Estimating what a geothermal system could save you

What does a geothermal heat pump save money on?

The saving is the difference between two annual running costs: what your current heating costs and what the heat pump would cost for the same heat. A ground-source unit moves heat from the ground rather than making it, so each kilowatt-hour of electricity can deliver roughly three to five kilowatt-hours of heat over a season. The exact figure depends on the model, the loop and the way the house distributes heat.

Running costs are only half of the picture. A geothermal system costs more to install than most alternatives, and the extra upfront money has to be earned back in lower bills. The cost guide covers installed price drivers and whether geothermal is worth it weighs both sides.

How do you work out your own savings?

Use a short method with your own numbers.

1. Find your heating energy. Look at 12 months of fuel bills, subtract the non-heating share (hot water, cooking), and convert to useful heat delivered. An energy audit or a load calculation gives a cleaner figure.
2. Cost the current system. Divide the heat needed by your furnace or heater efficiency to get fuel used, then multiply by your fuel price.
3. Cost the heat pump. Divide the heat needed by the installer's estimated seasonal efficiency, then multiply by your electricity price.
4. Subtract, then compare with the extra install cost. Include cooling savings if you currently run air conditioning.

What does a worked example look like?

These numbers are placeholders to show the arithmetic, not forecasts or real prices. Suppose a house needs 20,000 kWh of delivered heat a year. Assume a seasonal heat pump efficiency of 3.5 and an electricity price of 15 cents per kWh. The heat pump then uses about 5,700 kWh of electricity, costing roughly $860 a year.

• Against a 95% efficient gas furnace. At an assumed gas price equal to 4.5 cents per kWh of energy, the furnace costs about $950. The saving is around $90 a year, which is small.
• Against electric baseboard heat. Baseboard converts all of its electricity to heat, so the same 20,000 kWh costs about $3,000. The saving is roughly $2,100 a year.

The pattern matters more than the figures. The more expensive your current fuel is per unit of heat, the greater the saving. Replace the placeholders with your own prices and your installer's efficiency figure before drawing any conclusion. The comparison of natural gas and electric heating shows why price ratios matter.

What changes the saving up or down?

• Heat loss. A better-insulated house needs less heat, and cutting it first can shrink the system and its cost.
• Distribution temperature. Low supply temperatures, from radiant floors or large coils, let heat pumps run more efficiently.
• Loop design. An undersized loop lets entering fluid temperatures sink in winter, and efficiency falls.
• Electricity and fuel prices. Rates and delivery charges vary by province and utility and change over time.
• Cooling. A house with air conditioning may also save on summer electricity; see geothermal cooling.

For other ways to trim a heating bill without new equipment, see how to lower your heating bill in winter.

How do rebates and financing change the picture?

Incentive programmes and loans for ground-source systems have existed at federal, provincial and utility level, but amounts and eligibility change. Check the Government of Canada energy-efficiency pages, your provincial energy ministry and your utility for what is open now, and read the geothermal rebates and financing guide. Treat any quoted payback as an estimate until you have the final quote, the current incentive terms and your own price data.

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