geothermal heat pump installation cost

$12,000 – $27,000

The cost to install a geothermal heat pump 4-ton system averages about $21,000 for most homes. Total range for all systems is $12,000 to $27,000, though some large, complex systems cost more. Tax credits and local rebates reduce the cost of many geothermal HVAC projects.

Average Cost of Geothermal Heat Pump HVAC Installation

A typical ground-source HVAC system, i.e., geothermal, costs about $21,000 for an average 4-ton system serving a home of 1,600 to 2,500 square feet.

At this cost, the contractor will supply the heat pump and evaporator coil, minor ductwork alterations, installation materials including the loop pipe, all installation labor and local permits.

Average Do It Yourself cost

$6,500 – $13,500

Average Contractor Installed Cost

$16,000 – $23,000

Typical Cost Average


Last Updated: Wednesday, January 12, 2022

Overview of Geothermal Heat Pumps

There’s no doubt that geothermal is a green energy system. Even with significant increases in the efficiency of air-source heat pumps, both traditional and ductless split system heat pumps, ground-source heat pumps remain far more efficient. After all, they are gathering heat and dumping heat in ground with a year-round temperature of 50-55F rather than having to gather heat in sub-freezing temperatures in winter and disperse it in 80F and higher temperatures in summer. Physics will always be on the side of geothermal.

The question with geothermal heat pumps is payback time. Even if they use 40% to 70% less energy of other heat pump types, how long will it take you to recoup the extra spent? Current estimates are between 7 and 20 years, but there are many variables that make it difficult to accurately estimate.

Your options, based on the local site conditions, include a horizontal loop system employing tubing in trenches or in a body of water and vertical loop systems installed with the aid of well-drilling equipment.

This page of Business Finance News explores geothermal heat pump prices, cost factors, a sampling of pricing from around the web plus homeowner-submitted geothermal heat pump pricing.

Product and Installation Supplies Cost Details

Geothermal Heat Pump Cost Factors

We’ve pegged the cost of this type of heat pump system at $14,000 to $27,000, with $21,000 being the average. According to the prices homeowners have submitted on this page and on PickHVAC, that’s an accurate estimate of what people are paying to get one of these green energy HVAC system for their home. Home Advisor’s range of about $3,500 to $14,500 simply doesn’t reflect actual project costs and, on the low end, doesn’t cover equipment and material costs.

Here are the equipment and installation cost factors related to geothermal heat pump price.

  • System Size – House size, insulation levels, condition of the windows and doors all affect the size of the system you’ll need. Regardless of the type of HVAC equipment you select, from geothermal to a gas furnace and split system AC, size impacts cost. The more heating and AC capacity it has, the more it will cost (all else being equal). Residential systems range from 2.0 to 6.0 tons from most manufacturers. Home Guide suggests a geothermal heat pump costs $2,500 to $5,000 per ton, but it isn’t that easy. There are certain fixed costs related to excavation or well drilling and the installation and setup of the geothermal heat pump that vary only a little with size.
  • Hot Water Too – This is really a function of system size, but something to consider. If you want your geothermal equipment to heat the water in your hot water tank, you’ll need a larger size – at a higher cost.
  • System Performance – As with split system air-source heat pumps, geothermal models come in three performance levels: Single-stage, two-stage and variable capacity compressors. Indoor comfort control and efficiency rise with compressor performance, but so does price.
  • Horizontal vs Vertical Loop Systems – This is a large factor in geothermal heat pump system installation pricing. Horizontal loop systems require larger lots than vertical loop systems, but excavation costs are much lower due to the cost of drilling vertical wells.
  • Ductwork Changes – If you’re switching from an air-source heat pump or even a gas furnace, existing ductwork will probably be usable. However, if it is the wrong size or in poor condition, expect to pay $175 to $400 per duct run for for duct replacement in addition to the costs listed for a geothermal HVAC system.
  • Ground Conditions – Where the ground is rocky, especially when having to drill through bedrock, installation costs are higher and might be prohibitively high.
  • Tax Credits – The US Tax Credit for qualifying geothermal heat pump systems is 22%. That’s a tax credit, not a deduction. So if you spend $20,000 on a system, for example, you’ll receive a $4,400 break on your taxes. If your tax burden is less than that, you’ll get cash back. The credit expires at the end of 2021, and there’s no guarantee it will be renewed.
  • Rebates – Many states, cities and most local utility companies offer rebates for energy efficient HVAC equipment including geothermal. As your contractor about rebates or look up local rebates on the Database of State Incentives for Renewables & Efficiency.
  • Permits – You’ll need a mechanical permit at minimum and perhaps electrical and some form of DNR/DEQ permit. See Permit costs below.
  • Environmental Impact Study – If you’re considering a geothermal system that uses a pond or lake as the sink, then an impact study might be required at a cost of $750-$1,500.

