At the beginning of February 2018, federal legislation was passed to extend federal tax credits for residential and commercial installations of geothermal heat pumps (GHPs). How does that relate to you?
Between 2009 and 2016, Congress approved the Residential Renewable Energy Tax Credit plan, passing tax credits for solar, wind turbines, fuel cell and geothermal systems. However, that plan allowed fuel cell and geothermal tax credits to expire at the end of 2016, while solar and wind tax credits extend into 2021.
The new legislation allows most homeowners to get back 30 percent of the cost of their geothermal installation, retroactively to January 1, 2017. This means if you bought a geothermal heating and air conditioning unit anytime in 2017, you will qualify for the new credits. The current federal geothermal tax credit stays at 30 percent through 2019, then drops to 26 percent in 2020, then 22 perfect in 2021, and is set to expire at the end of 2021.
Find Out Why You Might Want to Consider a Geothermal Heating and Cooling System for Your Home
The Geothermal Exchange Organization (GEO), a non-profit trade association representing the interests of all businesses involved in the GHP industry, had a big hand in getting the new tax credits approved by Congress.
“Our hard-fought victory for the GHP industry helps ensure a bright future for our technology,” said Geothermal Exchange Organization (GEO) President and CEO Doug Dougherty. “It will stem the loss of jobs we now face, provide more time to overcome market barriers, achieve economies of scale, and help spread the environmental and economic benefits of GHPs across America.”
GHPs differ from conventional HVAC units in that geothermal systems are housed inside of your home, safe from the elements. They exchange water from the ground, either from a well or a loop buried underground. The ground absorbs almost half of the solar energy our planet receives. As a result, the temperature of underground water in Central Indiana stays consistently around 55 degrees Fahrenheit. This means a geothermal system starts at 55°F, then heats or cools your home according to your thermostat settings.
Alternatively, conventional HVAC units live outside of your home and exchange heat with the outdoor air, which varies significantly in temperature throughout the year. Therefore, your HVAC system has to work that much harder to heat or cool your home, making it much less efficient.
The EPA and U.S. Department of Energy consider GHPs the most environmentally friendly method of heating and cooling your home. These systems don’t emit greenhouse gases, such as carbon dioxide and carbon monoxide. They also require a limited amount of electricity to run, saving on energy use and cost.
Installing a GHP system can seem like an overwhelmingly expensive cost upfront, but it will pay off in the long run. It can cost anywhere from $15,000 to $50,000 for initial installation – compared to $5,000 – $10,000 for a typical HVAC unit. However, keep in mind that the new tax credit will significantly decrease the cost of installation.
Energy savings take into consideration the lifespan of each unit. Conventional HVAC units have a life expectancy of 15 years, while geothermal systems average up to 25 years of life. Couple this with the higher efficiency ratings, and it could take as little as four years to see cost and energy savings from your geothermal system, depending on utility rates and cost of installation.
Make sure you talk with a trusted HVAC professional about the specifics of your situation when determining the initial cost and potential savings of installing a geothermal system in your home.
At Homesense, we specialize in installing extremely efficient HVAC systems that use renewable geothermal energy, but we want you to fully understand the system, environmental impacts and costs before committing to a new system. We’ll be happy to answer any questions you have about installing a geothermal heat system for your home.
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