Geothermal Heat Pump Installation Basics

Installing a geothermal heat pump (GHP) in homes is gaining in popularity as an alternative source of home heating. While they are initially more expensive to install than a traditional heat system, they are extremely energy efficient and will money in the long run.

How Does Geothermal Work?

Geothermal heat pumps utilize the naturally occurring heat that is available from underground sources. A geothermal heat pump takes advantage of the relatively stable warm temperatures several feet below the earth’s crust where naturally occurring hot springs and heat vents may allow for heated air and water to escape. This heat is used to either heat the home or the home's water system. In addition to providing heat, a GHP can be used to generate power for the home’s cooling system or as a heat-exchange system for pulling cooler air from underground and pumping heated above-ground air back under the ground.

Also, geothermal heat can be used to turn turbines and generate power for a home, providing additional benefit as an alternative energy source. Geothermal energy has been used for many, many years as a method of providing power in areas of the world with abundant hot water springs and underground steam vents.


Geothermal heat pumps are available in the general market and can be installed by almost any qualified HVAC installer. A GHP system requires both an indoor and outdoor installation.

The outdoor installation is the system that taps into the geothermal heat below-ground and requires digging a very deep hole several feet below the surface of the ground.

The indoor installation is the system that heats the inside of the house and the home water system.

Geothermal heat pump systems can be installed in both new construction and in existing homes. However, it may be necessary to obtain a building permit to install this system in an existing home.

Cost Benefits

One of the primary benefits of installing a geothermal heating pump is the long-term cost benefits. Although GHP systems are more expensive than traditional oil fuel or gas heating systems, over the life of the heat pump, they prove to save an average of between 30 to 70 percent on heating costs. Additionally, according to the EPA, homeowners can save an estimated 20 to 50 percent on cooling costs. Over time, this can prove to be an extremely substantial amount of money and many homeowners discover that they are able to receive a return on their investment rather quickly after installing a GHP system.

Additionally, as an alternative energy source system, installing a geothermal heat pump system may qualify a homeowner for an alternative-energy tax credit.

The most expensive aspect of installing a GHP system is digging the underground loop for the system. In many cases, homeowners will pay between $4,000 and $11,000 more for a complete GHP system installation than they would for a more traditional home heating and cooling system. However, for many homeowners the initial high costs are justified by the long-term and environmental cost savings benefits.