How Much Does Geothermal Cost to Install?

If you’re after an environmentally-friendly and efficient way to cool and heat your home, you want to start considering geothermal costs. This heating method involves knowing that the temperature below the frost line stays close to 50-degrees all year-round. It works to transfer heat out or into your home, and it exchanges it with the ground to cool or heat your home more efficiently. This way, you can keep your home at a comfortable temperature without worrying about driving up your energy bills. It’s also a nice way to control your energy usage all year-round. 

Improvements in technology are quickly making geothermal costs fall to more acceptable ranges for your average homeowner, and the new technology also allows you to get tax incentives to switch to it. This system is more expensive than electric, gas, or air exchange systems, but your geothermal cost is justifiable to a lot of people because you can save on your energy bills while lowering your carbon footprint. Additionally, it’s efficient enough to use in both small and large homes without an issue.  

There are several different types of geothermal systems available, and you size it based on your climate and home. This makes your geothermal costs fluctuate. On average, your geothermal costs will range between $10,000 to $30,000. Most people will pay $20,000 to install a 5-ton, 60,000 BTU system to heat or cool a 2,000-square foot home. Larger units will require excavation, ground looping, and new ductwork that can drive the price closer to $30,000. 

In order to understand why your geothermal costs fluctuate so much, it’s important to know what the various components of this project are. There are several that could apply to your project and drive the price, but we’ll outline them in this quick guide. The goal is to give you a great understanding of this project before you undertake it, and this can ensure that you don’t get surprised by a nasty bill at the end. You’ll get the energy-efficient heating and cooling system you need without going over your budget. 

1 Geothermal Diagram
Understanding how this heating system works allows you to get a much better understanding of this project’s scope and why it’s so popular. It can save on energy bills all year-round too.
Geothermal heating by makototakeuchi / CC BY 2.0

How Geothermal Heating Systems Work

Geothermal heating systems rely on the fact that the Earth stays at a consistent temperature all year-round. In the winter, it’s warmer underneath the surface, and in the summer, it’s cooler. It uses coils that spread under the Earth’s surface, and these coils carry refrigerant through the coils to exchange heat. During the winter months, they take warmth from the ground and compress it to help raise the temperature. 

Then, this system distributes the heat through a heat exchanger that creates hydronic heating or forced hot air to warm your home very efficiently. During the summer months, your geothermal system runs in reverse. It takes heat from inside your home and deposits it into the earth to cool it down. 

You will have electricity costs associated with running it, but it’s less than you’d use with other HVAC systems. The compressor and fan run on electricity, and the actual energy it uses to cool or heat your home comes from the earth. Don’t confuse it with geothermal energy that creates electricity from the earth’s insides. 

Prices for Different Types of Heat Pump Compressors

A big part of your geothermal cost will be the compressor. It’s an important part of your system that helps to raise the temperature of the ground energy to heat the space. You can choose from three different types, and each one will impact your final geothermal cost. It also impacts how efficient the system is and how well it works. The three options are: 


This type of compressor runs at low or high speeds, depending on what you need. During times of the year that are more moderate, you’ll run it at a lower speed. It’ll only run high when needed. This lowers your energy bills while keeping your temperature consistent without leaving cold or hot spots in the house. Your geothermal costs will range from $3,100 and $5,400 for this compressor. 


This is the cheapest type of compressor available, but it’s also the least comfortable and efficient option of the three. It has one speed it runs at consistently at all times, and this can make it run much higher than needed to regulate the temperature. In turn, you use more electricity. It turns off and on more quickly, and this can leave cold or hot spots in your home. Your geothermal costs for a single-stage compressor ranges from $2,300 to $3,400. 


You’ll get several stages with this compressor, and it switches between them as needed. This allows it to run at the correct speed for the required temperature. This makes it very efficient while ensuring it produces more even temperatures throughout your home. It may not save enough on energy bills if you live in very cold or very hot planting zones to offset the higher geothermal costs for installation. You’ll pay between $4,000 and $7,000 for this compressor. 

