Here's What to Know if You're Considering Switching to Geothermal Heat

Allie Ogletree
Written by Allie Ogletree
Updated October 4, 2021
A woman reading a book on couch at her home
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Whether or not geothermal is worth it depends largely on where you live and how much you're willing to spend upfront

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Geothermal units haven’t come down in price much over the past few years. They still cost between $20,000 and $25,000, on average, which is about 30% to 40% more upfront than a traditional furnace and air conditioner. This doesn’t mean that choosing renewable energy for your home heater isn’t worth it. Here’s what you need to know if you’re considering switching to geothermal heat.

What Is a Geothermal Heat Pump?

Geothermal heat pumps work by capturing the heat deep within the earth with pipes installed somewhere between 200 to 500 feet below your home. This in-ground source heat pump system is a ground loop that relies on a steady 55°F temperature to provide heating and cooling to the home via a geothermal unit inside your house. 

The systems use no fuel and can be three to four times more efficient than the highest-efficiency air-source units. 

How Much Does a Geothermal Heating Unit Cost?

Geothermal heating units can range anywhere from $20,000 to $25,000. Though this may seem high, there is some good news. According to ENERGY STAR, you can receive a 26% tax credit for geothermal heat pumps installed in 2021 through the end of 2022. After 2022, the rebate decreases to 22% until January 1, 2024.

Geothermal Heating vs. Natural Gas

For many homeowners on the fence about geothermal heating, one common question about heating one’s house is whether geothermal heating or natural gas is better. This is a loaded question because every home is different, and many factors can come into play. At the same time, there are many benefits to geothermal heating systems

Here are a few factors to keep in mind.


Geothermal heat pumps are more costly than natural gas systems, coming in at $20,000 to $25,000 compared to the cost of a natural gas furnace, which is between $2,600 to $6,400. For homeowners who cannot pay the upfront costs, natural gas may be a much more affordable option than geothermal heat. 


Geothermal systems last about twice as long as a conventional air-source unit. Expect your system to run for 20 to 25 years compared to a traditional furnace, which will only last from 15 to 20 years, and an HVAC, which tends to only last from 10 to 15 years


Homes in a quiet urban neighborhood
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Both your area’s climate and the type of area you live in can determine whether or not geothermal heating is worth it. For example, if you’re in an area that requires very little heating, such as Florida, it won’t benefit you as much as if you lived in, say, Minnesota. 

At the same time, if you live in a rural location, there might not even be an option for installing geothermal heating because of lack of availability or demand. You might wish to do a quick Google search for a local geothermal heating installer near you to see if geothermal energy is an option.


As stated by the U.S. Department of Energy, investing in a geothermal heat pump can mean a 25% to 50% decrease in energy consumed compared to traditional systems that use air. In addition, your geothermal system can be as much as 300% to 600% more efficient, making this a great HVAC investment long term.

Tax Credits

Installing a geothermal heating system means you are eligible for a federal tax credit of 26%, bringing your initial cost closer to the price of a traditional unit. Not to mention, you have a long-term payback for cheaper utility bills. 


Since geothermal heat pumps only need to be a few hundred feet into the ground at most, they aren’t capable of fracking bedrock like oil and natural gas industries do. Nor does geothermal energy require the depletion of the earth’s natural resources. For these reasons, geothermal energy is one of the most renewable and sustainable alternatives to conventional heating and cooling systems.

Geothermal Resources

If you’re interested in generating electricity in commercial areas, another fact worth noting is that geothermal plants can’t exist just anywhere. To build a geothermal power plant to provide geothermal electricity to buildings, plants must tap into geothermal reservoirs that are 212°F (100°C) or greater. 

This might be feasible for California, which has access to these hot spots, but not so much for Michigan. Keep in mind, however, that homes do not require connections to geothermal power plants for geothermal heating and cooling alone. In this case, geothermal heat pumps will suffice. 

The EPA created a map that identifies potential geothermal systems for more information on whether or not your area has geothermal resources.

What to Expect When Installing a Geothermal Unit

The last thing you want is to go through all of the steps to install a new unit only to not have the correct heating and cooling capacities for your geothermal system. That’s why it’s a good idea to ensure the installation company performs a Manual “J” load calculation before getting started. 

This is technical talk for a room-by-room analysis that determines how much air is needed to keep the room’s temperature comfortable. A sufficiently-sized unit will meet the home’s energy needs. 

Once that’s complete, get ready for demolition day. Adding a geothermal system typically involves a serious excavation in the backyard. You might even feel like your yard is comparable to a monster truck arena, but advances in technology—and a skilled and trained professional—can help limit the damage done to yards.

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