Geothermal Heating Back to Home Page

I have been asked on a number of occasions about geothermal heating systems, and if they are really worth the cost. I find there are a number of misconceptions about this method of heating/cooling, and public perceptions are not being helped by the claims made by some installers. I even had one mailer that boldly claimed efficiencies of greater than 100%. Energy efficiency is defined as “The percentage of total energy input into a machine or equipment that is recoverable as useful work or heat.” You can’t get more out of a machine than you put in, but you can rate the performance of a heat pump with something called the Coefficient of Performance (COP). COP is defined as “The percentage of the electrical energy input compared to the total useful heat recovered”, and is usually more than 100%. One uses total energy, and the other only electrical energy. COP does not account for the heat recovered from the heat source.

Geothermal heating systems are more correctly called geothermal heat pump systems, and have one thing in common; they all use a refrigeration cycle to transfer heat. We all know that a refrigerator has a compressor. But do we all know that it also has an evaporator and a condenser.


All refrigeration systems utilise a refrigerant that is not quite sure it wants to be a liquid or a gas at atmospheric temperatures and pressures, and it takes advantage of something called the “Latent Heat of Vaporisation”. It takes substantially more energy to vaporise a liquid than it does to raise the temperature of the liquid to the vaporisation temperature. Propane is one of those liquids, but it is also very combustible, and for that reason it is not often used. So if we allow our volatile liquid to evaporate, we can extract heat from the surrounding environment (eg. inside of the refrigerator). We can then take the evaporated gas and compress it to a higher temperature and pressure. Sending that hot gas through a condenser extracts heat from the gas to the surrounding environment (eg. outside of the refrigerator). As it cools, the refrigerant is returned to its liquid form. If we reversed the cycle, we could heat the inside of the refrigerator and cool the surrounding room.

The simplest and most recognisable form of heat pump is an air conditioner. This can also be called an air-to-air heat pump. Heat is extracted from the air inside a building, and discharged to the outside air. The cycle could be reversed to heat the building in the winter time, but unfortunately that is not very efficient. For Kelowna, the extreme maximum is 39.5°C and the extreme minimum is -31.7 °C. For air-to-air heating/cooling, the differential would be (21-(-31.7)) or 52.7 °C in winter, and (39.5-24) or 15.5 °C in summer. A system designed for winter heating would be highly over-sized for summer cooling.

But we can improve the effectiveness of Heat Pump system by reducing the temperature differential between the heat sink and the heat source. We do this by taking advantage of the relatively stable temperature of the sub surface of the earth. We can use the earth as a giant heat sink. This stable temperature and the depth we have to go to find it, vary with geographic area and the type of soil. Well drained rocky soil will require greater depths than water logged clay soils. We call systems that utilise the earth as a heat sink/source “Geothermal Heat Pump” systems. One misconception about geothermal systems is that heat is stored in the ground in summer and recovered in winter. In systems that utilise the ground beneath the basement floor, that is indeed possible, but most geothermal systems use the ground outside of the house. The average ground temperature in the Okanagan at depths of 5 to 7 ft. is about 5 to 7 °C. For air-to-ground systems, that translates into a differential of 15 °C in winter, and 16 °C in summer. Now we have a much better balance between seasons.

The cost to implement a Ground Source Heat Pump can vary widely. Most systems utilise a heat exchanger between the refrigerant and the freeze protected fluid circulated in the ground, but other systems are possible. The refrigerant could be circulated directly through the ground loop, or we could circulate air through larger underground pipes. We could also use ground water, and return it back to the underground source. Ground water systems are known as open-loop systems as opposed to the more common closed-loop systems. Of the closed-loop systems, circulation pipes can be run horizontally or vertically, or even laid on the bottom of a deep pond. Of these closed-loop systems, the pond is the least expensive and the vertical systems are generally the most expensive. Vertical loops can run as much as $20,000.00 or more.

Before jumping into Geothermal Heat systems, do the math. Don’t rely on someone else to do it, unless that person has your best interests at heart. If you already have a central heating/cooling system in place, your costs will be lower. If all you have is base board heaters, it can still be done, but the costs will be higher. If your furnace has reached the end of its life cycle (20 plus years for high efficiency gas furnace, 30 plus years for an electric furnace), that will also impact on your calculations. Refrigeration based systems generally have a life expectancy of 15 years plus, although some companies are claiming 20 to 25 years for geothermal systems. If you use those numbers, you will need at least one compressor replacement in that period. The easiest way to evaluate system conversions is a simple payback. Take the total cost of the conversion and divide it by the annual savings. For paybacks less than 4 years, that is usually adequate. For longer paybacks, Net Present Value calculations should be used to allow for the time value of money.

Lets take a typical wood framed single family house with a basement and 1200 to 1500 sq. ft on the main floor. This would normally require an 80,000 BTU gas furnace and a 3 ton air conditioner. Both systems (standard and geothermal) will require ducting and electrical, so we will leave these out of the calculations.

High efficiency (90%) gas furnace 4,500.00
Air Conditioner 3,000.00
Total installed cost for standard install: $7,500.00

Source: Ontario Contractor's Association
High effiency furnace - supply & install $3,500.00 - 4,500.00
Air Conditioning - add to existing forced air $1,700.00 - 3,000.00

Geothermal Heat Pump 10,000.00
Pond Ground Loop 9,600.00
or Horizontal Ground Loop 12,000.00
or Vertical Ground Loop 19,200.00
Total installed cost for Geothermal install: $19,600.00 to $29,200.00

Source: Geothermal systems LLC
Heat pump - supply & install $10,000 - $15,000 (used low figure because ducting not incl.)
Pond Loop - supply and install $900 - $1,200 per Ton (1 Ton is approximately 10,000 BTU)
Horizontal Loop - supply and install $1,300 - $1,500 per Ton
Vertical Loop - supply and install $2,000 - $2,400 per Ton

This corresponds quite well with the total cost for a horizontal ground loop installation of $23,000 reported by an Ontario couple, but be advised that vertical ground loop systems can cost appreciably more if bedrock is encountered in the drilling operation. Since land is at a premium in the Okanagan, we will use the $29,200.00 figure.

That same Ontario couple reported an annual increase in electrical costs of $800.00 after converting from oil heat to geothermal, and an annual savings of $1700.00 on oil costs. That translates to an annual savings of $900.00. Oil is the most expensive form of heating, and natural gas is the least expensive. But the low cost of natural gas that we currently enjoy cannot be expected to persist, and the Ontario couple did not have air conditioning with the old system. So we look to another source for the annual savings. Manitoba Hydro lists the difference between an average geothermal system and a high efficiency natural gas furnace at $351.00 annually. Adjusting this for the difference in utility rates brings us to approximately $520.00 annually. Natural Resources Canada also offers on online calculator to compare different heating system costs.

Now that we have all the numbers, it’s time to do the calculation:

Payback = (29,200 – 7,500) / 520 = 41.7 years

Note: This calculation does not include government grants or energy company rebates. Upgrades to a high efficiency gas furnace may also qualify. In certain cases, geothermal installation may increase the resale value of your home, especially older less efficient homes.

A simple payback of 41.7 years doesn’t warrant the effort of using the more complex Net Present Value calculations as the payback would only get worse. As a reference, most utility companies use a 9 year payback as the cut-off point. The lower the payback, the higher the priority. I installed a Waste Water Heat Recovery system instead because the payback was less than 3 years. I also installed an on-demand electric water heater, and the payback on that worked out to 9 to 10 years. That one is more questionable, although it fit in with the overall design of having all utilities in one wall (i.e. no utility room).

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