Geothermal - Cheaper than traditional HVAC with tax credits?

momto3kiddosFebruary 25, 2012

Hi all - We are finalizing our floor plans and do not have hard quotes from any contractors, but we have been discussing the pros/cons of geothermal vs. traditional HVAC. We are builing a one-story 5000 sq ft home in central NC. We plan to have a tight envelope with good insulation. Rough estimates we have found for a traditional HVAC system are aroung $25K, whereas geothermal would be $45K. With geothermal, we would get a 13.5K federal tax credit and $8.4K NC tax credit. This makes is $2000 dollars cheaper to do the geothermal out of the gate. Could this be right? What am I not taking into consideration? I feel pretty certain that geothermal would save a us some on electricity, but at a cost savings, I am not sure the amount even matters. Please give me your feedback. Thanks in advance!

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The NC tax credit can only be used to offset the income tax that you owe. It can be carried forward for, I believe, 5 years. You need to take that into consideration when calculating your costs. It could be that you won't get the entire credit or that it may take you a few years to get it all.

    Bookmark   February 25, 2012 at 7:03PM
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$25k is pretty high for conventional. My builder's usual budget is $13k for 2 Trane systems (in a 2 story house). Sure - that is a basic system but I went pretty crazy and got 2 units for $20k (zoned, dual fuel, seer 16 etc).

So while geo can be cheaper, you really have to compare apples to apples. You could get a nice single system with zones for $15k easily. And by nice, I mean Carrier Infinity with Seer 16.

The big unknown here is do you have NG? I live in Cary so I know your climate and local pricing.

    Bookmark   February 26, 2012 at 6:14AM
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Thanks for your feedback guys - I am certain we could use the entire credit for NC, so that wouldn't be an issue for us. David - we do not have NG as an option because the property is not near town. I am (not so) patiently waiting for our plans so that I can get some more specific quotes. I really can't compare until I have all that info. Thanks for sharing your numbers with me. You have shared your utility costs with me on another thread, so I am sure that you have made very good choices with regards to energy efficiency. We will have a propane tank for gas logs (that will be used infrequently), but I cannot imagine that it would be cost effective to heat with this regularly. Would you share with me who did your insulation/sealing work? Thanks!

    Bookmark   February 26, 2012 at 1:49PM
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No gas means all elec or propane? Many rural houses in US. Wonder what % has no gas hookup?

    Bookmark   February 28, 2012 at 11:16AM
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A quick search and I found that 56% of american households use NG - it didn't say how many have access and do not use it. NG lines are offered just north and just south of us, but not in our zip code at all. I suspect that it is due to the low housing density in the area.

    Bookmark   February 28, 2012 at 1:00PM
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Momto3kiddos - I know you said it won't make a difference to you, but I just want to correct my earlier posting for others that may read this thread. The NC tax credit can only be used to offset up to 50% of the income tax that you owe. In order to get the entire $8400 tax credit in the first year, you would need to owe $16,800 in NC taxes.

No natural gas where we are in NC either.

    Bookmark   February 28, 2012 at 7:46PM
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I don't know who did the work. Southern Energy did the ES certification.

Are you planning on zoning a single unit or having multiple units? Basement or crawl? Are you working with anyone in planning stages with a serious interest in energy efficiency?

No NG tilts the balance in favor of geo more easily. It is usually still hard to justify in our climate. I am curious what system they are thinking that gets you to $25k for conventional HVAC?

    Bookmark   February 29, 2012 at 4:11AM
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A nephew works outside sales for a geothermal manufacturer. At Christmas time I asked him how things were going and one story he told was of a fellow with a large (expensive) house where a system had been installed/designed improperly. The nephew's company went to assess the design and it was 10s of thousands to fix the poor design.

At the Minnesota State Fair I visited a concept house and discussed geothermal with the HVAC consultant. He said there were only 2 companies he'd recommend in the Minneapolis/Saint Paul area.

My point being "make sure you have a good firm giving you the quote."

    Bookmark   March 2, 2012 at 11:12PM
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If they are designed and installed correctly they are amazing. If they are not... it can cost what you would have saved over traditional getting everything corrected. I highly recommend GEO just be careful and get multiple opinions.

    Bookmark   March 5, 2012 at 1:08PM
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In new construction it should be relatively easy to run numbers that tell you what your outlook is with current energy prices. By easy, I don't mean that it is not time-consuming for an average person. An energy rater should have software that makes it a snap. They can also evaluate your entire house design and monitor the construction for correct performance. They should also know all the rebate/tax break smoke and mirrors. Have you considered calling one or three to see what they will do and what they would charge?

    Bookmark   March 6, 2012 at 1:54PM
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My energy rate experience with new construction.
Base house $3800
ES house $3400. We did a few things beyond this but not much.
Actual house $1700.

So they were pretty far off. The thing that is interesting is that they predicted $1400 for heat and $500 for a/c. Reality is more like $500 each. So it wasn't only a matter of magnitude, it was the split. We do run the master bedroom very cold so I'm not surprised that heat is less than expected but about a third is pretty surprising.

FWIW, they had geo as saving $300 a year. Since it mostly helps in heating and our heating was $900 less than expected, it is really hard to believe the $300 savings... By my math, it actually would save about $100.

    Bookmark   March 6, 2012 at 2:23PM
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Epiarch Designs

geo is best in a colder climate where the hp can be used year round vs a air to air hp that dropped the output and shuts down at low temps. In mild climates you need to crunch the math to see if it really works, and what the pay off will be. The numbers to include are extra financing (you still need to front the initial bill!), electric costs, maintaining it (typically more then a hp/furnace), etc.
However in my area, installing a 2 ton geo system in my new home would be cheaper then a gas furnace after credits.
The 2 ton (waterfurnace) price is around $20k with vertical wells and duct work. A Lennox HP and furnace backup is about 13k with the same as above. However with the assumed tax credit and also a 3650 credit from the local power company, it puts geo below the price of the air to air hp, just over 10k to be exact.

    Bookmark   March 8, 2012 at 9:00AM
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lzerarc - unbelievable conventional costs. I wonder why. Just installed 2 Trane Seer 15 HPs at 2 tons each - $10k including all duct work. So we are less than 1/2 the price - that is just unbelievable. This was in 2 story 2,000 sqft so the ductwork maybe similar to yours but nearly twice the equipment price. I can think of a 4,000 sqft house with 6.5 tons in 2 units with gas furnaces that was $13k.

I know - that is a lot of tonnage. Very large east windows in an a/c environment.

    Bookmark   March 8, 2012 at 3:53PM
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