OLR Research Report

September 29, 2008




By: Kevin E. McCarthy, Principal Analyst

You asked for a discussion of the pros and cons of geothermal heating and cooling systems.


Geothermal heat pumps use the ground's relatively constant temperature to provide both heating and air conditioning. Geothermal systems can also be designed to supply a home with hot water. There are four basic types of systems, three of which (horizontal, vertical, and pond) have closed circulation loops. The fourth type of system is the open-loop option, which uses well or surface water as the heat exchange fluid that circulates through the system. Once the water has circulated through the system, it returns to the ground through a well or surface discharge.

The feasibility and economics of these systems depends on the climate, soil conditions, available land, and local installation costs. All of these approaches can be used for residential and commercial building applications. According to Connecticut Light & Power staff, the vast majority of the geothermal systems installed in the state have been vertical closed loop systems, because they require less surface area than other types of system. The U.S. Department of Energy has a consumers guide to geothermal systems, which is available at

The principal arguments for geothermal systems are that they provide several environmental benefits and have lower operating costs than conventional heating and cooling systems. The environmental benefits include lower air emissions and higher energy efficiency. The systems use 25% to 50% less electricity than conventional electric heating or cooling systems. They are easier to maintain than conventional systems and the system life is approximately 25 years for the inside components and 40 or more years for the ground loop. The systems improve humidity control by maintaining about 50% relative indoor humidity. They are also quieter than air conditioners.

The primary argument against geothermal systems is their cost. In Connecticut, a typical closed loop system in an existing home costs between $10,000 and $25,000 per ton of air conditioning capacity. A ton of capacity is needed to air condition 600 to 800 square feet. So, a system for a 1,800 square foot home could cost $30,000 or more. In the case of closed loop systems in existing homes, it takes a system approximately 16 to 20 years to pay for itself with its lower operating costs. The marginal cost of systems in new construction is substantially less since the new home would require ductwork (a major component of the cost) whether the home was equipped with a geothermal or conventional system. As a result, payback periods are often under ten years. An electric company subsidy of up to $3,000 can improve the economics of geothermal systems to a limited degree.