Geothermal Heat Pump Costs

The type of system you install depends on whether it’s a retrofit or new construction, what surface soil you have, how much land there is on your property, and whether you live near a lake or aquifer. You can get closed and open loop systems with closed-loop being the most common choice. You may install an open-loop system in specific circumstances, and this will increase your geothermal costs because they’re less common. The most common setups include: 


This system will operate in one of three basic methods. You’ll get either lake loop, horizontal in-ground, or vertical-in ground systems. With a closed loop system, water or refrigerant gets continuously circulated throughout your system. 

It won’t dump or take in liquid at any point, and it doesn’t need an aquifer to run like you’d need with an open-loop system. This gives you more installation options. Depending on the type of system you have, your geothermal costs will range from $10,000 to $30,000. 


This is one of the most common options available if you have enough space. They’re less expensive to install and very efficient. However, it needs a lot of space. On average, you’ll need at least 400-feet per row to install the coils under the ground. 

They won’t need to go down much deeper than the earth’s frost line, and this makes them more cost-efficient than vertical systems. However, the bigger the system is, the bigger the area you need, and you have to go deeper the colder your climate is. Your geothermal costs for this system runs from $12,000 to $25,000. 

Pond or Lake

If you have a lake or pond on your property and it’s deep enough to accommodate coils that are at least six feet below the surface of the water at all times, you can save on your geothermal costs and install it here. Lake or pond closed-loop systems don’t need any drilling to install, and this lowers your geothermal costs. 

The coils take energy from the water, and this system uses refrigerant. Not every pond, lake, or property will work with this particular system, so you want to double-check with your local zoning offices to see if your property is a good fit. If it is, your geothermal costs will range from $12,000 to $15,000. 


This system will take up less space compared to horizontal systems, but the coils will go much deeper into the earth. The contractors will usually dig several wells before sinking the coils to the bottom of the wells to connect them. They work for smaller yards because they get installed in smaller footprints. 

If your topsoil layer won’t support a horizontal installation, it’s a good idea to consider a vertical one. However, the drilling required for the wells will drive up your total geothermal costs. Generally speaking, this process will cost between $15,000 and $30,000 to complete. 


This system has generally lower geothermal costs associated with it, but it’s rare to have it. You’ll need a decent amount of groundwater at a rate of 7.5 gallons a minute to operate it. It uses water directly to help cool or heat your home. It takes water in, cools or heats it, and then dumps it back out. 

There are no pollutants with this system, but many municipalities don’t allow you to dump the water back out again. So, this system is illegal in some areas. If you already have a well in place, your geothermal costs will range from $9,000 to $15,000. If you need to drill a well, you can add between $1,500 to $12,000 to your total project costs. 

2 Geothermal System Types
Choosing a type of heating system will impact the project’s total cost because some systems require much more labor to get them in the ground than others. Labor is a large part of your final project costs.
Heating the sidewalk by Thomas Quine / CC BY-SA 2.0

Sizing Your Geothermal System

Heat pumps come in several sizes, just like any other HVAC system. They usually get sold in tons, and a one-ton system is around 12,000 BTUs. So, if your current setup uses 48,000 BTUs, you’ll need at least a four-ton pump to heat and cool adequately. 

There are several factors that help decide what size system you need, and one of the biggest factors is where you live. To get a rough estimate, take the square footage of your home and multiply it by the number of BTUs required by your climate zone: 

  • Zones 1 and 2 – 26 to 30 BTUs/square foot
  • Zone 3  – 22 to 25 BTUs/square foot
  • Zone 4 – 20 BTUs/square foot
  • Zone 5 – 22 to 25 BTUs/square foot
  • Zones 6 and 7 – 26 to 30 BTUs/square foot

Since these pumps heat and cool, it’s important that you size up for very cold or hot climates to meet your space demands. Furnaces get larger in colder climates, but heat pumps only have to get big enough to handle your needs when the temperature spikes. This can cause your geothermal costs to go up based on your climate, and you’ll need: 

