Perhaps someone can help me out with a 'back of the envelope' calculation regarding geothermal.

Background: I live in Ohio, and my house is 2,247 square feet (raised basement and first floor). We have a natural gas furnace that is exactly 20 years old. We have a small lot in a suburban setting and could not lay horizontal pipe. We are considering going the geothermal route, but it has to be better financially than natural gas. We have a baseline usage of 0.77CCF of gas per day for hot water and gas dryer. Our total gas for all of last year was 889CCF. The average cost of gas all of last year was $1.09/CCF. I have not done any Manual J load calculations, have not called any contractors and am just trying to rough out cost/benefit.

According to my calculations, we used 607.95CCF (889CCF - (0.77CCF * 365)) per year ($662.67) on heating the house. Assuming it was an average year, and assuming I would save 60% per year ($397.60), and assuming a Geothermal system is $10,000 before government tax credits ($7,000 after). I figure it would take me 17.5 years to pay off the cost. Even if the cost of gas doubled, I am still looking at 8.8 years. I would like to justify going Geothermal, but with a payoff of 8.8-17.5 years, I cannot see how geothermal can beat natural gas.

Does anyone see any obvious misses I have made?

Thanks!
Adam

For simple payback this is sound. The key is the 60% savings - did you factor in the price of gas and electricity and heat pump COP? In some areas 60% savings would be optimistic.

The assumption of 60% savings needs substantiation. The way to quantify that is to compare both systems on a common basis of cost per million btu delivered into the home. What you've come up with is a useful beginning. If I assume 1025 btu per CF of gas and 75% utilization efficiency of your present system I get an annual heating load of 46.7 million btu at $14.18 per million btu.

Geo heat can be conservatively estimated to operate at a COP of 3.0. At $0.11 per kwh it will deliver a million btu at a cost of $10.74. That's not a 60% savings. All my assumptions on the back of this envelope are guesses needing to be confirmed. A key value is what your cost per kwh would be with geo heat (some utilities have better rates for electric heat)

$10k would be a very very cheap geo system with vertical bores. In addition present ductwork would need to be assessed for its ability to move the air required by geo.

The final significant variable is the expected prices of both alternative fuels throughout the life of the system.

Other considerations are geo's ability to provide efficient air conditioning as well as a good proportion of your hot water

Yeah, anything I do to improve the house efficiency, including updating the furnace, adding insulation etc, all make it even worse of a payback as far as I can see.

If I save gas, that means my real cost of gas was even lower, which means my real savings would be lower (60% of a lesser number), which means my payback is even longer.

$663 per year is a fairly cheap annual heat bill for that house in Ohio, and it is even more suprising given that the furnace is 20 YOA. There are folks who pay that much per month for heat.

Wait until the furnace turns 21 and buy it a beer.

You're going to need to replace the gas furnace soon so you need to look at the cost difference between the two alternatives not just the geo cost. Which may be still around 7-10K or more?

You also need to factor in the cost of money; i.e. what is it costing you to tie up the extra $s (either the interest over the life of the loan if you are borrowing the $s or the interest you would have received on the $s if you invested it rather than used it to go to the geo.

If you are only spending $6xx a year heating with gas then the price difference between the geo and gas units will have to be fairly small to justify geo. I wouldn't reach any conclusion without actual quotes from reliable contractors.

Don't forget to calc in the savings during AC season too.

Generally, I would expect geo electricity costs to be about 66% of nat gas costs, ie, a 34% $ savings. Yes, this makes payback long.

Posted By s002axb on 10 Mar 2010 09:55 AM
The average cost of gas all of last year was $1.09/CCF.

100 cu.ft. of natural gas is energy-equivalent to about 30 kWh.

Thus, your annual 608 CCF NG (if burned at 100% efficiency!)
is equivalent to 18,240 kWh of electric resistance heat -- or
about 4560 kWh, for a geo heat pump running at COP 4. 

Obviously, the savings (if any) depend heavily on your electric
rates -- could be anywhere from "less-than-nothing" to 70+%.

You are missing the fact that geo will save you on electricity during cooling system and that your furnace uses electricity heating the home which is part of your heating cost. It also reduces cost of domestic hot water.
$10,000 is very optimistic as well however.
For a first glance you can fill in the info section on my web site (google amicontracting). We can pull up a comp house and give you some idea.
The worst approach is to use guesstimates backed by speculation.
Most of our geo systems will payback in ~10 years against natural gas with an honest comparison. Then there's comfort, safety and sometimes reduced insurance rates.
The real question is will you be there to enjoy the improvement?
Good Luck,
Joe