Department of Energy and the EPA:
Overall, our annual CO2 emissions would be reduced by 880 million pounds. This is HUGE! That’s equivalent to eliminating auto emissions from nearly 60,000 vehicles and also equivalent to planting over 120,000 acres of trees.
Additionally, current the 650,000 residential geothermal heat pump installations within the USA alone:
- Produce an annual savings of 5.2 billion kilowatt hours of electricity usage.
- Reduce fossil fuel consumption by 26 trillion BTU’s.
- Eliminate nearly 8 billion pounds of CO2.
Also, those 650,000 geothermal heat pump installations have provided the environmental equivalent of:
- Removing emissions produced by 840,000 vehicles.
- Planting 250,000,000 trees.
- Reducing the reliance on oil imports by 14,000,000 barrels per year.
Now think about this, if large developers within the US like D.R. Horton, Toll Brothers, Pulte Group, Lennar Corp and others started building large subdivision utilizing geothermal heating and cooling systems in lieu of conventional heating and cooling, we would benefit by having the following environmental impact:
- An annual reduction of 3,800,000 kilowatt hours of electricity.
- An annual reduction of over 19 Billion BTU’s of fossil fuel.
- That fossil fuel reduction would eliminate the need to import 10,245 barrels of crude oil, (or 430,290 gallons of crude oil).
- The associated reduction energy usage would reduce annual carbon emissions by over 760 metric tons.
- The impact of these reductions would be equivalent to taking approximately 600 cars off the highway or planting 382 acres of trees.
and that’s per large subdivision. Every zoning board in the US should now start requiring all subdivisions to have these geothermal heating and cooling systems installed as part of the subdivision plans. Think about it, they already require underground utilities, widening of nearby streets supporting a subdivision if the community isn’t a “planned community” and several other regulations. Why not adding geothermal to the mix?
What’s the real-life price tag of a geothermal heating and cooling system?
The average price for a residential geothermal heating and cooling system depends on the actual physical size of your house and the amount of BTU’s (British Thermal Unit – a unit of heat defined as the amount of heat required to raise the temperature of one pound of water by one degree Fahrenheit.) required for your sized house. Typically, a 1-ton unit provides 12,000 BTU’s and generally a home will need a unit between the ranges of 2.5 tons to 5.0 tons.
As such, homeowners can expect a total cost to reach between $18,000 to $45,000 on geothermal heating and cooling systems including a complete geothermal installation, heat pump and other necessary equipment. Please note that the following factors which will impact the cost range of your geothermal system: size of your home, the location, types of soil, available land, local climate usability, condition of existing duct work, and your choice of heat pump.
Because of an approximate annual growth rate of 12% in the geothermal heating and cooling market, geothermal costs of a decade ago as compared to today are becoming much more competitive, thanks to the fact of having more manufacturers offering ground source heat pumps, with more experienced and efficient installers in the market as well.
Are there any Tax Advantages for a geothermal heating and cooling system?
Today, the tax credit currently stands at 26% throughout 2021 and 2022 before decreasing to 22% in 2023 and down to zero in 2024 however Congress has continually renewed the tax credit since originally implemented in 2005, except for the year 2016 but reinstated it in 2018 making it retroactive to January 1, 2017. With climate concerns more prevalent than ever, it might be safe to say tax credits will survive well into the future but we can’t say that for sure just yet.
So, as long as your geothermal heating and cooling system is up and running by the end of 2022, you can claim the 26% credit on your federal income taxes. All you have to do to get the tax credit is simply filling out a form (IRS form 5695 as of this writing) declaring the amount you spent when you file your federal income taxes. We recommend you get with your tax advisor to determine everything that you can include in your filing to optimize your tax credit and minimize your risk of claiming something not allowed.
It’s an incredible advantage and can significantly reduce the cost of the system overall. There’s no limit to the value of the tax credit meaning that it doesn’t matter if you spent within the price range stated above or more, you can apply for the tax credit. Obviously, you must still own the house where the system is installed to get the tax credit due based on the year you installed the system.
Please note that not every geothermal heat pump is qualified; our geothermal heat pump has to meet Energy Star (a federal energy-efficiency program) requirements meaning the heat pump must meet or exceed specific efficiency standards. All Energy Star geothermal heat pumps are over 45 percent more energy efficient than standard options.
The geothermal credit can’t be claimed for rental properties though unless you use the property as a second home for part of the year. For example, if you live in your second home for 3 months out of the year but rent it out the rest of the time, you may be able to claim 25% of the 26% tax credit for that home also.
The Geothermal Tax Credit allows homeowners to apply their tax credit over multiple years but you cannot use it for a refund. For illustrative purposes, you purchase a geothermal system for $20,000. Using the 26% tax credit figure, you are eligible for a $5,200 tax credit. But let’s say your tax liability for the year was $3,000. In this situation, you can simply claim $3,000 in credit this year and $2,200 on next year’s tax filing but you cannot claim the full amount this year thinking that you will get a $ 2,200 refund.
Lastly, check with your State, a qualified financial advisor or your CPA/Tax attorney to see if your State offers any incentives also like NY, Connecticut or Massachusetts.
Geothermal Energy Uses
There are numerous applications for geothermal usage of which I have barely scratched the surface in this post like, for example utilizing geothermal for electric power generation. Geothermal power plants can produce electricity in three ways which I won’t go into detail in this post as I wanted to focus on you, the homeowner in this post.
However, I wanted to mention it briefly here because it can affect you the homeowner in other household electricity costs. Basically, all three methods to produce electricity control the behavior of steam and use it to drive electrical generators. The fact that the excess water vapor at the end of each process is condensed and returned into the ground, reheating it again for later use, makes geothermal generated electrical power a form of renewable energy.
Below is a chart showing several other uses for geothermal systems.
I’ll bet that if you use your thinking cap, you can come up with other uses too like heated pools and hot tubs for example.
Geothermal Heating and Cooling Systems – Conclusion
In conclusion, I started out thinking I was going to write a post about solar here but then remembered doing a website for a client of mine several years ago who installed geothermal heating and cooling systems alongside of his electric/electrician services business, and easily drifted to this subject matter for this post.
Upon reaching the conclusion here, I realized how I really NEVER thought about geothermal as being a “Green Technology” yet it is a renewable form of energy AND it is also “clean”. I am sure that since I NEVER thought of geothermal as being “Green”, there must be many of you reading this post who also aren’t or weren’t aware of its “greenness” either.
So if you are thinking of or when the time comes to replace your furnace/heater or AC unit, think about going “Green” with a geothermal heating and cooling system and increase the value of your home instead of buying a new heater or AC unit which depreciates over time (and less time today because of manufacturers’ built in obsolescence today – ya know, America’s idea of value these days). You’ll be happy you contributed to your child’s better world and benefit the planet as a whole!
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