Making the Case for Geothermal

At Illiana Heating, we don't do a lot of Geothermal installations in a year, but when we do, we try to do them very well.  Recent developments in the world of Propane pricing have inspired me to put together this post with the hope that it reaches some folks that are experiencing the pain of high propane prices and may not realize there is a very real and reliable solution available that will solve their home heating problems once and for all.  That solution is a heat pump - more specifically a Geothermal or ground-source heat pump (or "Geo")

I wrote that paragraph over a year ago.  I don't know why I stopped after that point, but I did and I just couldn't get the rest out for some reason.  I love Geothermal heat pumps - I think they're wonderful technology that provide very comfortable heating and cooling at unbeatable efficiency.  They're not for everyone, but that's largely a factor of cost more than anything.  However, the past couple of weeks have once again reminded me everything to like about Geothermal heat pumps and why for some people they are just about the perfect answer to  the question "What's the best way to make my home comfortable without spending a fortune on utility bills?"

A little over a week ago we completed the installation of 2 new Geothermal systems in an existing home.  The home was currently served by two very old natural gas furnaces and matching air conditioners.  The furnaces were huge - physically and capacity-wise - and were in need of replacement.  Although the homeowner had the option to install state-of-the-art natural gas furnaces and two-stage or variable speed air conditioners, he chose to go with Geothermal and I'm glad he did.  I was reminded of all the benefits of Geo when performing the startup testing on the new units last week.  Quiet, comfortable, efficient...the list goes on.

This past weekend we had a chance to visit with some great friends at their home that is now a little over two years old.  We had the privilege of installing Geo in their home when they built it.  Their situation was different - they didn't have natural gas available so they were looking at using either propane or electric to heat their home.  With Geothermal in place, their overall cost of living in their home, between utility bills and mortgage payments, is lower from day one because of Geothermal.  When their neighbors were suffering with $700 propane bills for a single month and electricity bills on top of that, their highest electric bill was less than $300 for heating their entire home along with lights, appliances, computers, etc.  I should also remember to mention just how comfortable their home was on this warm weekend.  75 degrees inside, less than 50% humidity without a dehumidifier running, and no noisy condenser outside interrupting conversations in the back yard.

So, that's what inspired me to finally come back and finish what I started over a year ago.  So, without further, ado, I'm going to do my best to make a case for Geothermal as a great solution for your Heating and Cooling needs.

To help understand why a system like this can save you money, it’s important to understand a bit about how Geo works and why it is so efficient.  First of all, the system itself does not create heat like a gas furnace by burning fossil fuel.  Instead, it is a heat pump and, being a pump, it simply moves heat from one place to another.  You already have at least one heat pump in your home - you probably have two or three.  Your refrigerator and your air conditioner unit are both heat pumps, they're just configured to work in one direction only.  They take heat from one place (inside your fridge or home) and move it somewhere else (outside your fridge or home).  It's that simple - move the heat.  A Geothermal Heat Pump uses that same concept to either cool or HEAT the inside of your house.  However, instead of transferring heat to the air, like your fridge or AC, it uses a series of pipes that run underground (or water from a well) and exchanges heat with the earth.  Being a reversible heat pump, it takes heat from the ground to heat your house in winter and, to cool your home in the summer, takes heat from your house and deposits it in the ground.

Where do the savings come from?  Traditional furnaces are rated in AFUE (Annual Fuel Utilization Efficiency) and air conditioners are rated in SEER (Seasonal Energy Efficiency Ratio).  Since we use much more heating than cooling in our region of the country, I will focus on heating performance as that will be where most if not all the savings come from (in residential at least). Today’s most efficient furnaces are rated around 97% AFUE – that means for every dollar of gas you burn, you get $0.97 worth of heat delivered to your home.  Given that many furnaces in homes today are 80% efficient or lower, and with today’s fuel prices, that's a lot of dollars going up your chimney.  Geothermal Heat Pumps, on the other hand, are rated using a value called COP (Coefficient of Performance) to rate their heating performance.  COP measures how much energy is delivered for every unit of energy used.  Geothermal units have a COP of around 4 or higher – that means that you get $4 of heat for every $1 of electricity used.  So, if we rated a Geothermal unit like a furnace, it would be 400% efficient!  But, that efficiency isn’t magic - it’s because we’re not creating heat; we’re just moving it from underground where it's been heated by the sun conveniently stored for us in the yard.  Geo simply takes advantage of the heat already there and puts it where you need it.  

