Geothermal Systems - How Tax Credits Have Made Them Affordable

We get many questions on geothermal systems, particularly from homebuyers interested in a greener approach to their new home.   Top questions include affordability and steps to installation for a geothermal system.

How Much Does a Geothermal System Cost?

A geothermal heating and cooling system in the Triangle area generally starts at about $8,000 per ton, installed.  This compares to a cost of about $2,000 per ton for a traditional HVAC system. 

Example Geothermal System

Just to make the numbers easy, let's look at a 3000 sq ft home.  A 3000 sq ft home generally requires about a 5 ton system.

Traditional HVAC system -

5 tons at $2,000 each

$10,000 for total system - Traditional HVAC

Geothermal Heating and Cooling system -

5 tons at $8,000 each

$40,000 for total system - Geothermal Heating and Cooling

Geothermal Tax Credits

Ok, now we get to look at the tax credits.  Remember, you'll want to consult a tax professional, and you will have to wait to get "refunded" for the tax credits.  But the savings can be significant.

Federal Geothermal Tax Credit

30% of the cost of the Geothermal System, or $12,000 credit.

North Carolina State Geothermal Tax Credit

35% of the cost of the Geothermal System (with a cap of $8400) - $8,400 credit

Progress Energy Credit

$1200 credit

Cost of Geothermal after credits:

Original price tag = $40,000

- $12,000 Federal Tax Credit

- $8400 North Carolina State Tax Credit

- $1200 Progress Energy Credit

= $18,400 total cost. 

Thus after credits, the cost is much closer to a traditional HVAC system.  On average, a geothermal system saves 35% on energy costs for COOLING your home versus a standard HVAC system, and 70% on energy costs for HEATING your home versus a standard HVAC system.

Geothermal can be a great part of building green.  Again, you'll want to talk with your tax professionals about how the tax credits work, but these credits have made a significant difference this year in the total cost of a geothermal system. 

You may also be interested in these popular green building topics:

Green Home Building in the Triangle

What is a Green Home?              

What Is Geothermal?  Geothermal News and Information

Passive Solar Homes and Ideas