There is no question that a geothermal heat pump system is a great investment. For one, GHPs are both environmentally friendly and financially effective. These systems leverage the natural, renewable energy in the ground to transfer heating or cooling to and from the building. This efficient means for heating and cooling provides owners with the benefit of lower utility bills, reduced maintenance costs and fewer emissions. Despite the many advantages of a GHP system, building owners and homeowners often face hurdles related to the first cost of the system. Luckily, there are several financial solutions available to help offset this burden and provide owners with a considerable return on investment.

Components that Contribute to First Cost
Like with any major purchase, it’s important for prospective buyers to grasp the full financial picture. Understanding some of the major components that contribute to the first cost of a geothermal system will help buyers to understand the value of their purchase.
Here are 2 major components that contribute to first cost:

  1. Ground Loop: Unlike traditional HVAC systems, geothermal heat pumps need access to the energy beneath the surface of the earth. In order to do this, a ground loop, or network of underground piping, needs to be installed This component, which must be drilled or trenched often accounts for much of the first cost but this renewable asset is guaranteed for fifty years and probably lasts one hundred years. Cost of the ground loop will vary depending on size and other factors.
  2. Geothermal Heat Pump and Distribution System: A geothermal heat pump is the actual energy efficient technology, installed inside your home. Cost of the geothermal heat pump itself will vary depending on your home or building’s unique conditioning needs.

Financial Opportunities
Insight around what goes into developing and installing a geothermal heat pump system should help buyers to feel confident about the value of their purchase. If the first cost of a GHP system still seems daunting, potential buyers can rest easy knowing that there are ample financing and incentive opportunities available to help counteract this.
Here are a few options:

  • Manufacturer/Installer Financing: Many manufacturers and installers offer financing options, often with $0 down. Monthly payments can then be offset by the energy savings that result from installing a new geothermal system. Because GHPs have an average life cycle of 25 years and ground loops can last for up to 75 years, these types of programs can be spread across longer terms.
  • U.S. Federal Incentives: This widely known tax credit lets homeowners claim 26 percent of the amount they spent on purchasing and installing a geothermal heat pump system through 2020. The percentage decreases to 22% in 2021.
  • U.S. PACE Loans: Property Assessed Clean Energy is a type of financing for renewable energy and energy efficiency projects. These loans are backed by the US government, tied directly to the property and repaid through property assessments as an addition to the owner’s regular property taxes. Geothermal heat pump systems qualify for PACE loans, which can cover up to 100% of hard and soft costs. Please note that PACE is a relatively new program

So check to see if there is a Residential or Commercial PACE program in your area.
These are just a few solutions to compensate for the higher first cost of a geothermal system. Taking advantage of these opportunities means you’ll reap the many benefits of a geothermal heat pump system now and for years to come.

John (Jack) P. DiEnna Jr is the Executive Director of the Geothermal National & International Initiative, and can be reached at

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