Cost Breakdown

Here is a breakdown of costs for a geothermal HVAC system. The list starts with equipment costs only and ends with labor/installation costs.

  • $4,500 – $10,000 | All-in-One Package System – Heat Pump, Air Handler & Coil – Compare to about $6,000 total cost for an air-source package heat pump installed
  • $2,400 – $7,800 | Split System Heat Pump Only
  • $600 – $1,500 | Evaporator Coil
  • $900 – $2,000 | Air Handler
  • $2,000 – $3,500 | Loop System Supplies
  • $6,000 – $15,000 | Excavation for a Horizontal Loop System; Well-drilling for a Vertical Loop System and installation of the system.

Sample Projects

Typically, horizontal loops systems are installed on large properties while vertical loop systems are installed where space is tight. Soil conditions and bedrock can also affect the design of the loop system. The cost factors listed above affect the price ranges.

  • 3 ton horizontal loop system: $12,000 – $17,000
  • 4 ton horizontal loop system: $14,500 – $19,000
  • 5 ton horizontal loop system: $16,000 – $21,500
  • 6 ton horizontal loop system: $18,000 – $23,000
  • 3 ton vertical loop system: $14,500 – $20,000
  • 4 ton vertical loop system: $16,000 – $22,000
  • 5 ton vertical loop system: $17,500 – $24,500
  • 6 ton vertical loop system: $22,000 – $27,000+

Permits, Inspection, Related Costs and Installation Time

Permits and Inspection Cost

  • $300 – $1,000 | Permits. Depending on your system, permits needed could include mechanical, electrical and an environmental permit from the DNR or Department of Environmental Quality (names vary by state).

Related Costs and Installation Time

Installing a geothermal HVAC system is a labor-intensive project that also includes heavy equipment. As noted above, the labor and installation costs based on the system size, type of loop system installed and ground conditions comes to:

  • $6,000 – $15,000 | Excavation for a Horizontal Loop System; Well-drilling for a Vertical Loop System and installation of the system.

How long does it take to install a geothermal heat pump system?

Here is a general time frame:

  • Up to 4 months | Applying for and receiving permits. If no environmental impact study is done, it usually takes up to 6 weeks for permits. Having a study done and waiting for results and permission can take much longer.
  • 1-3 Days | Site excavation and preparation
  • 1-3 Days | Installation of the loop system
  • 1-2 Days | Installation of the heat pump system (usually done by a separate crew simultaneously to the loop system being installed)

DIY or Hire a Pro?

The short list of people that DIY is possible for includes excavation contractors and HVAC pros. Even then, some of the work would likely have to be hired out.

In short, this isn’t a DIY project for most of us. Besides, most homeowners want the safeguard that if something goes wrong with the underground loop system, the work will be under warranty for a least a period of time, usually 10-15 years. Having to dig up a loop system to find a line break, for example, is a costly job.

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Author S Krone

A lawyer never retires. So I would just say that I am not as active as I used to be. Now I simply dedicate myself to fishing, my hobby, and my grandchildren. For Business Finance News I write about legal aspects of mortgage policies, mostly regarding the rights of policyholders. I also have articles about personal injuries.

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