So, why doesn't everyone install Geothermal?  For one thing, there is a large cost to installation vs. simply replacing or installing a forced air furnace.  The units themselves are more expensive but you also need to install an expensive loop field that you don't have with a traditional furnace and air conditioner.  If you have natural gas available, the savings aren't as great - not because Geothermal is any less efficient, it's simply a factor of the cost of energy.  To show what that looks like, we'll figure out how much 100,000 BTU of energy costs when you buy it from  your utility or propane supplier.  I used average on-bill costs from my own utility bill (I have NIPSCO for gas and electric) for the cost of natural gas and electricity.  I used information found here to determine an LP price of $2.29 per gallon.

For natural gas, one therm (what you pay for) equals 100,000 BTU.  My average price per therm is around $1.10 per therm. So:  Cost of natural gas = $1.10 for 100,000 BTU.

For propane, one gallon contains 91,502 BTU (as found here).  With a cost of $2.29 per gallon we find that 100,000 BTU = $2.29 per gallon * 100,000 BTU/91,502 BTU per gallon = $2.50 for 100,000 BTU worth of propane.

For electricity the conversion is a little trickier, but still simple enough, we just need to get from kilowatt-hours (how you're billed) into that same unit of BTU.  On my bills, one KWH costs $0.12. One KWH equals 3,412 BTU, so to calculate the price of 100,000 BTU, we use this equation:  Cost of electricity per 100,000 BTU = $0.12 per KWH * 100,000 BTU / 3,412 BTU per KWH =  $3.52 for 100,000 BTU worth of electricity.

So, as you can see, we only need to buy $1.10 worth of natural gas to get the same amount of energy as $3.52 worth of electricity provides or $2.50 of propane.  Using a Geothermal with a COP of 4, however, with that $3.52 worth of electricity, we can provide 400,000 BTU of heat to the home.  Buying $3.52 worth of gas gets us 320,000 BTU, but with a 97% efficient furnace, we only deliver 310,400 BTU of heat to the home.  $3.52 of LP is 140,649 BTU which as 97% delivers 136,430 BTU of heat into the home.  

When we look at the numbers that way, it's not hard to see why Geothermal vs. Propane is a no brainer, but it's a little harder decision if you have natural gas.  But guess what - you can't build a furnace that's more than 100% efficient, but there are already Geothermal systems on the market with a COP approaching and in some configurations exceeding 5.  That means that for every $1 in electricity you buy you get $5 worth of heat.  In other words, there's still room to improve Geothermal performance in coming years while traditional furnaces have just about reached the end of their possible improvements.

Geothermal has a number of other benefits as well: 

  1. Federal Government Tax Credit- System are still eligible for a 30% uncapped credit – that means a $25,000 Geo installation would get you $7,500 in tax credits!
  2. Water Heating Cost Savings - Geo has the ability to generate some of your domestic hot water in addition to heating and cooling your house with the same great efficiency to save you even more.
  3. Longevity - Geothermal Heat Pumps last 30 years!Why so much longer than traditional systems?It's because the units are not subject to the wear and tear generated by the heat of an internal fire (like a furnace), and don't have to live outside year round (like an air conditioner).One Geo system could outlive two traditional Furnace/AC systems, saving you money all the while.
  4. Comfort and Cleanliness - A Geothermal system, installed by Illiana Heating, provides you with 3 stages of Heat and 2 stages of Cooling along with a variable speed blower motor.This means the system will be providing just as much heating and cooling as you need for improved comfort and savings while also allowing for constant air filtration and circulation.

So, if you have any questions about Geothermal I recommend you visit our Geothermal page or ask a question on our Facebook page.  Thanks for reading!