Geothermal Heat Pumps

New Residential

What are Geothermal Heat Pumps?

Geothermal heat pumps (GHPs), also known as ground source heat pumps or geo-exchange systems use the constant temperature (45°F- 75°F) of the earth to cool buildings in the summer and warm them in the winter. [1] Geothermal technology consists of open-loop or closed-loop systems (see Figure 1). Open-loop systems draw water from a well or a surface water body to circulate as a heat exchange fluid through the system and then returns the water to the ground through a well or surface discharge.[2] Closed-loop systems, configured as horizontal, vertical, or pond/lake systems, use a non-toxic antifreeze solution as the heat exchanger.[3] Some GHPs have wells drilled vertically deep underground and can fit into space constricted areas, while others have horizontal loops a shorter distance below ground that require adequate space or land.[4] GHPs can include a device called a desuperheater, which heats household water using waste heat from water in cooling mode.[5]

Figure 1 – Geothermal Heat Pump Systems with Associated Equipment. (Source: Whole Building Design Guide: Geothermal Heat Pumps)

Figure 1 – Geothermal Heat Pump Systems with Associated Equipment. (Source: Whole Building Design Guide: Geothermal Heat Pumps)

How to Implement Geothermal Heat Pumps

The practicality of a GHP for a specific project increases when considered early in the planning stages of the site and building design. Renewable energy systems are complex and require project team members with on-site renewable energy system expertise. Site assessments include analysis of geology, hydrology, and land availability to determine the feasibility of installing a geothermal heat pump, whether to install vertical or horizontal ground loops, and opportunities to utilize local water bodies. [6]

Look for ENERGY STAR qualified geothermal heat pumps that use about 45% less energy than a standard heat pump.[7] Find qualified installers through your local utility company, the International Ground Source Heat Pump Association, or the Geothermal Heat Pump Consortium.


Baseline Home vs. Model of Energy-Efficient New Home in NJ.

This study investigated the costs and benefits of several investments in residential energy efficiency, including a high-level mechanical upgrade using a ground source heat pump or geothermal system, compared to a baseline, single-family detached home with a conventional HVAC system.

The high upfront capital costs for this system included trenching, piping, equipment (including pump and de-superheater with associated fittings, valves, and backflow preventers) and installation.[8] The incremental capital cost of $34k surpassed the baseline capital costs by more than one-third. [9] While operating costs fell by 37%, a lack of available tax benefits and incentives, and site conditions that prevented a low-cost installation resulted in a project payback period of 32 years.

Sites and projects with similar limitations might consider other heat pump technologies including air source heat pumps or absorption heat pumps.[10] Check NJ’s Clean Energy Program for available incentives.


Incorporating a geothermal system reduces greenhouse gas emissions, protects against the fluctuating costs of fossil fuels, and saves on purchasing energy from utility companies while providing additional ecological and user benefits. Geothermal pumps have a higher efficiency than air pumps and produce less noise pollution as most of the moving parts are underground.[11] Depending on the cost and type of fuel, heating with geothermal pumps can cost 25-50% less than that of conventional heating.[12] Compared to air-source heat pumps, geothermal pumps last longer, require less maintenance and do not depend on outside air temperatures.[13]


While the initial purchase price of a residential GHP system cost more than that of a comparable gas-fired furnace and central air-conditioning system, lower utility costs associated with GHP systems can result in a payback of two to ten years depending on the system and environmental factors.[14] As seen in the example above, site-specific costs associated with wellfields can add tens of thousands of dollars to the cost of the system in some locations. For instance, costs increase when a high level of bedrock at the site requires boring and vertical trenching.[15] If included in a mortgage, a GHP can have a positive cash flow from the beginning. For example, if the extra $3,500 in installation costs added $30 per month to each mortgage payment, the energy cost savings can exceed that added mortgage amount each year.[16]

Check NJ’s Clean Energy Program for the latest information about incentives for residential geothermal systems.


Geothermal heat pumps increase grid resiliency by helping to diversify sources of clean and renewable energy and by providing a consistent and energy-efficient source of renewable energy to supply the grid in the absence of wind or solar. Geothermal heat pumps with thermal energy storage can operate off the grid and supply energy to emergency services and infrastructure during power outages.


[1] US DOE  “Geothermal Heat Pumps.” (accessed  April 4, 2018).

[2] ENERGY STAR. “Choosing and Installing a Geothermal Heat Pumps.” (accessed April 5, 2018).

[3] US DOE “Geothermal Heat Pumps.” (accessed April 5, 2018).

[4]  US DOE. “Guide to Geothermal Heat Pumps” (accessed April 4, 2018).

[5] EnergySmart Alternatives. “How a Geothermal DeSuperheater Works.” (accessed April 5, 2018).

[6] ENERGY STAR. “Choosing and Installing a Geothermal Heat Pumps.” (accessed  April 4, 2018).

[7] ENERGY STAR. “Heat Pumps, Geothermal for Consumers.” (accessed  April 4, 2018).

[8] Rutgers Center for Green Building (RCGB). “Costs and Benefits of Residential Energy-Efficiency Investments.” Prepared for the New Jersey Association of Realtors Governmental Research Foundation. Final Report. July 2011. (accessed April 4, 2018). The costs of the ground source heat pump’s material and labor costs came from averages of estimates from local vendors.

[9] Ibid. RCGB. Costs for ground source heat pump well fields are highly site-specific. The reported construction cost is for a site that required vertical boreholes. A site that is suitable for a shallow, horizontal piping loop may have an incremental cost of less than $10k. Such a system would achieve simple payback in less than 10 years (instead of 32 years for the vertical case).

[10] US DOE. Energy Savers: Heat Pumps Systems. (accessed April 4, 2018).

[11] ENERGY STAR. “Choosing and Installing a Geothermal Heat Pumps.”  (accessed April 5, 2018).

[12] US DOE. Energy Savers: Benefits of Geothermal Heat Pumps. (accessed April 20, 2018).

[13] US DOE. Energy Savers: Selecting and Installing a Geothermal Heat Pump. (accessed April 4, 2018).

[14] US DOE. Geothermal Heat Pump. (accessed May 14, 2018).

[15] Rutgers Center for Green Building. 2011. Costs and Benefits of Residential Energy Efficiency Investments. Prepared for the New Jersey Association of REALTORS Governmental Research Foundation. (accessed May 14, 2018).

[16] US DOE. Selecting and Installing a Geothermal Heat Pump. (accessed April 5, 2018 ).