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Chris M.

That was really interesting! I thought geothermal only worked if you lived in Iceland.

I'm no financial wizard, but $2,000/$25,000 = 8%. That's a terrific return for very little risk. And that's assuming oil prices stay constant. If they go up the implied return goes up as well. However, I think "big backyard" is an enormous understatement. That's a football field!

If I had the room I would do it myself, because I hate the dry furnace air I breathe all winter.


Back in 1980, I worked on a farm where they hooked the ventilation system of a barn to the tile drain system in their fields. The reason was the same as your father's. The ground temperature was constant. The animals didn't need room temperature heating so the system was much simpler than described here.

I bring up this example to show that these ideas have been around for decades. In our zeal to find the ultimate answer, we forget that there are a series of simple solutions that could be used to gain energy efficiency.


ps. I do recall spending time in the same classrooms as you in highschool.

Daniel Haran

In some cases, the return may be better than 8%. Without getting into the maintenance costs of both systems, we'd have to look at the difference in capital outlays for both solutions.

The oil solution requires at least $4,000 for the furnace, so that's a $21,000 extra outlay rather than $25,000.

If we looked at the value of the house at resale, things might get wonkier. Better indoor air quality is certainly a good selling point! Should someone compile this data, they could convince bankers to lend money for heat pumps, maybe payable with the mortgage.

Looking at this from a purely hard-nosed business perspective, the numbers look fairly good. This has better returns than most GIC's and government bonds, with the added insurance against rising oil prices.

mac china

This is awesome. When I am old and rich I will do this.

Chris M.

Another way to look at it is whether it's worth taking out a home equity loan to do it. At a return of at least 8% I think it probably is.

Joel Schopp

I am a big fan of geothermal. But at the savings and cost you mention it does not make sense on economics alone. You must put economic value on non-economic terms, like the CO2 savings or the cleaner air.

Let's give a scenerio, you have $25,000 laying around and decide to either invest it in a geothermal unit saving you $2000/year or a 5% bond. What year would the geothermal savings total up to be greater than the bond value?

The answer is never, it's not even close in any year. The bond always has more value. And that's using a bond rate below any stock or bond you'd invest in.

There are renewable energy choices that have crossed the economic threshold. Wind is one. Power companies put up wind turbines because it makes them money, not because it is environmentally friendly.

If we want to have the population as a whole adopt clean alternatives to oil and gas we need to make it economic to do so. That means funding research. It means standardization so the parts can become commodity and the system prices come down. It means putting economic terms on non-economic costs, like Kyoto attempts to do. It is not about eduction, people who are better educated are still going to be reluctant to lose a lot of money for a clean concience.

Joel Schopp

"I'm no financial wizard, but $2,000/$25,000 = 8%. That's a terrific return for very little risk. "

I agree with the first part of your statement, but not the second. It would be 8% if at the end of year 1 you had $27,000, not $2000. Let's compute the actual interest, which in this case only makes sense over a time period:

5 year: -16.74%
10 year: -2.21%
15 year: 1.22%
20 year: 2.38%
25 year: 2.81%
30 year: 2.96%


I never knew that this was "geothermal heating" or that it was possible to use in a house. But I do know that Cornell University heats its entire campus thus way--they run the pipes through a lake, and the buildings are always way warm, feel pretty good, and apparently they save a lot of money


Presumably, it would cost rather less to install such a system at the time when the house is built. Are there any construction companies that already do this? How does it affect the initial sale price of the house?

James Wynn

A few years ago an architect/developer put up a new building in Tribeca that uses geothermal heating/cooling. Apparently they dug all the way down to the bedrock.


My parents had a Spectra geothermal system installed in the house they built in 1994. They live on a large lot, but there's only a few feet of dirt over a limestone cap so they couldn't lay out the giant trenches like the author describes. Instead, they used drilling equipment to put several very deep holes in the backyard - it only took about a 10x10 meter area.

My parents live in northern Kentucky, which has pretty wild temperature swings. Average temps during the summer are in the upper 90F range, and average temps in the winter are in the 20F range. The system handles both ends without a problem. I think electricity is a little cheaper there than in Ontario, but it's unusual for their total electrical bill to be more than $120US a month.

The system cost about $6K total (including installation), but I think the local electrical utility picked up several thousand dollars off the top. It's never needed any kind of repair or maintenance that I'm aware of. My parents' first house had oil heat, and it was a never-ending hassle. My father swears he'll never go back (and based on what's going on in the Middle East, I don't expect that he could afford to).

Doug Karr

Iceland is a great example of the use of geothermal energy. They have none of the polution difficulties that we have.


Jim Ross

A minor point, but I think the energy usage figures should read "watts" not "KWHs". A typical baseboard heater uses 1500 watts. 1500 KWHs is more than I use in my house for an entire month.

Trevor Sumner

In Coober Pedy Australia, this is exactly the reason why they live underground. The summers are harsh (~120 degrees) and the winters so cold at night, but 8 ft under the ground it is always nice and cool.

