All, I am in the process of looking into geothermal for my house. It has an existing Natural Gas (forced air) system that is about 20 years old, and a central air that is 25 years old. I was wondering what elements are involved in the cost of the geothermal system. Meaning, suppose you are doing a 4 ton system, using existing ductwork. I would imagine you need wells drilled (land is too tight for horizontal), pumps installed, tubing run into the house, and a geothermal heat pump in the house.

Does anyone have ballpark dollar amounts for these individually?

I am trying to understand why these systems keep getting quoted at $30,000 - $40,000 installed. There must be something major I am overlooking.

Thanks!

Look at this thread:
http://www.greenbuildingtalk.com/Forums/tabid/53/aff/13/aft/38169/afv/topic/Default.aspx
Read the first post by thehtrguy. I wish this was made a sticky.

Prices vary. You can see the description of our equipment in my signature. Our quotes varied from $25,000 to $39,000 with the majority of quotes being at $30,000.

My philosophy - I don't need to understand why a particular car (for instance) costs "x" dollars in order to buy one (or feel comfortable buying one.) The important thing is to have dealers that I am willing to buy from.  I check their reputation, see who will give me the best deal, and make a decision. Knowing how much overhead, profit, etc., is in their price isn't relevant. Also, this information isn't needed in order to try to negotiate a better deal. In fact, nit picking the individual components of the price will most likely result in the installer walking away. With geothermal, I am also interested in performance (cost savings vs other types of systems) and warranty.  If I can't afford it, factoring in any potential geothermal savings, I walk away and keep my ear open to possible price reductions and/or additional tax credits.

As demand for geothermal increases, so will production and the number of installers. Increased production and competition should tend to lower prices or keep them from increasing as fast as they would have otherwise.

This is quoted for an old post, but I see geome beat me to it. I can tell you that retail for a 4 ton heat pump with backup heat and a desuperheater runs between  $6,000 to $8,000.


Posted By thehtrguy on 07 Jul 2008 01:13 PM
Hi.

I'm new to the forums.

I've installed some EarthLinked DX systems. I can't talk for water source systems, other than they cost more.



I'm going to list my approximate costs and what I charge on a bid for a 4 ton system--just for forced air heating and cooling.

Cost of materials on a typical 4 ton system includes:
4 ton heat pump: $3,690
4 ton vertical ground loop: $2,255
125' of line set, approx. $1,100-$1,300
R-22 refrigerant, $200
Nitrogen, $45
heat pump thermostat, $200
duct, including the grilles, registers, duct seal, (always varies greatly), let's say it's a new home, 2000 s.f. per level, basement and main (NOT A RETROFIT COST): $2,400
condensate drain: $50-$100, depending if a pump is needed
acetylene and brazing rod: $50
freight: $450

This totals about $11,300. Next, I'll have to pay sales tax on all of this. That's an additional $710. Now my total material cost is $12,010.

Next, I have labor to install the above. It'll cost me about $45 per hour to pay my guys. This includes worker's comp, non-productive time, etc. I'll have to pay about $4,800 in labor. I'll also have to pay about 30% labor taxes on that. That adds another $1,440. So my total labor costs hopefully don't exceed $6,240. This is not my profit, this is my labor COST. In other areas, I've heard of the hourly cost being upwards of $85 per hour. (because of labor unions and dues, I'm told)

Overhead is next. I know this one, along with labor, varies greatly across the US. For my small company, and small amount of sales, I have to cover at least $1,800 of overhead for this job. This could easily need to be $3,500+ or so.

Now there's mileage. It costs me (just a pure cost) about $1.00 per mile of travel with a service/install truck. This is gas, tires, service and insurance. Let's say the mileage is only $100.

So, my costs (still haven't added drilling or excavation) total about $20,150.

Now, how much money do I need to survive? Are you okay with me getting $50,000 per year? It'll take about 1 week for us to get this system installed. Let's say (I wish) that I can sell 1 system per week. That would be phenomenal, but improbable. So, for 50 weeks/year, at $50,000 per year, that's $1,000 per system. Let me tell you, if I'm only making $1,000 per system, I'm going to go bankrupt. Why? because eventually--inevitably--I'll have to return to a system to fix it on warranty. Whether it's my fault or the manufacturer's, it costs me time, fuel, and materials to go back. Of course, we all want the system to never have problems, but...

Typically, I need to make at least $3,500 per system. So now, without drilling and excavation, the total is $23,650. When I can get a driller, they're typically $10 per foot in my area. So, for a 4 ton, that's $4,000 drilling. Now the price is up to $27,650. I'll need a backhoe for a day, another $350. So, I'm an even $28,000. This isn't always the case, but it's a good fair guess as to how much I'd charge. If an installer needs to make $5,000 per system, good for them. It's not a rip-off. You're getting exactly what supply/demand dictates. A fair price for a fair product.

Remember, this is for a NEW home. NOT a retrofit. For a house without duct, that needs it retrofitted, it'll cost me double the labor and overhead. It'll cost about 50% more on duct materials, and my liability is higher, too. It also takes longer, so I can't do as many systems.

Before anyone rags on me for wanting to make a profit, let me say this. I'm installing the most comfortable, reliable, efficient, safe, green heating and cooling system available. Do you get a Mercedes car for the price of a Yugo? Is a Yugo just as comfortable and safe as a Mercedes? No. You pay extra for a better product.

I'm installing a system in your house that will actually pay for itself in savings. How about your kitchen cabinets? The carpet? the tile? window and door trims? No. Geothermal is the best bang for the buck. Do I wish my costs were lower? Absolutely. When they become lower, I can lower my price. But until then, I have to maintain the price as it is, or I'll go bankrupt. Why do you all want us HVAC guys to go bankrupt?

