A year and a half ago, we purchased our little slice of heaven – the perfect home for our family on 10 acres of land in lower Michigan. But just 2 months after moving in, we lost power. When the electricity finally came back on (5 days later) we experienced a power surge which destroyed a very expensive part in our 18 year old furnace. The only option was to replace it for $5000. Our home also had a second furnace of the same age that ran the second story of the home. So in another year or two, that one would likely have to be replaced as well.
We debated, should we just replace the old systems and possibly be out $10,000, or look into other options? We were currently paying about $800/mo for propane in the peak winter months. That was going to become much more reasonable in the summer, but we estimated our annual propane costs to be around $5,500/year.
We decided it wouldn’t hurt to get some quotes for geothermal heating and cooling. We learned that this switch would not only replace our furnaces but also the water heater and AC unit. We also determined that it would be cheaper to re-configure the upstairs ductwork to tie into the basement geothermal unit vs. getting two units. Plus I got to reclaim the furnace closet upstairs for storage, bonus!
We got 3 quotes: one for $70,000, one for $60,000 and one for $45,000. Guess which one we chose?
Here’s our Savings!
$45,000 may seem like a lot of money, but you have to look at it as an investment in your future (and your home)! If we were using propane at $5,500/year we would have reached $45K and seen a return on our investment in just under 8 years. We definitely planned to stay in this home longer than that, so the numbers just made sense.
We were able to take advantage of an energy program in our state and put $35,000 on a loan. The payments for this would be $300/month for 10 years (much lower than our monthly propane bills, not to mention more consistent). So after we paid off this loan, we would have virtually free heating and cooling forever (aside from repairs or replacement of the inside geothermal unit in 20 years).
The tax credit for geothermal was currently not available, but lucky for us it was reinstated later that year. We were able to get the $10,000 out-of-pocket cash we had to put down back as a tax credit a year later.
The whole thing costs about $25/month in electricity to run and is set up on its own meter. Our electricity company has a green energy program where customers with geothermal are given a discounted rate for electricity used to run their system.
So, we would end up saving tens of thousands of dollars over the next few decades and add value to our home if we ever decided to sell it. Plus this was an environmentally friendly, renewable resource. That was a no-brainer for us. And on top of that savings, I was able to sell our old water heater, AC unit and both furnaces online and made an extra $1,500 cash! With that extra cash, we decided to add a whole house humidifier, HEPA filter and air purification system to our project (which I included in that $45K).
How Geothermal Works?
There are two main types of geothermal systems – vertical loop and horizontal loop. You can also have an open loop or closed loop system. All of the systems use tubes buried underground that circulate water or a water/antifreeze mix through the loop. As this liquid moves underground, the earths constant temperature warms it up during winter or cools it down in summer.
All of these systems then connect to a unit inside the house (which replaces your old furnace) that converts the liquid from the underground tubes into heated air that then travels through your home’s duct work.
A Vertical Loop System is typically used when there’s limited space on the property. A well driller digs a hole several hundred feet deep for the geothermal tubes to be buried in.
A Horizontal Loop System was what we chose because it was less expensive than a vertical loop and we have a large yard to accommodate it. In this system, the tubes are buried in a 6ft deep trench that spans several hundred feet in length across the yard.
Open and Closed Loops can be used with either a vertical or horizontal system. Most systems are a closed loop, where the liquid in the buried tubes is constantly recirculating. We ended up needing a temporary open-loop system because, during installation, our ground was so wet and muddy that it became unsafe for the workers. Since we had no more furnace, our system was hooked up to our well on one end, run through the indoor geothermal unit to be converted to heat, then dumped out into our yard in a designated area on the other end.
The thermostat is a bit different than we were used to. When you’re using fuel, it saves money to turn the heat down at night, quite the opposite is true for geothermal. Since the unit runs on electricity, it actually spends more energy when it needs to make an adjustment to the temperature. So, keeping the house at a constant temperature year round is actually less expensive. You also have to use a thermostat that is specifically made for geothermal systems. Using this, we can adjust the humidity, air purification and other metrics on a dual zone setup (upstairs and downstairs).
What’s the Downside?
Since we did a horizontal loop system, we had to let that 6ft deep trench settle for a season before landscaping it. We ended up having to live with a giant mud pit in our backyard for a year. Since we had just moved in during winter, we didn’t have any landscaping done at all yet. We had to set up our gardens and a play area for the kids in the side yard, which wasn’t our first choice, but there it is.
We ended up getting in touch with a neighbor just down the road who had dug a pond in his yard the year before. He had tons of dirt leftover from this project, plus he owned a gravel business and mini-bulldozer. Since we needed our yard graded and filled, we paid him $2,200 for his labor, equipment and materials to fix up our mess of a yard.
Not everyone lives in Michigan, but I wanted to include links to all the companies and programs we used for anyone interested in learning more.
Michigan Energy Services (The company that designed and installed our Geothermal system. Amazing people!)
Michigan Saves (Energy Loan Program)
DTE Energy (Geothermal Electricity Discount Program)
Oak Electric (Our electrician for the project)
So What Do You Think?
We have always dreamed of taking our homestead off-grid, but never imagined that we could afford it. This just proves that we can’t afford NOT to do it! Our next step will be converting to solar power before that tax credit is gone. It feels great to be self-reliant and know that we don’t need to have fuel shipped in to heat our home. We have a system that will last for lifetimes to come and we are helping our planet stay green at the same time.
I hope this was helpful information for anyone questioning if geothermal is the right choice for your home. I am not an expert on geothermal, but I would love to answer any other questions you have after reading this!
Looking for other ways to go green? Check out these ideas!