It also happens to be a miner's town, one of world's best sources of amber. So if you spend all your days underground, why not your nights?


My father installed a Geo-thermal unit at his new house a few years ago. I do not know what he has saved financially but I know he loves the system and it runs smoothly for him throughout the year. We live in Southern Indiana so we get a good mix of hot/cold weather.


One thing you forgot to mention is the need for a backup electric furnace. Every geothermal unit I have looked into has trouble heating on very cold days. Once you get down into the single digits and below, the backup kicks in.

BTW, you can also use a geothermal unit to help heat water. This can save you more money.

Susan Jones

Wow! that was super informative, a bit dry, but a must read!
(btw, your comment counter isn't working)


Michael R.

Hey Malcolm,

The apple certainly does not fall far from the tree!

However, the apple certainly has the benefit of an editor, which the tree did not:

"For heating, there is an extra wrinkle. Most of us prefer the temperature in the house in the winter to be nearer 70˚F then 60˚F..."

"than" should be substituted for "then" in the sentence above.

Otherwise, loved this article...except for the fact I don't have the space to set this up. I wonder if one could run the pipes in a series of esses. I wonder how far apart they would need to be so they wouldn't affect each other.

Christian Pearce

The office complex I work in had several buildings go up in the last five years. I think almost all off them installed geothermals including the one I work in. They dug the really deep trenches.

Heating seemed to be no problem. But I don't ever know if a backup kicked on. (We have cold winters) The worst part though was almost every girl in the office would run a little space heater at their feet complaing they were cold.

Also having a bunch of computers running in a large room routinely overloaded the system. I don't know if it was spec out wrong or what.

If I was going to build I would do it. But it is at best a poor investment if you already have a house. Unless you can do it for a lot keeping. With oil getting more and more expensive biodiesels will become a viable alternative. You are probably better off getting a new model that burns cleaner and more efficiently.

As far as being greener sure it is greener and that is good. I am glad to see people adopt this technology. One should note the where their increased electricity comes from. It could be coal which is again adding more CO2. But overall you would have to be saving.


The geothermal system you've discribed is a basic geothermal system that's been around for several decades. There ahave been significant advances in geothermal technology over the past two decades. There are now advanced geothermal systems that actually heat the earth up way beyond the 50-60F mentioned by your dad. I'm currently installing 4 systems in a townhouse project In Halifax, Nova Scotia that will capture "waste summer heat" through cooling and solar summer heat and store that thermal energy underground until the winter. We will be heating the earth up to about 80-85F and drawing that heat during the winter. This will double the efficiency of the geothermal system.

Roger L

There is a whole subdivision of houses in Kamloops BC, Canada that is heated and cooled via geothermal energy. I am not sure of the technology they used, but it does make tremendous sense. Is anyone familiar with this particular project?

Roger L

Further to my comment, here is a URL on the Kamloops geothermal....http://www.geothermie.de/europaundweltweit/canadas.htm

Pat Joseph

Nice post Malcolm and Graham. The US Department of Energy actually has some pretty decent information about heat pumps. It's worth noting that, in milder climates, air-source heat pumps (as opposed to geothermal heat pumps) are a good option. According to the DOE: "When properly installed, an air-source heat pump can deliver one-and-a-half to three times more heat energy to a home than the electrical energy it consumes."

So, why don't we hear more about this technology?


The geothermal system could be run on solar energy during some of the year, or combined with wind or water power to really reduce the cost and impact. As for needing a back-up heater for cold days--that's what fireplaces/woodstoves are for. After all wood it the fuel which heats thrice--once while splitting, once while hauling, once while burning.


In working at a large company researching entry into the HVAC arena, we explored geothermal as a high potential growing market. An interesting thing happens when the market's value chain is evaluated.

For a couple quick facts...
HVAC systems have two main markets: 1. Residential and commercial construction; and 2. Replacements. HVAC product replacement cycles are very long, a house gets one when its built and then the system is replaced every 10-40 years depending on use.

First, the construction market is its own animal that really isn't so much a single point of distribution (like Wal Mart), but is more like an assembly of local service providers (framers, plumbers, electricians, etc) that, along with their service (which is regulated at the municipal level), sell a physical product. So this leads to a market of people working with people to build homes and offices - meaning that novelty and new approaches require a large number of people communicating great benefits on why things should change OR the government to force this action to occur.

Now most of us, as home owners, live in a home for 5-10 years on average and may never deal with a HVAC replacement. The supply chain to provide a replacement is similarly bound by local municipal regulations (plumbing primarily), thus restricting nationalization of delivery - again, people selling services and products to the home owner in a market structure that greatly benefits the current providers.

Where does this leave a very good design? Waiting for prices to make it compelling (like solar) or for government action requiring some level of implementation (like California emmissions). Of course, there's one last option of a manufacturer taking risks and the consumer buying it on faith, like the Prius...

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