How Much Will It Cost to Install a Geothermal
Well System?
While each house is unique, the usual cost of a geothermal well system can range from about $9,000 to $13,000, depending on your home’s requirements.
How Much Will It Save?
In a recent customer survey, we found that homeowners saved 30-50% on their heating and cooling bills after installing geothermal systems. A home’s value increases by $10-25 for every $1 reduction in the annual utility bill, according to the National Association of Realtors Appraisal Journal
Tax Incentives for Geothermal Energy Systems
Expanded Tax Incentive Encourages Installation of
Geothermal Heating and Cooling Systems
Legislation allows FULL 30% TAX INCENTIVE!
Homeowners who install geothermal heating and cooling systems are now eligible for increased tax incentives under the American Recovery and Reinvestment Act of 2009.
Previous legislation offered a one-time tax credit of 30 percent of the total investment for residential ground loop or ground water geothermal heat pump installations, with a maximum credit of $2,000 for a single residence. The new bill, signed into law on Feb. 17, 2009, removes the $2,000 cap and offers homeowners the entire 30 percent tax credit.
“We anticipate the removal of the $2,000 cap will have a positive impact on our geothermal system sales moving forward,” said Bill Seguin, Seguin Heating & Air, New Milford,CT “The improved tax incentive will make geothermal systems more affordable for homeowners and allow them to make decisions about their home comfort systems based more on energy and comfort concerns and less on installation price.”
The new tax credits are retroactive to Jan. 1, 2009, and expire on Dec. 31, 2016. Residential systems installed Jan. 1, 2008, through Dec. 31, 2008, are also eligible for the 30 percent tax credit, but they are subject to the provisions of previous legislation, including the $2,000 cap.
To qualify for the tax credit, residential systems must meet Energy Star requirements. Owners can file for the credit by completing the Renewable Energy Credits subsection on their 2009 tax return forms. No proof of purchase is required. However, in case of an audit, owners are encouraged to keep a detailed invoice of their purchase on file. Contractors who install the product should list the purchase as a “Geothermal Heat Pump” on the invoice and note that the unit “Meets or exceeds requirements of the Energy Star program currently in effect.”
“This new, larger tax incentive supports geothermal technology as a homegrown solution to both the energy and the financial crisis by encouraging the growth of renewable energy and creating opportunities for the heating and air-conditioning contractors, electricians, plumbers, excavators and drilling machine operators that support the geothermal industry,” said Bruce Ritchey, CEO of WaterFurnace Renewable Energy, Inc. “Geothermal heat pumps and the machines used to put the renewable heat exchangers in the earth are all made in the United States. Additionally, every system installed requires skilled U.S. labor across a variety of trades.”
Geothermal systems tap the free, renewable supply of solar energy stored just a few feet below the Earth’s surface and use that energy to drive heating and cooling systems in both residential and commercial buildings. In addition to utility, state and now federal tax incentives that enhance the affordability of geothermal systems, this cost-effective, environmentally friendly technology offers a host of benefits that includes:
- Free, renewable supply of solar energy
- Efficiency ratings up to five times higher than those of ordinary heating and cooling systems
- Savings on utility bills up to 70 percent
- Reduced carbon footprint, since the system burns no fossil fuels
- More even distribution of heating and cooling for improved comfort
- Improved indoor air quality
- Quiet operation with no noisy outdoor units to disturb the environment or neighbors
- Safe operation that requires no open flame or fuel storage tanks
- Less maintenance
- Increased system longevity (an average life span of 24 years vs.15 for conventional air conditioners and 20 years for fossil fuel furnaces)
More Geothermal Energy Tax Incentives and Rebates
Businesses and residential homeowners may qualify for a wide variety of investment tax credits, which can be deducted against capital improvement expenses. Consult a tax specialist for specific information.
Investment Tax Credits (IRS)
Standard investment tax credits for business can be deducted against capital improvement expenses. These expenses generally include rehabilitation expenses and specifically include solar energy systems, geothermal energy systems, and micro turbines. See instructions for form 3468 (Investment Credit) for more information.
- Energy Policy Act of 2005 – Federal Tax Deductions and Credits (IRS)
- The Energy Policy Act of 2005 (EPAct) created tax deductions and credits for the installation of many energy efficiency measures. These deductions and credits are applicable to businesses and residential homeowners under different sets of guidelines. Homeowners can receive credits for a percentage of the cost of specific eligible measures installed. Commercial property owners can earn a tax deduction for improvements relative to ASHRAE 90.1-2004 standards. These deductions fall into three areas of concentration: interior lighting; heating and cooling ventilation and hot water systems; and building envelope.
- Connecticut Light and Power (CL & P)
Through the Connecticut Energy Efficiency Fund, CL&P offers a $500 per ton incentive (maximum incentive is $3,000) for the installation of Air Conditioning and Refrigeration Institute (ARI)-rated geothermal systems. These ground source heat pumps must be performance-tested in order to qualify for the incentive. - For more information and to download rebate applications please visit:
http://www.cl-p.com/Home/SaveEnergy/Rebates/HeatPumpRebate.aspx
More information on these incentives can be found on the following websites.
Federal Tax Incentives for Geothermal Energy:
Connecticut Tax Incentives for Geothermal Energy: