When we talk about heating efficiency, we talk about how much of the fuel we use ends up in the house. A standard oil or gas – natural gas or propane – heater has an annual efficiency of about 80%. This means that 80% of the heat produced as the fuel burns makes it into the house, but – and this is a big but – 20% of what you paid for goes up the chimney.

A more modern gas heater can have an efficiency of almost 96% because it grabs the heat that was going to go up the chimney and funnels it back into your house, and even though it is more expensive, that extra cost is an excellent investment. Pretty good, eh? Remember that propane is over twice as expensive to use as natural gas, even though the heaters are the same efficiency. An electric heater – an electric furnace or a portable electric heater – is very close to 100% efficient, but the bad news is that the electricity it uses is expensive, and this makes it the most expensive type of heat to use.

A heat pump works not by burning fuel to make heat but by pumping heat from one area to another, and it has to have a source of heat. A regular air heat pump (AHP) uses the air outside your house as its source of heat. The AHP does fine in our mid-Atlantic climates most of the time, but as the air gets colder, the heat pump can’t get as much heat, so it needs a contribution from a backup source to keep your house warm. This happens in AHP’s at about 30°, but the heat pump is still partially heating your house down to below 0°, so it is important in our region to let it do its job. Remember that 96% efficiency? Most heat pumps use electricity as their backup (though you can also use a gas or oil heater for backup); even accounting for that expense, your geothermal heat pump can be as high as 300% efficient (yes, three hundred). This allows it to heat your house for the same or less than natural gas and half the cost of oil or propane.

A geothermal heat pump (GHP) uses the temperature of the ground as its source of heat. In our region, the ground is about 54-55°, so the unit has a constant source of heat that never gets down to that 30% range, so its efficiency can be as high as 600%, and use about half of the electricity of an air source heat pump. This is great news.

There are problems – as the ground gets its heat pulled out over the course of a winter, the efficiency of the GHP can drop as its source becomes cooler. It also needs a backup, although not as much, and the choice is either electric or fossil fuel. Bear in mind that there is so little backup needed with the GHP that using fossil fuel can raise your cost to heat higher than an electric backup, depending on how much you pay for that fuel.

And the good news is tempered with the very high cost of a GHP. To get that ground temperature, you have to either dig wells to pull water from deep in the earth or dig a swimming pool-sized hole in the yard that is then lined with a pipe that carries liquid to pick up the ground temperature. As with everything, the total cost versus the total savings must be taken into account before you make this important decision.

If you are building a new house, your house might not need a lot of heat. Once the need is low, the economics of the GHP fall apart, even when considering the generous federal tax credits allowed for its installation.

As an example, a recent new house that we worked on is 2,800 ft2 (4,400 ft2 with the basement), so it is not a small house. With advanced energy features built in, the annual bill for heating and cooling with an efficient AHP is about $700 per year. A GHP would have reduced the bill by about 40%, but it would have cost an additional $22,000 over the installed unit, making the payback over 70 years – and either unit will need replacement after about 20 years.

There are very large advances in heat pump technology right now, and there are AHPs available that are as efficient as a lower-efficiency GHP. Who knows what they will look like in 20 years? This means that most likely, the wells or buried pipes – the expensive part of the system – may not be needed in 20 years when the unit is replaced.

If you are renovating an older house, the economics change. We know how to reduce the bill dramatically in an existing house, but this Deep Retrofit (google that one) may cost $25-30,000 to achieve – similar to the cost of the GHP. So now we have two choices – retrofit the house or add a GHP. Fixing the house is not as sexy as the shiny new machine, but it never has to be replaced. And retrofitting the house increases its comfort where a heat pump, GHP or AHP, will not do that.

Let us help you make this important and expensive decision.