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Geothermal Heating and Cooling

The greatest question during our preconstruction meetings recently has been about Geothermal Heating and Cooling. What is it? With natural gas prices at an all time low, is it worth it? How does it work? Are there any tax credits I am eligible for?

These are all very valid questions. First and foremost, what is the general concept of geothermal and how does it work? In general, it is the method of harnessing the earth's constant temperature underground. In the winter months, the temperature underground is much greater than the temperature above ground and in the summer months the temperature below ground is much less then the temperature above ground. To harness this energy, we install a closed system made up of a series of loops underground filled with distilled water. This water is simply circulated through the series of loops to either heat or cool the home. In the winter months, the water is warmed in the ground and put under pressure. Water under pressure increases its boiling point. This heated water is then run through a coil where air can be blown across the coil to create warmth. In the summer the reverse occurs; the warm water is cooled in the earth and air is blown across a cooled coil.

This energy efficient process makes a lot of sense, but is it worth it? Historically, natural gas prices fluctuate with the economy. Therefore, as the state of the economy improves, natural gas prices will increase. Looking forward to next year, forecasts say natural gas prices are expected to increase. Without a doubt, a geothermal system is more expensive to install, but will save you money in the long run.

Clients who install a geothermal system are eligible for a 30% tax credit for the cost of the entire system. For example, a standard natural gas system in a new home costs $15,000 to install, and the geothermal upgrade cost is an additional $15,000. However, with a geothermal system, you are eligible for a tax credit of 30% of the total cost, which is $9,000. Taking your tax credit into account, your geothermal upgrade cost will be reduced to only $6,000! This brings your system payback down to a 3-4 year average. After 3-4 years, your geothermal system is making you money. As always, any tax related issue should always be discussed with your accountant to ensure eligibility. So is it worth it? The answer is ABSOLUTELY!

If you would like to learn more about geothermal and its benefits, please feel free to set up an appointment.

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