It's interesting to compare this to a air source heat pump install - in a replacement case (no ducts, wiring or thermostat), perhaps $4000 for 4 tons (total cost, equipment, labor, etc).

It is interesting reading all of the posts geome linked to.

I am interested in geothermal because I think it would be kinder on the environment, but if it is not competitive with Natural Gas, then it is not an option.

I plan on doing some of the work myself and will probably hire a well driller directly.

At this point, I am trying to get the ideas all lined up in my head and see if it is something reasonable on price before I start talking to the people who will do most of the actual work.

The well drilling of 3 250' wells with pumps (4 ton system) seems the most variable of the costs at this point. I will talk to well drilling companies first and see what the prices are in my area. If the cost is ~$10 per foot, then I can proceed with the next step, buying a heat pump.

I have found a couple of web sites that sell full systems, and it seems like a reasonable cost of $5000 or so. Installing the heat pump is another grey area as I am not too sure how much sheet metal work I am capable of. I plan on playing around with it for a while and seeing if I can fashion ducts and such (seems like it should be a cheap way to approach that).

If all three of those items line up cost wise ($7500 + $5000 + $500) then I think the whole shebang might be doable. I would still have to hire someone to finish everything up (not sure what that means yet) as well as 'release' the refrigerant (although I am also under the impression that there would really be no need to release anything as it should all be self contained in the heat pump?) , and check my work.

I know it seems crazy, but I am not seeing any real reason it will not work out this way.

But of course, that is why I am posting on here first Maybe someone can scare me straight?

Posted By s002axb on 21 May 2010 03:23 PM

I am interested in geothermal because I think it would be kinder on the environment, but if it is not competitive with Natural Gas, then it is not an option.

sorry to say...but geothermal will never be competitive with natural gas.  The cost of ground loop will always be in the way.

But then natural gas will never have a COP above .9

Let's say "closed loop geothermal" - open loop can involve less cost and can beat nat gas.

I live in an area where natural gas is available. Nat. gas is pretty cheap compared to propane and our electric rate isn't terrible either. One of the quotes that I had gotten from a very respected installer showed a price difference of around $2600 after accounting for all the tax credits and local rebates. The calculation that was provided showed a difference of about $400/year in heating/cooling bills. That is also taking into consideration that my local utility company will offer me a dual fuel rate (5.5 cents per Kw instead of 11 cents) if I used geo as a primary heating source and have nat gas as a backup. If all of these conditions didn't apply, it would be very difficult for geo to compete with nat. gas in my area.

That dual fuel rate is a huge break on electric power cost. I agree that it is presently difficult for geo to compete with NG, but bear in mind that NG prices tend to vary much more widely than do kwh rates.

The trouble with basing a system buy decision on a 50% rate break is that the utility could turn around and take that rate break away far earlier than the expected life of the system. Are they committing to keep such a rate structure in place for the expected lifetime of a geo system (20-30 years)?

The $30,000 to 40,000 cost is about right depending on the ducting integrity. You have at least 6-8,000 in interior work - swapping the air handler, mastic sealing the 25 year old ductwork, controls, hot water etc. Then the outside work for a 48,000 BTU/H (DX) system should cost in the mid to upper 20's. Don't forget to factor in the replacement cost for the fossil fuel garbage you have now and replacing the 4 ton condenser. Then factor in the 30% tax credit along with the local incentives (Central Hudson in our area gives $700 a ton with no limit) and you have a fair indication of cost. With a 20 year old furnace and 25 yr old a/c, doing geo is a NO BRAINER.

Paul
Total Green

Lower rates for certain uses doesn't make sense to me. On the other hand, lower rates for interruptible service and for off-peak service make sense and are likely to stay.

Posted By jonr on 27 May 2010 09:18 AM

Lower rates for certain uses doesn't make sense to me.

Nuttin' in the rule book sez it hasta make sense.

s002axb,
the biggest problem I see in your plan is the notion of having someone check your work when your done. Much better to have help with design, equipment selection, sizing and sheet metal. you've not mentioned where you are from or btu load which are the components we use to size equipment. Nor do you know the capacity of your ductwork. If you need a 5 ton and install a 4 or if you install a 4 ton but only have ductwork that will carry 1,000 CFM, it would be unfortunate to learn this after you spent a ton of money.
We offer DIY assisstance. Last such job we sized system, provided heat pump did duct and plumbing while H/O did electric and drain pipe to pond (open loop). Cost for this single stage unit with warranties and our above mentioned contribution ~$8,000. Same system closed loop verticle around here would have been about $7,000 more (3 ton).
These numbers may not be portable to your area. But perhaps a local guy (active or retiree) might want to guide you through the project for some greenbacks. If you are handy, do the electric and the DSH and buffer tank plumbing. Hard to save money on sheet metal.
RE payback against natural gas, generally around 10 years in my area. Small houses on small lots might go 15, but still within appliance life-span. Remember your second heat pump will cost less due to infrastructure already in place.
Finally air source heat pumps offer little savings against natural gas in my area (mid-MI) and take at least as long as geo for ROI (sometimes longer than their lifespan). Milder winter climates however can do much better with ASHPs and in some cases surpass geo's ROI.
Good Luck,
Joe

I agree with Joe. Engage a pro with design tools and experience as early as possible in the process. The geo unit itself is a relatively insignificant component in the design process even though it is the heart of the system.

What do I mean by that? Loop and duct system foulups are very hard to correct after the fact, but will doom a system to poor performance (high cost and low comfort) no matter how good the geo unit.

I share Joe's willingness to provide expertise and oversight to a DIYer at a rate well below cost of organizing, executing and supervising an entire job. Homeowner sweat equity goes much further with just a bit of guidance at crucial junctures in the project.