  • Zones 1 and 2 – 52,000 to 60,000 BTUs/5 Tons
  • Zone 3  – 44,000 to 50,000 BTUs/4 Tons
  • Zone 4 – 40,000 BTUs/3 to 4 Tons
  • Zone 5 – 44,000 to 50,000 BTUs/4 Tons
  • Zones 6 and 7 – 52,000 to 60,000 BTUs/5 Tons

Cost for a Split System Versus a Heat Pump Package

When you buy this system, the area where you want to install it will impact the type of system you can get. If you have an area that is easy to get to and has room for the entire system to fit into one space, including a compressor and two heat exchangers, get a packaged unit. This will lower your geothermal costs because it’s easier to install and the whole thing comes factory welded together. 

If you don’t have the space to install all three pieces together, you’ll have to invest in a split system. This system needs to be welded or connected on-site, and this can increase your geothermal costs. However, it also gives you more flexibility where you install the various components. 

For a packaged unit, your geothermal costs will range from $3,300 to $8,000. A split system costs between $3,900 and $8,000. The biggest geothermal costs come because of the installation process. To install a split system, your labor costs will be around $3,000 more than a packaged system due to the various components. 

Understanding Geothermal System Efficiency Ratings

Every HVAC system comes with varying efficiency degrees. This degree refers to how much energy they use to produce heat or cool a room. You’ll get two different efficiency ratings on each system. One is the cooling rating and one is the heating rating. 

The COP (Coefficient of Performance) for heating measures how well the unit can use energy to heat your house. Geothermal heat pumps come with a COP rating of three to five. So, for every unit of electricity it uses, it’ll give you three to five heat units. This is a lot more efficient than other systems that come with a COP of one or two in high-efficiency systems. 

For cooling operations, the system comes with an EER (Energy Efficient Ratio). The higher this rating is on your cooling system, the more efficiently it’ll cool down your home. Most geothermal pumps come with a rating of 13 to 30. Anything that has a rating of 12 and up is considered to be highly efficient, and this turns any geothermal pump into a highly-efficient cooling appliance. 

Direct Exchange Versus Heat Exchangers

A closed-loop system will operate in one of two ways. They can come with a heat exchanger that changes refrigerant for a solution containing antifreeze with flexible plastic tubing. If they have the second system, they’ll use a direct exchange system that circulates the refrigerant using copper tubing. 

In direct exchange systems, the absence of a heat exchanger gets made up by a larger compressor and the bigger price tag attached to the copper tubing. This makes your geothermal costs for both systems almost even. Direct exchange systems work best in wetter soil areas and heat exchangers work best in any corrosive soils where copper does not work well. 

3 Heating System Size
The climate where you live will play a big impact on the size system you get because you want it to be powerful enough to heat and cool the home without leaving any cold or hot spots.
“Under-floor heating” in the street by Stig Nygaard / CC BY 2.0

Water-to-Water or Water-to-Air Heat Pumps

This system will heat your home using forced hot water or forced air. The heat pump type has to change based on how you want it to heat your home. A water-to-air pump utilizes liquid it heats inside the system that heats forced hot air through your home’s ducts. A water-to-water utilizes the liquid the system heats to heat the water that it pushes through your hydronic heating system into your radiant floor heating or radiator. 

A water-to-water system is more complicated to install and buy, and this can drive up your geothermal costs. For just the system, you’ll pay between $4,000 and $8,000. When you add installation costs, your geothermal costs jump by $2,000 to $4,000 more than a water-to-air system at $3,300 to $7,500. 

Replacement Costs

Your heat pump’s outdoor portion can easily last 100 years or more. It most likely won’t need to be replaced in your lifetime, depending on your conditions. You  might have to replace the indoor portion of the unit, but it can last decades. If you want to upgrade the interior portion or if you have an older system, yoru geothermal costs to replace it will run around $8,000 for a five-ton system. This price includes both parts and labor. 

Labor Costs for Installation 

Roughly 50% to 75% of your geothermal costs will come from labor costs to install your system. This project is extremely labor-intensive, no matter which system you pick out. It requires the contractors to bring in a large amount of equipment to lay the pipes, excavate the land, weld the system shut, add the refrigerant, and hook it up to your hydronic heating system or ducts. If you need new radiators or ductwork, your geothermal costs will increase. 

To buy the entire system for most homes, your geothermal costs will range from $10,000 to $30,000. Of this price, installation will be around $7,000 or a $22,000 project total. The supplies and system make up the rest of the geothermal costs. 

There are a broad range of factors that influence your geothermal costs when it comes to installation. Your climate, location, soil type, home’s energy efficiency, install location, yard space, and whether or not this is a retrofit or new installation all factor in. If you have steam radiators or you need ducts installed, your geothermal costs will climb higher than they would if you already have usable ducts installed. 

Additional Geothermal Cost Considerations

When you’re trying to figure out your total project costs, there are a few important considerations that you want to keep in mind. Some of these things won’t apply to your project, but some may add thousands onto the total costs. They include: 

Duct Zoning

Zoning your house will give you much better control over the cooling and heating in each area. It does increase your costs because it’s more complicated to install several thermostats, dampers, and a zone control board. If you choose to perform duct zoning, be prepared to add $3,000 to $4,000 to your project’s costs when all is said and done. 

Energy-Efficient Windows

You can choose to make your windows more energy-efficient to stop heat loss in the winter and lock hot air out in the summer. Installing a complete set of energy-efficient windows to replace your existing ones can cost between $650 and $1,500 per window. So, if you have more windows in your home, this can drastically increase your project costs. 

Home Energy Audit

Before you decide to make any big changes to your home’s insulation or HVAC system, it’s a good idea to get a home energy audit. This will help to pinpoint what changes you need to make to get a much more energy-efficient home. On average, this audit will cost around $250. 


You can add insulation to your home to help make it more energy-efficient. This is especially important to consider doing in older homes. If the home is more energy-efficient, you could lower your geothermal costs by getting a smaller system. Insulation costs between $3,500 and $4,500 for an entire house. 


Before you start this project, you will need a permit from your local municipality to install this new system. Some types of systems might come with additional regulations to keep in mind. If so, your wait time for your permit can stretch out into months. Ask your contractor if they include permits in their estimates. If they don’t, your permits can add between $100 and $1,000 to your total geothermal costs. 

Where to Find Geothermal System Installers Near You

You’ll need professional help to install this system correctly, no matter which one you choose. You want to stay as local as possible to help control your geothermal costs, and you can start looking here: 

Frequently Asked Questions 

4 Geothermal Cost FAQs
Knowing which questions to ask your local contractors when you contact them will help you get a good estimate for your project costs. They can also help you understand how involved this project can be.
Newberry Geothermal Lease Project by Bureau of Land Management Oregon and Washington / CC BY 2.0

1. Does this system boost your home’s value once you install it?

This system can add value to your home, but it depends on your local area. It does save you money on your energy bills, and this can be an attractive draw to some potential buyers if you sell the house. 

2. How much space do you need for this system?

The amount of space you need for this system will vary depending on the system type. Vertical systems won’t take up much space in your yard as they go much deeper. Horizontal systems will require much more space for all of their components. 

3. Is there a lot of maintenance on this system?

No. One nice thing about this system is that they can last over 100 years with virtually no maintenance once you get them installed. 

4. Does this system work with steam radiators?

You can use this system with radiant heating systems. However, they don’t work if you have a steam radiator. If you have a steam radiator, you’ll have to replace them with a hydronic model before you can install your geothermal system. 

Bottom Line 

Your geothermal costs will fluctuate quickly depending on several important factors. We’ve picked out the biggest ones you want to keep in mind when you take on this project. Doing so will help you get the system you want without going over your budget. Make sure you contact several local contractors before you pick one to ensure you get the best price with professional-grade installation. 

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